Investment Strategy

&Green provides credit or guarantees to finance commodity supply chain projects in its Approved Jurisdictions, all of which have progressive forest and/or peatland protection strategies & policies.

Projects are expected to provide substantial Environmental Returns, that can be monitored throughout the investment period, and must adhere to strong social and environmental covenants as well as a plan for the protection of the wider landscape around the project.

All &Green investments must be additional to the investee and must leverage significant 3rd party financial participation.

&Green does not provide grants or make non-commercial investments, and it does not fund projects without a direct land-use impact.

Geographic & Sector Focus

Geographic Focus

  • Tropical Forest Countries globally
  • &Green Approved Jurisdictions only

&Green works globally, with local investment teams based in the tropical forest focus regions of Latin America and South-East Asia.

Sector Focus

  • Generally, all commodity supply chains which source from tropical forest regions
  • Specific focus on the soy, livestock, palm oil, rubber and forestry sector

&Green invests in financially viable companies along the value chain of commodity production.

It does not directly fund smallholders or non-profit organizations.

Environmental Return
& Social Inclusion

&Green has an Environmental Return (ER) target of 5 million hectares of tropical forest protected or restored and a Social Inclusion (SI) target of 500,000 smallholders/households benefiting from the Fund’s investments. Social Inclusion of local communities and/or smallholders is an essential component of a robust Environmental Return.

&Green will assess every transaction with respect to its potential for generating Environmental Return, and will monitor its achievement through a suitable set of transparent KPIs. The level of Environmental Return has a direct impact on &Green’s pricing.

&Green investments must contribute to Environmental Return in at least one of these dimensions commensurate with the amount of investment provided.

Conversed Forest: existing primary forest that is protected (i.e. the upkeep of existing natural resources within a forest).
Avoided Deforestation: avoiding conversion of intact forest into land for production by intensifying production on land, resulting in equal output on fewer hectares.
Restored Forest: restoration of degraded forest to its original state (i.e. to re-establish the presumed structure, productivity and species diversity of the forest that was originally present at a site.)
Households Benefiitting: households that benefit from the Fund’s investment through enhanced yields, profit sharing, securing tenure, and/or the creation of jobs and other income-generating opportunities.
Smallholders Benefiitting: viable small-scale producers that result from projects financed by the Fund.
 

Environmental, Social and Governance (ESG) Safeguards

In addition to compliance with all applicable laws and regulations, &Green investments safeguard ESG standards as part of the investment process as follows:

  • Investments must follow the IFC Performance Standards (IFC PS) or equivalent;
  • Investees must implement an Environmental and Social Action Plan (ESAP) in order to address gaps with the IFC PS and the risks identified;
  • Investees must make a commitment to No Deforestation, No Development of Peatlands, and No Exploitation (NDPE) at organizational level;
  • The project area, and all adjacent high carbon stock (HCS) and high conservation value (HCV) forest and peatland must be covered by a long-term Landscape Protection Plan (LPP),  and
  • Investees must obtain Free, Prior and Informed Consent (FPIC) of all local communities in the production and conservation areas of the project.

Financial institutions acting as &Green’s co-investors in any project are expected to comply with ESG standards, specifically the IFC PS or the Equator Principles.

Landscape Protection Plan

The landscape, or project area, from which the Fund considers its Environmental and Social Returns to be derived, includes areas with direct and indirect influence from the investee.  The LPP is produced by the investee, supported by &Green, and varies depending on the nature of the investee and the project undertaken.

The LPP is a sustainable long term land use and management plan put forward by the investee, which quantitatively sets out how the impact will be generated during the financing period.

The LPP serves to demonstrate and replicate models for inclusive agricultural production models reducing deforestation and to maximize direct positive environmental and social impacts.

The progress towards the LPP milestones is monitored and independently verified.

Target Client Base

&Green invests in private companies that are directly or indirectly involved in commodity production, including sufficiently independent state-owned enterprises.

  • Supply chain companies directly sourcing from land-users and their aggregation structures
  • Medium- to large-scale plantation and farming businesses
  • Financial institutions managing an agriculture investment portfolio or similarly influencing land-users, including special purpose vehicles such as funds
  • Service and input providers in the agricultural supply chain that can influence land-use behavior directly.

Alternative business models are also eligible for investment where it supports &Green’s Theory of Change.

Financial Instruments

&Green is de-risking investments in sustainable agricultural production with a strong component of tropical forest protection or forest restoration.

&Green offers loan or guarantee instruments with the capacity to provide long-term tenors (generally 5-15 years) as is needed by the investee for the transition to more sustainable production. The Fund is able to participate in project financing mechanisms, new venture structures and green loans.

In order to stimulate additional investments, &Green’s participation in any project is capped at 25% of total risk and is often subordinated to commercial investors. &Green aims for average investment sizes of USD 5-15 million in projects which it supports.

The pricing of &Green investments is structured in a manner that maintains the Fund’s capital base over the long term by covering its risk and operating costs.

&Green is able to absorb higher short and medium term risk and can therefore partially compensate its investees for the additional upfront project development costs, particularly related to its environmental and social criteria requirements, by providing lower than market standard cash flow requirements in early years.

Investment Process

&Green’s investment process allows for continuous assessment of potential investments and combines financial and ESG due diligence.

The process is rigorous but agile and run by the Investment Advisor which presents credible projects that meet the &Green investment criteria to the independent Credit Committee, appointed by the &Green Board of Directors. The Credit Committee recommends investments put forward by the Investment Advisor for final approval; by the Board of Directors.

Technical Assistance

To improve the prospects of achieving the Fund’s objectives, it has established a dedicated Technical Assistance Budget to support its clients, and prospective clients, in reaching the standard of the Fund’s Environmental & Social Management System (ESMS), which is required in order to qualify for financing from &Green. The &Green TA processes run in close connection with the investment process and the governance of the &Green TA Budget is integrated in to the existing &Green governance structure.

There are certain eligibility criteria for providing &Green TA, including cost-sharing requirements for clients. To provide additional support, particularly where a (prospective) client is not eligible under &Green’s TA, the Fund strives to connect clients to strategic partners that are able to provide similar grant-based support to catalyse &Green’s investment and maximise impact. As part of the partnership with IDH, the sustainable trade initiative, a separate technical assistance facility (TAF) has been developed and it is dedicated to assisting &Green’s (prospective) clients in preparing for, and realising, the environmental and social impact required by the Fund. Other similar connections have been established with 3rd parties and exceptionally on ad-hoc basis.