Skip to main content
You are currently impersonating the user:

Design of blended climate and gender-smart debt fund investing in scalable biochar projects and agriculture SMEs

Convergence awarded a feasibility study grant to Big Valley Advisors for the design of the gender-smart ‘AgWaste Climate Fund.’ The USD 100 Million fund aims to reduce emissions from postharvest losses in smallholder-intensive agricultural value chains by providing expansion debt capital to Small and midsize enterprises (SMEs) operating across countries in the Asia Pacific, Latin America and Africa.

Food loss and waste contribute to 8-10% of global greenhouse gas emissions. In less-developed nations, inadequate infrastructure, outdated technologies, and limited production resources lead to food waste and losses at various points in the food chain. Additionally, the common practices of burning agro-residues or allowing them to decompose result in adverse effects, including the release of soot, smoke, and greenhouse gas emissions, along with soil degradation. However, this situation presents an untapped opportunity for biowaste, offering the potential for repurposing within a circular economy framework to achieve positive climate change outcomes.

The AgWaste Climate Fund aims to address the problem of biowaste. The Fund will provide patient debt capital to large-scale agriculture SMEs and scalable biochar projects, as well as encourage a circular economy by repurposing agricultural waste for use as inputs in biochar projects. The fund is backed by Big Valley, in collaboration with, a prominent carbon credit platform specializing in engineered carbon dioxide removal technologies. Additionally, CGIAR, the world's largest agricultural research organization with a successful track record spanning over 50 years in climate-smart agriculture, will act as a technical advisor for the design and implementation.

Design Question and Learning Potential for the Market: How can a blended fund be structured with an integrated gender lens to address food waste in smallholder-intensive value chains and promote a circular economy?

The fund adopts a blended finance structure, combining a junior first loss tranche from catalytic public and philanthropic investors with senior tranches from commercial and private investors. With the proposition to reorient and leverage large volumes of private capital towards innovative investments in climate-smart, gender-responsive and permanent carbon sequestration projects in the Global South, the fund allocates its capital into two main investment categories.

Approximately 40 -60% of the fund’s capital will be invested in scalable biochar projects led by smallholder aggregators. The fund will be capitalized using a combination of mezzanine debt, unsecured senior and secured senior debt. Additionally, certain loans will employ a profit participation structure to help compensate for the risk of investments. The remaining 40% -60% of the capital will target established and growing SMEs in agriculture and food industry with low-risk/return profiles through patient long-term debt to finance climate-smart solutions for food waste management.

The blended finance approach serves to mitigate both real and perceived risks in financing biochar projects and SMEs in the agriculture and food industry in emerging markets. Further, the reduction of food loss and conversion of agricultural waste to biochar directly contribute to the promotion of a circular economy.

Big Valley will collaborate with and CGIAR to design and implement the fund and technical assistance facility (TA facility). The TA facility will adopt a gender-smart strategy and serve as an accelerator for new biochar and agriculture SMEs in the fund’s project pipeline.

    In progress
    Year and Quarter
    Gender Responsive Climate Finance Design Funding Window, 2023, Cycle 3
    Design Activity
    Feasibility Study
    Region Focus
    Sector Focus