Toronto, June 3 2021 - Convergence awards a feasibility study grant to the Wildlife Conservation Society (WCS) to develop a blended finance solution in Indonesia that increases access to credit and training for smallholder coffee farmers to engage in sustainable agriculture — with the end goal of strengthening smallholder livelihoods while protecting critical habitat and preserving biodiversity. This grant is awarded through the Asia Natural Capital Design Funding Window, co-designed with and funded by the RS Group, a Hong Kong based family office.
Commodity driven deforestation is an important driver of tree cover loss in Indonesia. Major gains have been made in reducing deforestation within commodity supply chains in recent years, and the development of new initiatives that support smallholder farmers to transition to sustainable production models are critically important in maintaining this momentum. Investments at the forest frontier, with the right management measures in place, can also play a major role in reducing deforestation and forest degradation. However, these investments are often deemed high risk, meaning they exist outside the scope of traditional investments.
The grant to WCS will explore the feasibility of establishing the Bukit Barisan Selatan (BBS) Landscape Fund, a blended finance fund tied closely to conservation outcomes that provides targeted technical assistance and capacity building to smallholder farmers adjacent to the Bukit Barisan Selatan National Park in Sumatra. To mobilize domestic lending to smallholder farmers, the Fund will also seek to develop a credit enhancement mechanism for local financial institutions.
“What got us excited about the BBS Landscape fund was that it offered an elegant solution to a tricky development challenge,” says Joan Larrea, CEO at Convergence. “The blended fund model proposed will first tackle the social dimension of deforestation, namely the marginalization of smallholders in sustainable/deforestation-free supply chain efforts, which then leads to preserving and protecting these priceless habitats. It really gets to the root of the problem.”
The BBS Landscape Fund, once fully mobilised, will have the potential to support the livelihoods of over 20,000 farmers by increasing the productivity of their coffee production, providing access to markets, and building their technical, financial, and organizational capacities. These investments in turn could catalyse a reduction in over 20,000 hectares of deforestation, avoiding over 13 million megatonnes of CO2 emissions through 2050, and supporting the protection of the BBS National Park, a critical habitat for iconic species such as the Sumatran tiger.
“With this grant we have an exciting opportunity to demonstrate both the business case and the conservation benefit of carefully targeted investments in sustainable agriculture at the forest and farm frontier in Sumatra. By exploring the feasibility of this Fund in the Bukit Barisan landscape we’re also able to build upon a longstanding partnership with the National Park and local communities in the area, giving us the best possible chance for success.” says Matt Leggett, Associate Director, Sustainable Commodities at WCS.
“For over 20 years, WCS has been partnering with the Ministry of Environment and Forestry to conserve Indonesia’s unique forest and biodiversity, including in the Bukit Barisan Selatan National Park. We’re excited to see how this feasibility study could support coffee farmers at the forest frontier, protect wildlife habitat, and provide much needed financing in support of conservation”, says Noviar Andayani, Country Director of WCS’s Indonesia Program.
The Asia Natural Capital Design Funding Window is currently accepting applications, with an upcoming deadline of September 24th, 2021. Please visit our website for more details.
About Convergence’s Design Funding Program
Convergence’s Design Funding Program provides early-stage capital to support blended finance solutions in frontier markets and nascent sectors in order to accelerate the number of investible transactions targeting the SDGs. Initiated, co-designed, and funded by the RS Group with $3 million in funding, the Asia Natural Capital Design Funding Window supports blended finance solutions that find new ways to enhance and protect the world's stock of natural assets, including water, land, soil, air, plants, and animals, by attracting private investment at scale. This design funding program is the first of its kind focused on the Asia and Pacific. Please visit Convergence’s Design Funding page for submission deadlines as well as other open windows.
Convergence is the global network for blended finance. On top of market acceleration through its Design Funding program, Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence’s global membership includes over 200 public, private, and philanthropic investors as well as sponsors of transactions and funds. To learn more, visit www.convergence.finance.
About the Wildlife Conservation Society (WCS)
WCS is a US non-profit established to save wildlife and wild places worldwide. WCS currently works in more than 60 countries and has helped to establish over 150 protected areas across the globe. WCS has been working to protect biodiversity in Indonesia since 1965 and has been active in the Bukit Barisan Selatan landscape for over 20 years.
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