CFC projects addressing conservation and climate change

CFC has long recognized that socioeconomic progress cannot come at the cost of environmental degradation and it is also increasingly clear that climate change in particular poses a challenge to livelihoods, thus creating a negative feedback mechanism for development. The past axiom of “grow first, clean up later”, cannot apply any more. Environmental restoration and socioeconomic progress can be complementary, and CFC seeks to achieve such complementarity at a project level. A few examples from past and present projects are shown below.

The conservation of the forest of Ashaninka communities, Peru

The Ashaninkas are the indigenous people living in the Ene river valley of the Peruvian Amazon, in the Satipo province. The project targets establishing the production of premium coffee and cocoa in Ashaninka areas under an agroforestry system, and marketing and sale of products to premium markets. The project provides support to the Ashaninka cocoa and coffee farmers in increasing the quality and yield per hectare of their produce. Cocoa is sold directly to premium markets in Australia and US under the brand name of Living Earth. The pilot project has been financed using an innovative Development Impact Bond (DIB) financing scheme set up by the CFC in collaboration with Schmidt Family Foundation, Rainforest UK, and KIT Royal Tropical Institute. Moringa Agroforestry Fund

On the adaptation side, CFC participates in the Moringa Agroforestry Fund (Moringa) to invest in agroforestry projects in Africa and Latin America which can commercially compete with deforestation drivers (like cattle ranching, crop farming and timber harvesting). At the same time Moringa investments are required to have a demonstrable positive impact on the environment and the livelihoods of local populations, while generating a clear positive impact on local populations and the environment. The result is reduced risks to livelihoods and stabilised incomes. The CFC supports this initiative as an investor and manager of Moringa’s technical assistance facility, ATAF, which has implemented more than 15 projects at an amount of EUR 4 million.

Olivado

Since 2019, the CFC has been working with Olivado, a Kenyan exporter of organic and fair trade avocado oil, to finance its purchase of inputs from smallholder farmers. At its processing plant in Kenya, the company has installed a biogas facility which converts fruit waste into energy and the CFC is now considering financing a similar facility for Olivado’s plant in Tanzania. From a pure business perspective, this means a more stable energy supply while the climate impact may be incidental. However, for the CFC as an impact investor, this is a particularly attractive investment opportunity as it may increase rural incomes while lowering the demand for fossil fuels.