There is a need to better understand how investments are currently being delivered on the ground to support the land use sector, and to support the most appropriate interventions to shape investments towards more sustainable and less destructive land use activities. To explore these opportunities, CPI partnered with the Climate and Land Use Alliance (CLUA) to identify entry points for philanthropic funders to unlock capital in support of more sustainable land use practices. CPI analysis shows that there are distinct, powerful, and accessible finance-related levers that philanthropy can use to unlock investment in and reorient capital towards more sustainable land use practices. Philanthropy can often act in more nimble and strategic ways compared with public donors who may be constrained by slow bureaucratic processes and competing political priorities.

1. 1
235 Montgomery St. 13th Floor
San Francisco, CA
94104, USA
climatepolicyinitiative.org
BRAZIL
CHINA
EUROPE
INDIA
INDONESIA
SOUTHERN AFRICA
UNITED STATES
Identifying strategic opportunities
for philanthropy to engage in
sustainable land use finance
March 2016 CLUA Retreat

2. Opportunities for philanthropy in land use finance 2
Purpose of this initiative
Identify the role foundations in CLUA could
play to support sustainable land use through
distinct, powerful, and accessible finance
levers, providing a framework for finance
interventions, and pinpointing potentially
promising interventions.

3. Opportunities for philanthropy in land use finance 3
Identify gaps and barriers
Explain the rationale for philanthropic involvement and
identify finance entry points
Elaborate a framework for philanthropic finance
interventions in sustainable land use
Executive summary
2
3
4
5
1 Describe the sustainable land use context
Brainstorm “suitable for philanthropy” interventions,
and potential criteria to prioritize interventions

4. Opportunities for philanthropy in land use finance 4
1. Describe the “sustainable land use” context

5. Opportunities for philanthropy in land use finance 5
How are current approaches helping us to avoid
catastrophic climate change?
Context of sustainable land use challenge
HIGH-
CARBON
LAND USE
LOW-
CARBON
LAND USE
Transition to low-carbon sustainable land use system
Climate/land-use policy
Climate finance/ sustainable land-use finance
Climate and land-use policy alone can only partially lead to a
complete transition. Finance is a powerful tool to unlock investments in
sustainable land-use.
1

6. Opportunities for philanthropy in land use finance 6
What are finance interventions?
Finance interventions seek to redirect or open new flows of
investment into low-carbon, sustainable practices and/or
restrict investment from high-carbon, unsustainable practices.
1
Govt. of Brazil’s “ABC Plan” to incentivize rural farmers to
adopt less GHG-intensive practices with lines of credit
Foundations work to through policy advocacy groups to
promote the establishment of new low-carbon
agricultural credit lines
Foundations directly invest in commercial
financing vehicles
Althelia Ecosphere, which invests in Novo Campo
sustainable cattle ranching finance facility
Examples

7. Opportunities for philanthropy in land use finance 7
Finance and policy overlaps
Policy interventions Finance interventions
REDD+
pay-for-
performance
Debt-for-nature
swaps
Stronger
regulation on
illegal logging
Low-carbon
agricultural
credit line
Sustainability
labeling
Tax incentives
Forestry bonds
Sustainability
requirements for
financial market
ratings
1

8. Opportunities for philanthropy in land use finance 8
Finance flows to agriculture and forestry –
only small percentage is climate-marked
Domestic private
investment
$168 billion p.a
Domestic public
expenditure
$38 - $225 billion p.a
FDI
around $3 bn p.a
Public R&D
$5 bn p.a
International ODA
$14 bn p.a
• of which, climate marked $8 bn p.a
• $2.1bn from multilateral DFI
• $1.7 from national DFI, $3.5bn
from bilateral DFIs, donors and
agencies
• $0.5bn from public climate funds
Source: FAO 2012. The State of Food and Agriculture; OECD
2014. CRS database; Koohafkan, 2012; Buchner et al., 2014
Note: this figure is not to scale and is prepared using data from
various sources for different years, so should be used only to
understand the possible magnitude of overall investment and
public support which may themselves overlap.
1

9. Opportunities for philanthropy in land use finance 9
2. Identify gaps and barriers

10. Opportunities for philanthropy in land use finance 10
Why is there not more investment?
2
Three main types of barriers impede sustainable
land use investment, encourage BAU behavior:
• Viability / cost gap: Sustainable land use may cost
more or have insecure/insufficient returns
• Knowledge gap: Developers, investors and users do
not understand the opportunities
• Risk gap: Investors perceive a range of risks in
sustainable land use investments, and few risks are
covered by existing risk instruments. Existing land use
climate finance initiatives are met with multiple
implementation challenges, slowing progress.

11. Opportunities for philanthropy in land use finance 11
3. Rationale and entry points for philanthropy

12. Opportunities for philanthropy in land use finance 12
Context
Population growth, growing middle class, growing demand for
food & fuel; natural resources are under increasing pressure.
Gap
Poorly designed land-use policies & incentives, land tenure
challenges; cost, knowledge and risk gaps, results in
investment in BAU practices.
Need
Finance interventions needed to redirect finance away from
brown to green and to catalyze new investments in
sustainable land use.
Opportunity
Philanthropy can test innovative approaches, take risks, be
nimble, and take a systemic, strategic approach; can catalyze
other actors given broad network.
Time is now
There is growing private sector demand for sustainable finance
interventions. Many opportunities to leverage existing work of
other donors. Build off momentum from Paris.
Why land use? Why philanthropy? Why now?
3

13. Opportunities for philanthropy in land use finance 13
4. A framework for philanthropic finance
interventions in sustainable land use

14. Opportunities for philanthropy in land use finance 14
Philanthropic entry points: a framework
Entry points Type of activity
1. Knowledge building and
analysis
• Research/analysis
• Education to key stakeholders
• Diagnostics and trouble-shooting
• Investment guidance
2. Disseminating,
advocacy, raising
awareness
• Public campaigns
• Staffing policymakers
• Legal actions
• Advocacy
• Corporate activism
3. Community and
platform building
• Community building
• Platform building/voice amplifying
4. Direct investing & market
building
• Making direct investments
• Facilitating investment opportunities
4

15. Opportunities for philanthropy in land use finance 15
Finance not a new focus for CLUA
• US$5m in finance-related grants from CLUA in 2015:
– 10 grants (62% total value) on disseminating/advocacy
– 7 grants (33% total value) focused on knowledge building
– 1 grant (5% total value) on direct investing/market-building
• Packard’s PRIs not included here
4
Knowledge
building and
analysis
Disseminating,
advocacy,
raising
awareness
Direct
investing &
market
building
• Several CLUA grants already align with CPI’s suggested interventions
62%
33%
5%

16. Opportunities for philanthropy in land use finance 16
5. Brainstorm “suitable for philanthropy”
interventions and potential screening criteria

17. Opportunities for philanthropy in land use finance 17
Knowledge-building and analysis interventions
Candidate Interventions Example
1. Support improved disclosure and reporting of land
use finance by companies, investors, financial
institutions; help develop sustainability metrics
• UN PRI
• Ceres’ Investor Network on
Climate Risks
2. Support research and design of appropriate bond
instruments that could apply to different geographical
contexts, sectors, and actors
• Forest Resilience Bond by Blue
Forest Conservation with support
from Rockefeller, Packard, Fink
3. Fund training programs to improve investors’
understanding of commodity-specific risks, opportunities
• IFC Advisory Services
• Grow Africa
4. Support research to track brown and green land use
finance flows and improve transparency of financial
institutions’ and companies’ progress toward
sustainability commitments
• CPI’s Landscape of Public
Climate Finance in Indonesia
• Moore’s support for Global Forest
Watch’s Commodity Finance
5. Fund research to develop and analyze new business
models and identify appropriate policies and fiscal
incentives to support them
• Global Innovation Lab for
Climate Finance
• Moore/CLUA grant to NWF and
GLUE’s Zero Deforestation Cattle
Candidate Interventions Example
1. Support improved disclosure and reporting of land
use finance by companies, investors, financial
institutions; help develop sustainability metrics
• UN PRI
• Ceres’ Investor Network on
Climate Risks
2. Support research and design of appropriate bond
instruments that could apply to different geographical
contexts, sectors, and actors
• Forest Resilience Bond by Blue
Forest Conservation with support
from Rockefeller, Packard, Fink
3. Fund training programs to improve investors’
understanding of commodity-specific risks, opportunities
• IFC Advisory Services
• Grow Africa
4. Support research to track brown and green land use
finance flows and improve transparency of financial
institutions’ and companies’ progress toward
sustainability commitments
• CPI’s Landscape of Public
Climate Finance in Indonesia
• Moore’s support for Global Forest
Watch’s Commodity Finance
5. Fund research to develop and analyze new business
models and identify appropriate policies and fiscal
incentives to support them
• Global Innovation Lab for
Climate Finance
• Moore/CLUA grant to NWF and
GLUE’s Zero Deforestation Cattle
Candidate Interventions Example
1. Support improved disclosure and reporting of land
use finance by companies, investors, financial
institutions; help develop sustainability metrics
• UN PRI
• Ceres’ Investor Network on
Climate Risks
2. Support research and design of appropriate bond
instruments that could apply to different geographical
contexts, sectors, and actors
• Forest Resilience Bond by Blue
Forest Conservation with support
from Rockefeller, Packard, Fink
3. Fund training programs to improve investors’
understanding of commodity-specific risks, opportunities
• IFC Advisory Services
• Grow Africa
4. Support research to track brown and green land use
finance flows and improve transparency of financial
institutions’ and companies’ progress toward
sustainability commitments
• CPI’s Landscape of Public
Climate Finance in Indonesia
• Moore’s support for Global Forest
Watch’s Commodity Finance
5. Fund research to develop and analyze new business
models and identify appropriate policies and fiscal
incentives to support them
• Global Innovation Lab for
Climate Finance
• Moore/CLUA grant to NWF and
GLUE’s Zero Deforestation Cattle
5

18. Opportunities for philanthropy in land use finance 18
Dissemination, advocacy, awareness-raising
interventions
Candidate Interventions Example
6. Pay to embed experts within policymaking
organizations to provide advice on sustainable land
use policy, planning, and budgeting
• GIZ embeds REDD+ experts to sit
within government agencies in
Indonesia
7. Fund NGOs to advocate for changes in land use
finance policies, including agriculture subsidy reform
• ODI’s research on commodity
subsidies driving deforestation
8. Support advocacy for the creation of green credit
lines for smallholders (via local financial institutions)
• IDB Green Lines
• Brazil’s ABC Plan
9. Support public campaigns to increase % of
certified sustainable commodity imports
• Fern’s campaign against EU’s
import of forest-risk commodities
• Greenpeace’s campaign for
more stringent standards
Candidate Interventions Example
6. Pay to embed experts within policymaking
organizations to provide advice on sustainable land
use policy, planning, and budgeting
• GIZ embeds REDD+ experts to sit
within government agencies in
Indonesia
7. Fund NGOs to advocate for changes in land use
finance policies, including agriculture subsidy reform
• ODI’s research on commodity
subsidies driving deforestation
8. Support advocacy for the creation of green credit
lines for smallholders (via local financial institutions)
• IDB Green Lines
• Brazil’s ABC Plan
9. Support public campaigns to increase % of
certified sustainable commodity imports
• Fern’s campaign against EU’s
import of forest-risk commodities
• Greenpeace’s campaign for
more stringent standards
5

19. Opportunities for philanthropy in land use finance 19
Community- and platform-building interventions
Candidate Interventions Example
10. Support the development of a project bundling
facility (aggregator) or matchmaking facility
• Dutch Development Coop
Matchmaking Facility
11. Fund an “impact angel investor network” to
address absence of venture-style equity in
sustainable land use
• Clearly Social Angels, a UK angel
investor network
• AngelList’s “Impact Investing
Angel Investors
12. Fund the creation of a platform to test new and
innovative financing instruments
• The Global Innovation Lab for
Climate Finance
• FiRe
13. Pay for extension services / technical assistance
facilities including linking smallholders to value chains
• Agricultural Supply Chain
Adaptation Facility (ASCAF)
• CWF to TuK, promoting
smallholders’ access to technical
and financial assistance
Candidate Interventions Example
10. Support the development of a project bundling
facility (aggregator) or matchmaking facility
• Dutch Development Coop
Matchmaking Facility
11. Fund an “impact angel investor network” to
address absence of venture-style equity in
sustainable land use
• Clearly Social Angels, a UK angel
investor network
• AngelList’s “Impact Investing
Angel Investors
12. Fund the creation of a platform to test new and
innovative financing instruments
• The Global Innovation Lab for
Climate Finance
• FiRe
13. Pay for extension services / technical assistance
facilities including linking smallholders to value chains
• Agricultural Supply Chain
Adaptation Facility (ASCAF)
• CWF to TuK, promoting
smallholders’ access to technical
and financial assistance
Candidate Interventions Example
10. Support the development of a project bundling
facility (aggregator) or matchmaking facility
• Dutch Development Coop
Matchmaking Facility
11. Fund an “impact angel investor network” to
address absence of venture-style equity in
sustainable land use
• Clearly Social Angels, a UK angel
investor network
• AngelList’s “Impact Investing
Angel Investors
12. Fund the creation of a platform to test new and
innovative financing instruments
• The Global Innovation Lab for
Climate Finance
• FiRe
13. Pay for extension services / technical assistance
facilities including linking smallholders to value chains
• Agricultural Supply Chain
Adaptation Facility (ASCAF)
• CWF to TuK, promoting
smallholders’ access to technical
and financial assistance
5

20. Opportunities for philanthropy in land use finance 20
Direct investing and market-building interventions
Candidate Interventions Example
14. Take higher-risk positions in financing structures via a
range of instruments (e.g. first loss equity, subordinated
debt, guarantees)
• AgDevCo
• Root Capital
15. Fund pilots that test new business models payment
schemes for sustainable landscape management
• WFP’s Purchase for Progress
• Althelia Fund
• Livelihoods Fund
16. Fund early capitalization of climate risk indexed
insurance products for producers
• African Risk Capacity (ARC)
17. Facilitate early-stage ideas with at-scale investment
opportunities via an “accelerator”
• Climate Focus’ “accelerator”
proposal
• US-Africa Clean Energy
Financing Initiative
• Moore’s involvement with the
Novo Campo project in Brazil
Candidate Interventions Example
14. Take higher-risk positions in financing structures via a
range of instruments (e.g. first loss equity, subordinated
debt, guarantees)
• AgDevCo
• Root Capital
15. Fund pilots that test new business models payment
schemes for sustainable landscape management
• WFP’s Purchase for Progress
• Althelia Fund
• Livelihoods Fund
16. Fund early capitalization of climate risk indexed
insurance products for producers
• African Risk Capacity (ARC)
17. Facilitate early-stage ideas with at-scale investment
opportunities via an “accelerator”
• Climate Focus’ “accelerator”
proposal
• US-Africa Clean Energy
Financing Initiative
• Moore’s involvement with the
Novo Campo project in Brazil
Candidate Interventions Example
14. Take higher-risk positions in financing structures via a
range of instruments (e.g. first loss equity, subordinated
debt, guarantees)
• AgDevCo
• Root Capital
15. Fund pilots that test new business models payment
schemes for sustainable landscape management
• WFP’s Purchase for Progress
• Althelia Fund
• Livelihoods Fund
16. Fund early capitalization of climate risk indexed
insurance products for producers
• African Risk Capacity (ARC)
17. Facilitate early-stage ideas with at-scale investment
opportunities via an “accelerator”
• Climate Focus’ “accelerator”
proposal
• US-Africa Clean Energy
Financing Initiative
• Moore’s involvement with the
Novo Campo project in Brazil
5

21. Opportunities for philanthropy in land use finance 21
Deep dive: access to finance
Knowledge building &
analysis
Foundations can fund
training programs to improve
investors’ understanding of
commodity-specific risks,
opportunities
Foundations can support
advocacy for the creation of
green credit lines for
smallholders
Disseminating, advocacy,
awareness raising
interventions
Community- and platform
building interventions
Foundations can build an
“impact angel investor
network” to address absence
of venture style equity
Foundations can take high-
risk positions in financing
structures, aligning capital
with public & private investors
Direct investing and market
building interventions
5

22. Opportunities for philanthropy in land use finance 22
Potential criteria to evaluate interventions
Impact:
• Direct and indirect emissions reduction potential
• Potential volume of additional investment mobilized
(transformational)
Actionability and complementarity:
• How crowded is the space?
– Are other (philanthropic or non-philanthropic) actors working
on this? Are current actions effective?
• Is it feasible?
– To what extent does the intervention rely upon external
actors or decisions in order to be implemented?
• What is the likelihood of success?
– Is it likely to meet its intended goals?
5

23. BRAZIL
CHINA
EUROPE
INDIA
INDONESIA
UNITED STATES
235 Montgomery St. 13th Floor
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Thank you!

24. Opportunities for philanthropy in land use finance 24
Appendix

25. Opportunities for philanthropy in land use finance 25
The role of land use in climate change
Land use generates 17-25% of
global GHG emissions
Indonesia and Brazil
contributed 44% and 29% of
global LULUCF GHG emissions
(2012) Source: WRI, 2015, CAIT database
+
=
Nearly 75% of global
LULUCF emissions
Agriculture is the major driver of
deforestation
Mining, urban expansion &
infrastructure are also key
drivers

26. Opportunities for philanthropy in land use finance 26
Interviewees

27. Opportunities for philanthropy in land use finance 27
The current sustainable land use finance
landscape remains patchy
Data source:
Buchner et al., 2014
Less certain data:
• Philanthropic grants to ‘envt
& animals’ in 2012: USD 1.6
bn
• Estimated annual private
investment in selected
certified timber and palm oil
markets: USD 4.2 bn

28. Opportunities for philanthropy in land use finance 28
Sustainable land use finance actors

29. Opportunities for philanthropy in land use finance 29
These gaps are well-documented
Cost &
Viability
Knowledge
Mismatch between “quick results” needed by investors (plus
liquidity, Basel III constraints for banks) and long-term horizon
needed for landscape projects
Transaction costs too high and scale of investment too low -
small and scattered opportunities lack aggregation
Borrowers often need equity but have limited or no collateral
Weak legal frameworks e.g. on land tenure, governance
issues and corruption
Lack of risk instruments for the sector
Risk
Lack of known bankable
projects
Lack of spatial information
Limited investors, project
promoters working on
land use
Poor coordination between
stakeholders (govt., businesses,
local communities)
Weak political support
and institutional capacity
Lack of good
planning/coordination
on concessions, permits.
Local implementers lack
capacity to respond to
donor application and
reporting requirements
Lack of enforcement in land use
High start-up costs High monitoring costs
High vulnerability to
climate risks

30. Opportunities for philanthropy in land use finance 30
The role of philanthropy
Finance levers are underutilized by the land use
community
Can open pools of capital
Can be a catalyst to land use policy
Can help speed up innovation
Can motivate finance ministries
Financial
Policy
Financial
Sector
LEVERS
IMPACTS

31. Opportunities for philanthropy in land use finance 31

32. Opportunities for philanthropy in land use finance 32
Broader insights based on interviews
Philanthropy….
• Should not create new funds, but mainstream sustainability
objectives into existing financing and TA vehicles/institutions.
• Can support small scale activities with less visibility / immediate
results, ones which public donors may shy away from.
• Is a respected voice and can broker investment partnerships.
• Can leverage the South’s growing philanthropic community.
• Is uniquely positioned to finance private companies directly
where donors face constraints.
• In some cases, have a unique opportunity to support the
greening of the investment portfolio of their associated
asset management/investment arms/parent companies.
Philanthropy is uniquely suited to help address
the world’s sustainable land use finance needs

33. 3333
About CPI
Climate Policy Initiative (CPI) works to improve the most
important energy and land use policies around the world, with
a particular focus on finance.
We work in places that provide the most potential for policy
impact, including Brazil, China, Europe, India, Indonesia, and
the United States. Our work helps nations grow while
addressing increasingly scarce resources and climate risk. This
is a complex challenge in which policy plays a crucial role.
www.climatepolicyinitiative.org