Publication Details

Fin. Mechanisms FI

Financing Strategies for Integrated Landscape Investment: Review of Financing Institutions and Mechanisms

Editors

  • Seth Shames

Authors

Date

April 1, 2012

Support Provided By

Challenge

  • No Related Challenges

Research Theme

Short Summary

As the economic impacts of climate related risks grow and the limitations of public finance are ever more apparent, both the risk burden and investment requirements for climate smart investment are increasingly moving to the private sector, yet there remains a lack of private finance to fill the gap. We can change this picture.

Fin. Mechanisms FI

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Summary

Innovating across the public and private sectors

Public finance institutions are enhancing national and regional governments’ ability to finance multi-focal area strategies and develop integrated finance strategies for SLM in a manner that addresses synergies and trade-offs across programs at landscape and sub-national jurisdictional levels. Private sector finance is providing capital to companies, communities and projects supportive of landscape approaches (often in partnership with the public and civil sector). Some companies and investors are aligning investments in commodities and real assets with broader landscape actors and benefits (carbon, adaptation and conservation), in order to better manage context-specific and value-chain risks and develop more resilient supply chains.

Motivations across financial actors. Adapted from Dalberg (2012). From p. 4

Motivations across financial actors. Adapted from Dalberg (2012). From p. 4

 

Unique contributions and benefits by sector

Public sector finance (mainly through grants, subsidies and credit) can enable landscape actors to collaborate on projects that integrate multiple landscape objects. Private sector investment (loans, equity, credits) and partnership models for ILM range from those that channel finance into whole landscapes to those that support and are designed to coordinate with landscape objectives. Public-private partnerships enable public and philanthropic actors to more effectively leverage private sector investment for scale, while also providing private sector partners an opportunity to reduce environmental and social risks in their supply chain, fulfill corporate social responsibility goals, maintain a ‘license to operate,’ and sometimes to access new markets by raising their profile in emerging economies.

The public sector must do more

Public sector finance institutions must aggregate and coordinate ILM finance, improve the risk profile of ILM, and mainstream the ILM business case to help private sector investment expand beyond niche opportunities.

 

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