On a beautiful sunny morning, several decades ago, my intrepid 5-year-old self ventured into the arboretum behind our family home to collect from the nursery – or steal – as I later found out – three saplings. I was severely told off by my mother for doing so, an act that cemented my fascination in, and admiration for, forests and our natural world.
From COP 27 to COP 15
There are just three short weeks between the end of COP 27 climate conference in Sharm el Sheikh, and the COP 15 biodiversity meeting in Montreal. But we enjoy no such gap between the climate and nature crises, one cannot be addressed without the other. Even if we decarbonise high emitting industries, temperatures will continue to rise unless we stop destroying – and start restoring – our forests, wetlands and grasslands.
Mangroves, trees that thrive along tropical shorelines, are a beautiful illustration of the interdependencies between climate, nature and livelihoods. Home to a rich array of species, including bats, monkeys, crabs and lemurs, mangrove forests store huge amounts of carbon, offer protection from climate impacts such as flooding and soil erosion, and are essential for local fisheries.
Along with other forests across the globe, mangroves are vital weapons in the fight against climate change and biodiversity loss. Yet over the past three decades, the world has lost over 4% of its forests, equating to an area about half the size of India, and deforestation now accounts for 11% of global CO2 emissions.
Africa, home to the Congo, Mau and Ongoye, is now the last continent with contiguous forest, and has a 100-million-hectare restoration target through the AFR100 and Great Green Wall initiatives. We at Southbridge firmly believe that the future of our continent, and indeed the entire planet, depends on the protection and restoration of these vital biomes. They are the lungs of the earth, and we need to keep them functioning properly for the earth to breathe.
Turning challenge into opportunity
At Southbridge, it is in our DNA to turn challenges into financial opportunities to create sustainable livelihoods, with solutions that build bridges between Africa and the rest of the world. And with $US 285 billion a year needed to address the climate, biodiversity and land degradation crises, there is a huge opportunity to develop investment solutions that support ending deforestation, restoring forests and scaling nature-based solutions (NbS).
At COP 27 we were delighted to join the Finance Sector Deforestation Action Initiative (‘FSDA’) and launch our $2 billion “Vumbuzi” fund (Vumbuzi means to ‘innovate’ or ‘discover’ in Swahili) to accelerate our efforts to end deforestation, facilitate sustainable agriculture, and scale NbS. Vumbuzi is a strategic partnership with the Arab Bank for Economic Development in Africa that will blend concessional finance with private investment to channel patient capital to local actors involved in land restoration and reforestation across Africa. Supported by an anchor investment from the Bezos Earth Fund, and research and policy knowledge from the World Resources Institute (WRI), we aim to leverage philanthropic and grant capital in an innovative manner to do more in meeting the target of 128 million hectares of restoration in Africa.
Vumbuzi’s private investment vehicle, for example, will provide smallholders with access to the carbon markets and support them to develop sustainable agro-forestry practices. By using technology to measure the carbon absorption of trees, farmers – even those with small plots – can benefit from the sale of carbon credits, and practices like intermingling trees designated for timber with other more permanent species safeguards areas of forest, at the same time as supporting livelihoods and reducing dependencies on monoculture.
Together with a public fund and educational foundation – plus the first ever program in Africa to link wins in sports to reforestation – we see Vumbuzi as a breakthrough in enabling entrepreneurs, SMEs and NGOs to restore vital lands across our continent.
From tiny seeds to giant Sequoias – financing NbS at scale.
As it stands, there are not nearly enough institutional scale investment opportunities for NbS, and we see Vumbuzi as a prototype for other solutions with multiple climate, biodiversity and social benefits.
But what will it take to drive the transformational shifts needed, so that Vumbuzi is one of many similar funds?
Legislation that shapes public policy is often cited as the ultimate solution, and indeed in Rwanda, where there are strict rules governing forests, one can find some of the best managed forests in the world.
But waiting for legislation is not enough. A willingness to innovate, and build coalitions and partnerships is needed too. For example, we are advising a private equity fund that is tackling deforestation by introducing renewable energy-based cooking solutions to rural Africa – thereby reducing the use of charcoal, and working with FSDA to set shared investor expectations for companies on sustainable agricultural commodity production and sourcing.
An agreement on “loss and damage” could also present a breakthrough in how to finance forest-rich countries that have been serving the earth for decades by absorbing the carbon we all produce. There is no mechanism right now to compensate such a service. Loss and damage compensation could be such a tool.
Mobilising the markets to create more Vumbuzis
From the mangroves of Indonesia to the Congo basin, to the boreal forests of Canada, we need to keep the lungs of our planet intact. I have my childhood to thank for giving me an early wake-up call to the importance of nature and climate. Now we need all financial sector actors to acknowledge that we inhabit a shared world.
With $468 trillion in assets across the globe, fully addressing the climate, biodiversity and land degradation crises – in a way that is aligned with commercial objectives – is fully within the reach of financial markets. We see Vumbuzi as a beacon of possibility for what finance at scale looks like, and we need to see many more such innovations very soon.
Sean Kidney, CEO of the Climate Bonds Initiative, underlines transformative role of climate bonds in catalysing our race to a net zero, nature-postive and resilient world and what needs to happen to unlock its dramatic potential.
A fair future demands not only financial commitments but also strategic and inclusive approaches that consider the needs of the present and future alike, argues Karishma Ansaram, Climate Champions’ Finance Youth Fellow.
In this case study JGP Asset Management show how tackling deforestation using active ownership, creative financing, and nature restoration provides a holistic approach to driving the shift towards more sustainable commodity supply chains.
A fair future demands not only financial commitments but also strategic and inclusive approaches that consider the needs of the present and future alike, argues Karishma Ansaram, Climate Champions’ Finance Youth Fellow.
