Climate finance: Nature and sustainability

The Digital Finance for Nature Forum discusses climate finance solutions for sustainability in Latin America and the Caribbean.

Source: Think Landscape

A Family farmer showcases his coffee in Mato Grosso, Brazil. Ícaro Cooke Vieira | CIFO

How can the financial sector support Latin American and Caribbean communities and businesses in managing their lands?

Last week, hundreds of participants from 62 countries tuned in to the Digital Finance for Nature Forum: Investing in Equitable Futures to address this pressing issue.

Organized by the Global Landscapes Forum with the support of the governments of Germany and Luxembourg, the one-day online event brought together community representatives, business leaders, financiers, policymakers, and scientists, all focused on supporting stewardship by local communities and businesses in the region.

"It is of utmost importance that natural capital markets for nature-based solutions be carefully designed to enable the active involvement and decision-making of local communities in leading equity and justice."

Said Cherryl Dentzer, international climate finance consultant at the Luxembourg Ministry of Environment, Climate and Sustainable Development at the opening of the forum.

This sentiment was echoed throughout the three main sessions, which covered sustainable agriculture, how climate finance can reach indigenous peoples, and a Dragons' Den-style presentation of innovative solutions.

Agriculture has a devastating environmental impact, from deforestation and biodiversity loss to land and water degradation and pollution from pesticides, fertilizers, and other agricultural chemicals. However, it is also vital for the survival of almost everyone on the planet and plays a fundamental role in the economies of many countries in Latin America and the Caribbean.

“Agriculture is very hard-working in Brazil, despite the consequences of global climate change,”

Said Fabiane Sebaio, executive secretary of the Cerrado Waters Consortium (CCA). But thismay not be the case for much longer, she warned.

“If the temperature continues to rise as estimated, coffee will migrate from our region,” explains Sebaio.

Coffee is just one of countless commodities that could suffer the same fate.

However, shifting to more sustainable agricultural practices can present many challenges, especially in terms of financing – whether it's access to funds or problems with the structures being used.

“Perhaps you don't think a credit policy that works for one biome will work for another,”

Explains Dailson Andrade Santos, private markets manager at the Canudos, Uauá and Curuçá Family Agricultural Cooperative.

“Brazilian credit policy is still very standardized, while Brazil is very diverse.”

These particularities must be taken into account when developing financing for sustainable agriculture in the region, the speakers said.

“By introducing a more personalized credit system that takes into account the specific needs of farmers, we have significantly reduced default rates, which are now close to zero,”

Says Gabriel Chaves, rural development manager at Tabôa.

Transforming Ideas into Action

In the second session, three investment-ready projects in Latin America and the Caribbean were presented to a panel of three expert investors.

The speakers considered the potential environmental impact, financial viability, and scalability of the three sales pitches before asking probing questions and offering valuable advice.

The first project presented was Ecosystem Regeneration Associates (ERA), which offers carbon credits based in the Brazilian Cerrado. When questioned about its social impact, objectives, and community engagement, ERA's founder and CEO, Hannah Simmons, emphasized the increased opportunities for women in agroforestry compared to other practices, such as cattle ranching.

Next came Diwö Ambiental, represented by communications director and volunteer coordinator Jimena Araya. Founded in 2016 and based in Costa Rica, the NGO uses nature-based solutions for land restoration with a focus on socio-environmental impact.

Since it can often be difficult to measure real-world impact, Diwö Ambiental is leveraging a variety of technological solutions to ensure its projects are on track and impactful, from photo and video documentation to satellite and drone monitoring.

The final pitch of the day was from the Defensores de la Naturaleza Foundation, presented by managing director Javier Márquez. The Guatemala-based organization has been working to protect nature for decades, but, as Márquez pointed out in his speech, they have become reliant on donations and are now seeking other sources of revenue.

A discussion followed on funding stages, partners, and how a funding injection would be managed, highlighting the complexities of fundraising in the climate adaptation space.

Agroforestry in Peru

Although climate finance is being activated in some sectors, it is still very deficient in others. Fabiola Muñoz Dodero, coordinator in Peru of the Governors for Climate and Forests Task Force (GCF), opened the third session of the day explaining that, despite having the knowledge and practices to manage their territories sustainably, indigenous communities still receive only a small percentage of related investment – ​​less than 2%, according to speaker Aldo Soto, managing director and co-founder of Amazonia Impact Ventures.

This touched on the central question that the four speakers would discuss: how can climate finance reach indigenous peoples?

The answers are not so simple, but the panel of experts explored several ideas, including the need for “specialized organizations” that can “bridge the gap between indigenous communities and financial resources,” as Soto pointed out, as well as the need for empathy from all stakeholders.

“Perhaps innovation lies more than anything in the attitude of how you approach each other, and that may mean that you meet with respect and empathy before discussing interest rates,” said Mareike Hussels, mixed finance manager at Triodos Investment Management.

This sentiment was shared by Juan Carlos Jintiach, executive secretary of the Global Alliance of Territorial Communities (GATC).

“When empathy is present, it fosters an environment where active listening occurs, allowing for a deeper understanding of the motivations behind others’ requests,”

He said.

“Hard work, trust, and empathy are essential to finding common ground and collaborating effectively. We need to continue educating ourselves.”