Convergence awarded a proof of concept grant under the Gender Responsive Climate Finance Window to Clarmondial AG for the design and launch of a blended debt vehicle, Biosphere Integrity Fund (“BIF”), to transition emerging and developing market agricultural supply chains and sourcing landscapes to achieve targets on environment, local livelihoods, business resilience, and women's economic empowerment.
Environmental degradation is increasing value chain risk and uncertainty. There is a pressing need to mitigate environmental and regulatory risks, which, in turn, increases financing needs both on and off the farm. Agriculture, Forestry & Other Land Use sectors contribute 13-21% of global greenhouse gas emissions and approximately $420 billion are needed annually to transition croplands to conservation agriculture practices. In recognition of these challenges, corporations are preparing for emerging regulations, engaging in industry initiatives, and in landscape coalitions. For instance, the EU Deforestation Regulation (EUDR) will require substantial investment to ensure traceability to enforce deforestation-free imports to Europe. Specialized financing solutions are required to promote shared accountability for risks and returns between relevant stakeholders, across value chains and within sourcing landscapes. Companies cannot cover the full transition cost from current budgets, and additional private finance must be mobilized.
Clarmondial is designing the Biosphere Integrity Fund to provide longer-term transition finance across sourcing landscapes focusing on biodiversity and gender responsive climate action. The fund will finance on-farm, value chain and landscape actions. Its investments will drive accountability in the value chain and ensure financial sustainability. The Biosphere Integrity Fund has been conceptualized through the Business Case for Collective Landscape Action, an initiative supported by the U.S. Agency for International Development (USAID) and executed in collaboration with the Rainforest Alliance (RA), Conservation International, and CDP. The fund will support and finance on farm action such as agroforestry practice, soil health management practices, farmer training and agronomic support; value chain enhancements through renewable energy integration and efficient water and waste management; and landscape initiatives like building watershed protections and wildlife corridors. Overall the vehicle will look to convert 500,000 hectares of land to sustainable management, potentially avoiding 5 million tons of carbon emissions, improving livelihoods of more than 50,000 residents and farmers with over 50% women beneficiaries resulting in healthy landscape, and climate resilient ecosystem services.
The Convergence grant will enhance the initiatives supported by USAID by enabling Clarmondial to integrate payments for ecosystem services into their transaction structure. This funding will also contribute to the design of the technical assistance facility and help develop a transaction-level impact framework, advancing Clarmondial towards the launch of the fund.
Design question and learning potential for the market: How can a blended finance vehicle be structured to promote gender-responsive investment in climate-resilient practices across agriculture supply chains and sourcing landscapes?
The Biosphere Integrity Fund leverages its catalytic tranche and Technical Assistance Facility (TAF) to deliver both financial returns and impactful gender-responsive investments. Given the long-term nature of the investments, the fund aims to foster significant systemic changes through extended capital provisions. This includes payments for ecosystem services such as carbon insets and high-quality offsets, along with potential credits under the UNFCCC Paris Agreement Article 6 framework. These financial mechanisms are designed to enhance the livelihoods of women both on and off the farm. Clarmondial will engage consultants to identify relevant gender indicators for incorporation into loan agreements. The fund will monitor gender-specific outcomes and compliance with the EU’s Sustainable Finance Disclosure Regulation (SFDR) as an Article 9 Fund. Beyond setting quantitative targets at the fund level, the fund plans to create an impact framework adaptable to individual transactions. The Convergence grant will aid in developing a gender integration framework that links transaction-specific and fund-wide requirements, enhancing their ability to craft transaction-level Key Performance Indicators (KPIs) with borrowers. The Technical Assistance Facility (TAF) will further support borrowers in implementing gender action plans through capacity-building initiatives. The success of Biosphere in environmental, social, and governance (ESG) aspects is expected to catalyze subsequent funds by Clarmondial and other managers.
