Tropical Landscapes Finance Facility: New UNEP-Canada partnership to improve rural livelihoods in Indonesia

The Canadian government becomes an anchor donor to the Tropical Landscapes Finance Facility Grant Fund, mobilising private capital to improve rural livelihoods, reduce emissions and protect biodiversity in Indonesia.

The Canadian Government announced a grant of $4.8 million Canadian dollars to the United Nations Environment Programme (UNEP) for the Tropical Landscapes Finance Facility (TLFF) Grant Fund. The TLFF is a multi-stakeholder partnership comprised of UNEP, BNP Paribas, ADM Capital, ADM Capital Foundation and World Agroforestry Centre (ICRAF) that seeks to catalyse long-term finance to help Indonesia deliver economic growth alongside its national development and international climate and SDG objectives. The funding will go towards early-stage grants to develop investable climate-smart agriculture and forestry projects for the TLFF. Gender equality will be an important focus.

A webinar – Valuing Tropical Landscapes Finance: Lessons and Opportunities in Indonesia – was held on 28 May 2021 to highlight Canada’s support to the TLFF Grant Fund. The grant fund will enhance the “bankability” of local projects, thereby increasing the chances to be financed by the private sector.

Indonesia is home to some of the planet’s most important biodiversity hotspots. That’s why Canada is keen to continue its collaboration with Indonesia to tackle the interdependent crises of biodiversity loss, ecosystem degradation and climate change. Canada is pleased to announce that we will be the anchor donor to the UN Environment Programme in launching the Grant Fund window of the Tropical Landscapes Financing Facility in Indonesia. The TLFF provides innovative financing to promote green investments in Indonesia, with gender equality, climate change, and biodiversity prioritised.” said Ambassador of Canada to the Republic of Indonesia. H.E. Mr. MacKay.

Indonesia is a significant contributor to global greenhouse gases, mainly from conversion of forests and carbon-rich peatlands to agricultural lands. These land-use shifts have ecological and social consequences that affect men and women differently. Despite Indonesia’s considerable progress over the recent decades in poverty reduction, deforestation reduction and economic growth, women have not benefited equally. Informal sector occupation including that of agricultural sector is often characterized by poor working conditions. This has further affected women which, on average, earn less than their male counterparts.

The Grant Fund will work with women groups to enhance their entrepreneurial, managerial, and financial skills and ensure all projects follow clearly defined gender targets. Technical assistance will be provided to design financial models that further empower women and build resilience against climate change.

Benefiting from a partial USAID guarantee, the first TLFF investment transaction is a landmark USD 95 million corporate sustainability bond that helps finance a sustainable natural rubber plantation in two heavily degraded Indonesian landscapes. The funding from the Canadian Government to create a Tropical Landscapes Grant Fund will enable TLFF partners to focus on several potentially impactful projects, many of which are considered ‘un-bankable’ at present due to challenges such as a lack of an established track record, a sub-standard feasibility studies or a lack of domestic precedent for the business model.

“Tropical forests are under severe threat due to unsustainable agriculture.” said Susan Gardener, UNEP Ecosystem Director. “Through public financing, the TLFF can help direct generous amounts of private capital towards investments in sustainable land use practices. Not only will this be crucial for ensuring the survival of forests and their inhabitants, through the continued provision of vital ecosystem services, but it will also open up new employment opportunities – with the aim and potential to improve women’s economic empowerment. We are pleased to partner with the government of Canada, which will be leading the way in this area.”

About the Tropical Landscapes Finance Facility (TLFF) – TLFF’s objective is to bring long-term finance to projects and companies that stimulate green growth and improve rural livelihoods. For more information, visit www.tlffindonesia.org