This story was originally published on USAID Green Invest Asia's website. See the original article here.
By Christy Owen, Chief of Party
April 22, 2021 (BANGKOK) – For us here at USAID Green Invest Asia, every day is Earth Day. After today, we continue channeling private investment into the…earth, literally. Soil. Agriculture. Forestry. We partner with businesses that are “sustainable” – from biochar to biomass- to support their capital raises with impact studies and advisory. We help these environmentally and socially sound companies measure and shrink their carbon footprints, advance low-carbon commitments, and successfully pitch investors.
News headlines tend to focus on threatened species, burning forests and exploited local communities. But through our partnership with 30 industry-led initiatives in Southeast Asia, we have first-hand counter-examples of how some businesses and financiers are more climate-savvy than ever, and the promise this holds for green global supply chains, climate change mitigation, and the low-carbon economy.
Almost all the world’s rice, rubber and coconuts is sourced from Southeast Asia, plus a growing portion of coffee. Massive growth in exports of timber and agriculture commodities in recent years from the region helps explain why the percentage of greenhouse gas emissions that come from agriculture and forestry is roughly double the global average. Agriculture commodities like palm oil, nuts, cereals and fruits contributed to the conversion of more than nine million hectares of forests into cropland from 2000-2015. (One hectare is roughly the size of one football field.) If those forests were still standing, there would be 85 percent less carbon dioxide emissions released. Such emissions have fueled more erratic, even fatal, natural hazards, destroyed both lives and livelihoods, and threaten to shrink economies in some of the hardest-hit places that can least afford the contraction.
The Development Bank of Singapore (DBS) estimated in 2018 that green finance (investments that improve the environment) opportunities in Southeast Asia until 2030 reached an estimated $220 billion.
But yet, investments in business that till the land can be a hard sell in emerging economies where natural hazards and possibly tenuous land tenure can chill even the most ardent environmentalist. From a record breaking $269.5 billion in climate bonds issued in 2020, only 5 percent is earmarked for land use. Energy, transport and infrastructure dominated climate finance. Some investors say there isn’t enough viable, investible green agriculture/forestry projects. Our technical assistance – which has taken us from Asia’s dairy farms to coffee fields, peatlands to plantations and resulted in more than $40 million of investment in three years– has shown us otherwise. Businesses and banks, big and small, are re-tooling, pivoting, evolving to excel in a post-pandemic, green economy where climate risks are investment risks.
Rabo Foundation, the social arm of global agri-lender Rabo Bank, piloted its first portfolio-level carbon accounting analysis of its agricultural investments in Indonesia, which informed how it will evaluate investments going forward. Forest Carbon is a carbon project development company based in Indonesia whose mission is to substantially reduce forest-based greenhouse gas emissions by providing technical services for restoration and conservation. Jacobs Douwe Egberts and Nestlé, the world’s two largest coffee roasters, are both advancing on low-carbon corporate commitments and updating their sourcing requirements by analyzing their coffee supply chains in Vietnam and Indonesia. Cassia Co-op is a sustainable cinnamon sourcing, processing and exporting business located in the world’s largest Cassia (type of cinnamon) production area in Kerinci, Sumatra, Indonesia, which is seeking finance to scale production to fill unmet demand. The Association of Banks in Cambodia is rolling out in member banks sustainable finance (investments that evaluate economic, social and governance criteria) guidelines, including gender training. An organic, wildlife-friendly rice company in Cambodia, IBIS Rice, transitioned its business model from the public to private sector with a capital raise that exceeded its ask by five times.
The ripple effect of these and other climate-smart standouts in Southeast Asia through global food, agriculture, and forestry supply chains is potentially far-ranging and game-changing. And that’s something we will continue supporting and celebrating not only on Earth Day, but every day.