Fund of the year - Private debt: Finance in Motion's fund

Channels: IMPACT

Companies: Finance in Motion, Conservation International, KfW, ASN Bank, Calvert Impact Capital, IDB Invest, FMO

People: Jens Mackensen

In early 2020, the Fund expanded into sub-Saharan Africa, with the launch of a new sub-fund that seeks to transpose the blended finance vehicle's best work in Latin America and the Caribbean to a new region.

Jens Mackensen,Finance in Motion, which provides advisory and investment management services to the fund, called the expansion "a great example of building scalable solutions and replicating them in new markets".

The fund aims to promote practices that contribute to biodiversity conservation, to the sustainable use of natural resources and to mitigate climate change and adapt to its impacts, in Latin America, the Caribbean, and from this year, sub-Saharan Africa.

It was initiated and funded in December 2014 by Finance in Motion, Conservation International and German development bank KfW. Among its other backers are ASN Bank, Calvert Impact Capital, IDB Invest, FMO, the UK government and the European Commission.

It provides financing and technical assistance to financial institutions and businesses committed to environmental practices "in unique ecological landscapes" in these regions.

The fund invests in four sectors: agriculture and agri-processing; fisheries and aquaculture; forestry; and sustainable tourism.

It had about $383 million in assets under management as of June – up from $333 million the previous year – and its managers say they have made $437 million in cumulative investments since inception – mobilising more than $100 million in private capital.

The fund managers blend public and private financing – with public investors and donors currently contributing about one third of its total assets via a first-loss tranche, thereby providing a 'risk cushion' to attract investment from private institutional investors. An additional third is provided by international and development financial institutions.

The fund invests either via intermediaries or directly in businesses. In the case of intermediaries, these can be local financial institutions with which the fund works to deliver funding to businesses or producers or – in the case of sub-Saharan Africa – real-sector intermediaries, such as commodity buyers that are looking to enhance the sustainability of their supply chains and businesses seeking financing for green investments.

  • As of December, the fund managers say it has contributed to a range of environmental and socio-economic impacts, including:
  • Financing 261,000 hectares of farmland under sustainable management;
  • Maintaining an absolute carbon dioxide storage of 7.9 million tons through agroforestry activities;
  • Saving 4.2 million cubic metres of water; and
  • Supporting 360,000 jobs.

Jens Mackensen, chairperson of the fund board, said: "Financing sustainable business practices in agriculture, aquaculture, silviculture and sustainable tourism is what the fund does, however, to make this work 'stick,' the fund also focuses on channeling potential and existing resources to amplify impact in an enduring way... for example [by building] knowledge and capacities around sustainable production and green lending. The Fund is in it for the long term."

Delivering impact at scale

Elvira Lefting, managing director of impact asset manager Finance in Motion, explains why there is no substitute for local knowledge and technical expertise when it comes to delivering environmental and social impact at scale