Katharina Cavano l Palladium - Jul 26 2023
Partnerships for Forests and the Blended Finance Taskforce Launch “Funds for Nature” Database

Partnerships for Forests (P4F) and the Blended Finance Taskforce (BFT) have joined forces to launch the “Funds for Nature” Database, an initiative designed to address some of the financing challenges faced by nature-positive businesses in emerging markets. The database provides a free platform that connects companies with investors wanting to deploy capital into sustainable land use, regenerative agriculture, forests and other natural ecosystems.

P4F, which is jointly implemented by Palladium and Systemiq, works with nature-based businesses to combat deforestation, enhance sustainable land use practices, and contribute to the restoration of vital forest ecosystems.

In parallel, the BFT provides technical and fundraising support to companies in the P4F portfolio. By offering hands-on support to engage with investors, improve project bankability and facilitate connections with commercial and catalytic capital providers, the P4F-BFT partnership acts as a critical intermediary, helping equip small businesses across the tropical belt with the necessary tools to attract funding and improve their investment readiness.

Katy Brennan, BFT forests lead at Systemiq, emphasises the challenges faced by entrepreneurs trying to scale nature-positive businesses across the tropical belt – especially when it comes to accessing early-stage funding and risk capital. “Searching endlessly for the right type of financing can be resource-intensive and time-consuming for small businesses,” she explains. “Even established companies with international networks find it an extensive process. It's essential to find a match in terms of geography, sector, financing instrument, ticket size and year of disbursement."

Katherine Stodulka, Chair of the BFT adds that accelerating access to capital is critical to scaling nature-based solutions. “The current system often kills innovation because of high transaction costs and inefficient intermediation. It doesn’t need to be that way.”

To address the accessibility challenges faced by small businesses, the Funds for Nature Database was established to make it easier to identify the right kind of investors.

By providing a free and comprehensive compilation of funds dedicated to nature-based solutions, the database bridges the information gap and dramatically reduces transaction costs – facilitating connections and halving the time and resources required for businesses to find the right investor. This streamlined process not only eases the search for financing but also enables businesses to focus their efforts on advancing their nature-based initiatives rather than spending excessive time and resources on investor research.

The result will be an increase in finance for forest protection and restoration.

The database offers a collection of funds, researched and updated by Systemiq’s BFT team in partnership with P4F. The information includes details on sector preferences, geographical focus, fund size, and investment periods, allowing businesses to identify the best-fit investors for their specific needs. Nevertheless, it is important to recognise that launching the database represents just the initial phase of an efficient matchmaking process. By actively contributing to the accuracy and usefulness of the database, funds and collaborators can collectively enhance its effectiveness in fostering meaningful connections between businesses and investors.

Brennan emphasises that while assisting companies to find investors is a valuable aspect of financing forest protection and restoration, it represents just a fraction of the overall solution. Financing forest protection and restoration requires a comprehensive approach that also includes technical guidance, tools to support growth and a strong enabling environment for sustainable businesses to thrive and give investors confidence. Any approach to solving funding, technical and policy gaps needs to be systemic to have a meaningful impact.

The P4F-BFT “Funds for Nature” Database compliments the Pipeline Accelerator database launched last year, which addresses the supply side of the equation by helping investors find suitable nature-based businesses. "Investors often ask us for more pipeline options or struggling to locate the right companies. The Pipeline Accelerator database addresses this demand," Brennan explains.

"What makes the databases unique is that they are freely accessible and not hidden behind a paywall. We want them to be live, public resources where funds and companies can connect and be added to the database,” she concludes.

Partnerships for Forests (P4F) is funded by the UK Foreign COmmonwealth and Development Office and implemented by Palladium and Systemiq. For more, read ‘Partnerships for Forests Reaches 1B Milestone’ or contact info@thepalladiumgroup.com.

The Blended Finance Taskforce is a global coalition launched in 2017 to tackle barriers which prevent capital from flowing to a net-zero, nature-positive, and inclusive economy. The Taskforce helps optimise, design and scale climate deals and blended vehicles in emerging markets and works with pioneers to develop innovative investment partnerships and products. The Taskforce is housed at systems-change firm, Systemiq. For more information, contact katy.brennan@systemiq.earth.