This $118 million mutual fund pays companies in carbon credits
Monday, January 8, 2018
By Anya Khalamayzer
What does the growth of a smallholder milk farm in Kenya have to do with the success of institutional investor SAP?
The Livelihoods Carbon Fund, a newly launched impact investment fund, ties global sustainable economic development to emissions reduction from Danone, SAP, Schneider Electric and five other corporations. Launched Dec. 11 — just before the International Climate Summit in Paris — the fund aims to reach about a $118 million investment in ecosystem restoration, agroforestry and renewable energy projects next year in Africa, Asia and Latin America, which will avoid or sequester up to 25 million tons of CO2 over 20 years.
“The Livelihoods fund creates a link between these worlds,” said Bernard Giraud, co-founder of the Livelihood and Danone’s former senior sustainability advisor. “Companies invest in the fund, which finances projects that improve the lives of rural communities while mitigating climate change.”
What’s unique about this mutual fund (which divides risk among several investors) is that dividends are paid out in carbon credits, not cash. Using the principle of additionality — where an investment allows a new sustainability effort to exist — companies can voluntarily offset their greenhouse gas emissions along with their own carbon-reduction efforts while providing resources to vulnerable communities around the world.