Press Release: Convergence Awards Design Funding to Accelerate Sustainable Forestry and Ecosystem Restoration in Indonesia
Today, blended finance network Convergence awards a feasibility study grant to PT. Kandelia Alam (KLIA) to explore a blended finance solution in Indonesia focused on Sustainable Development Goal (SDG) 15 – Life on Land. This grant is awarded through the Asia Natural Capital Design Funding Window, funded by the RS Group.
The blended finance vehicle will aggregate financing opportunities for forestry concessions and allow concessionaires to work together on sustainable landscape development. Activities include sustainable forest management, ecosystem services, building biodiversity corridors, developing non-timber forest products, and promoting ecotourism in Kubu Raya. KLIA is a partner of IDH – The Sustainable Trade Initiative and part of IDH’s ‘Production, Protection, Inclusion’ Compact in the Kubu Raya District, West Kalimantan, Indonesia.
“This is a solution from Indonesia for Indonesia. We are delighted to fund a feasibility study grant toward a solution that aims to foster increased private sector financing for natural capital preservation, and that will set a strong example for sustainability and ecotourism in the country,” says Robert van Zwieten, Managing Director for the Asia-Pacific region at Convergence.
Agricultural croplands and rangelands represent the biggest challenge to biodiversity, and demand 55–69% of global conservation financing needs. Yet, few investable projects in the market exist that focus on protecting biodiversity, restoring forests, and reducing deforestation and degradation, making it difficult for commercial investors to participate. Regulatory complexities, challenging repayment models, and small ticket sizes further limit the participation of private investors.
KLIA, in collaboration with IDH, will lead a coalition of concessionaires in managing forests sustainably, which will be made investable through aggregation. The vehicle is expected to advance reforestation of over 5,000 hectares of degraded area, protection of over 40,000 hectares of mangroves, peatland, and forests, and support the livelihoods of nearly 25,000 people. Its success will also protect key species, such as the proboscis monkey native to Borneo.
PT. Kandelia Alam (KLIA) is an Indonesian private entity with significant experience in sustainable forestry in Indonesia and is a concession holder in Kubu Raya District, West Kalimantan. “Managing forests sustainably requires commitment and consistency” say Fairus Mulia, KLIA. KLIA has done significant work in partnership with IDH to establish the groundwork for this project. IDH brings together businesses, governments, farmers, and communities to build sustainable governance models in landscapes. Through the ‘Production, Protection, and Inclusion’ approach, IDH creates areas where agricultural products are grown sustainably while protecting and restoring natural resources and helping communities thrive.
“Innovation and investment are crucial to support sustainable landscape management. Convergence can help forestry concessions in Indonesia towards sustainable forest management that benefits the environment, economy and social inclusion”, says Fitrian Ardiansyah, Global Envoy for Nature-based Solutions at IDH – the Sustainable Trade Initiative and IDH’s Executive Chairman for Indonesia. This solution builds on achievements by IDH – the Sustainable Trade Initiative and partnerships between government, businesses, and civil society in Indonesia to improve sustainability in trade and value chains.
Protecting and restoring natural capital is an essential component of sustainable development for the private sector, local communities, and government. This work demands sponsoring and enabling innovative solutions that prioritize scale and private participation. Convergence’s Design Funding Program supports organizations to design and launch blended finance solutions that address these priorities.
About Convergence’s Design Funding Program
Convergence’s Design Funding Program operates as a market acceleration tool providing early-stage capital to support blended finance solutions in frontier markets and nascent sectors to accelerate the number of investible transactions targeting SDGs. Funded by the RS Group, The Asia Natural Capital Design Funding Window supports blended finance solutions that find new ways to enhance and protect the world’s stock of natural assets, including water, land, soil, air, plants, and animals, by attracting private investment at scale. This design funding program is the first of its kind focused on the Asia and Pacific, anchored by RS Group at USD 3 million. The window is currently accepting applications. The next deadline is June 3, 2021.
Convergence is the global network for blended finance. On top of market acceleration through its Design Funding program, Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence’s global membership includes over 200 public, private, and philanthropic investors as well as sponsors of transactions and funds. To learn more, visit www.convergence.finance.