12 September 2017: The Global Mechanism of the UN Convention to Combat Desertification (UNCCD) and private sector asset manager Mirova have launched the Land Degradation Neutrality (LDN) Fund, co-promoted and structured by the two partners since December 2015. The Fund is described as the first-ever privately managed global impact investment vehicle designed to contribute significantly to land degradation neutrality (LDN), which is one of the targets under Sustainable Development Goal (SDG) 15 (Life on land). The launch event also presented some initial commitments from partners and investors to the Fund, which has a target size of US$300 million.

The LDN Fund launch ceremony took place at the close of the COP 13 High-Level Segment, during the ongoing 13th session of the Conference of the Parties (COP 13) to the UNCCD, in Ordos, China.

In his introductory remarks, Philippe Zaouati, CEO of Mirova, which will serve as the Fund Manager, said the LDN Fund will raise capital from public and private investors to fund large-scale land restoration and land degradation avoidance projects and programmes worldwide. Discussing the investment criteria and scope of the Fund, Zaouati noted that it will focus on sustainable agriculture and forestry, as well as other LDN-related sectors such as green infrastructure and ecotourism. He said the Fund aims to spend at least 80% of its targeted capital allocation in developing countries, “while producing appropriate risk-adjusted returns and complying with robust environmental and social standards.” He further noted that the Fund will seek to offer added value by offering financing solutions that are not readily available on the market and with more flexible arrangements than conventional investors and banks.

UNCCD Executive Secretary Monique Barbut expressed her pride at seeing the Fund enter its operational phase, noting it will improve access to capital for projects addressing land degradation. She thanked the governments of France, Luxembourg and Norway, and the Rockefeller Foundation for their contributions that allowed the Global Mechanism and Mirova to bring the project to fruition.

The Fund will “provide rounded solutions for commercially promising sustainable land management projects, in ways that are greatly beneficial to local communities,” said Chris Knowles, EIB.

Chris Knowles, Head of the Climate Change and Environment Division, European Investment Bank (EIB), described the LDN Fund as a vehicle to complement innovative financing instruments with a range of technical assistance tools. He said the Fund will “provide rounded solutions for commercially promising sustainable land management projects, in ways that are greatly beneficial to local communities.”

Roland Reiland, Deputy Head of Mission, Embassy of China, Grand Duchy of Luxembourg, announced Luxembourg’s decision to invest EUR5 million in the LDN Fund, stating they have supported its set-up since the early days as part of their commitment to international climate finance.

During their deliberations, COP 13 delegates have welcomed the formation of the LDN Fund and taken note of the findings of an independent evaluation of the process to establish the LDN Fund, which concludes, inter alia, that “…a robust, diverse project portfolio has been constructed, which in itself is a considerable achievement given the immaturity of the LDN market.” The evaluation report describes the LDN Fund as “a rare case study of how the UN system can undertake meaningful, deep engagement with the private sector.”

The Fund will be managed as part of Mirova’s dedicated natural capital platform, with a separately-operated Technical Assistance (TA) Facility under development to support promising sustainable land use activities and build up a portfolio of bankable projects. The TA Facility will be operated in partnership with IDH Sustainable Trade Initiative, and funded by public institutions or private donor including the Global Environment Facility. [UNCCD Press Release] [LDN Fund brochure] [Publication: Integration of Sustainable Development Goal 15 and related target 15.3 into the implementation of the UNCCD: Secretariat Progress Report to COP 13] [Publication: Evaluation Report: Support to the development of the LDN Fund]