Investing in the ecosystem: Financing forest protection and inclusive growth
In sustainable finance, it is increasingly clear that capital alone cannot solve systemic environmental challenges. The success of an investment is not only measured by financial returns or hectares of forest protected but by the strength of the ecosystem that sustains it.
For many investors, this means looking beyond the project or portfolio level to consider the wider enabling environment: Are the local regulations providing an adequate scenario for companies implementing No Deforestation, No Peat, No Exploitation (NDPE) policies? Are government policies aligned with climate resilience? Do local financial institutions support climate-smart lending? Are there incentives for smallholders to adopt sustainable practices? When these conditions align, investments are not only de-risked, but they are also amplified.
SAIL Investments’ approach to transformational investment, via its &Green Fund
Since its launch in 2017, SAIL Investments (SAIL)’s &Green Fund has embodied this systems-level mindset. By investing in businesses across forest-risk commodities such as palm oil in Indonesia, cocoa in West Africa, coffee in Vietnam, and cattle in Brazil, the &Green Fund has shown that it is possible to grow production while protecting forests and supporting communities.
Each investment tells a story of transformation. These companies are proving that sustainable supply chains can thrive, but they also reveal how difficult it is for even the most committed agribusinesses to drive systemic change on their own.
Our investees are often pioneers in their sectors, but they operate within systems that may not yet reward sustainable behaviour. Supporting them to meet a Sustainable Value Creation Plan (SVCP) isn’t only good for impact, it also strengthens the business case and reduces investment risk.
Strengthening systems through partnership
Recognising this need, SAIL has deepened its collaboration with IDH. Together, they set up a new technical assistance facility (TAF), with the purpose to take a more integrated approach to strengthen the enabling environment for forest protection and climate resilient commodity production for the &Green Fund’s current and future investees.
IDH brings to this partnership a strong track record of bringing together governments, markets, and producers to co-create practical solutions and mobilise blended finance.
By partnering with global managers like SAIL Investments, we help shape the systems around investments, creating the conditions where sustainable production, forest protection, and inclusive growth become the norm, not the exception.
From theory to transformation
The reality of this approach can be seen in Brazil, where the &Green Fund’s investment in Marfrig, one of the country’s largest meatpackers, supports the company’s transition to a fully traceable, deforestation-free supply chain. Marfrig already holds full traceability of its direct suppliers and is close to achieving 100% traceability for indirect suppliers by 2025, following the pioneering commitment made by the company in 2021, as a covenant for the investment.
Investing in the conditions for change
As the climate and nature finance agenda matures, investors are beginning to view enabling environments not as a side issue, but as a core component of investment strategy. The partnership between SAIL Investments and IDH on this new TAF exemplifies this shift. From investing in sustainability, to investing for systemic change.
About IDH Invest
IDH Invest is a blended finance platform jointly developed by IDH and IDH Investment Management.
IDH Invest specialises in developing investable opportunities and managing high-impact funds to achieve market transformation at scale. Our funds under management offer de-risked investment opportunities that deliver social, ecological and financial returns.