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About this report
Welcome to the &Green Annual Report covering activities from 1 January to 31 December 2022. This report is designed to be accessible whether you have a deep insight into our work or discovering us for the first time. In addition to a comprehensive overview of our activities and expanding investment portfolio, we include information about why we do what we do, our investment approach and our growing network.
The Annual Report 2022 builds on the success of the digitalized version we published for the first time in 2021. A highly visual and interactive experience means readers can jump quickly between different sections to explore deeper detail through layered content.
For example, we have defined words key to understanding &Green’s activities. Hovering over a word that looks like this will show the concept definition. The left-hand menu provides support as a constant overview and enables full Report navigation.
A special focus in this years’ Report is the concept of transformational change and how we expect this transformation to look. &Green was created to drive transformational change across core global supply chains, and which is why we have thus chosen it as an underlying theme for the 2022 Report to make it easier for the reader to make a somewhat abstract concept clearer.
&Green’s financial and impact performance is captured in the 2022 Annual Impact KPIs (Section 11) and the 2022 Annual Financial Report (Section 13).
We are excited to present how &Green is bringing its purpose to life, creating transformational change while remaining committed to the highest levels of reporting transparency.
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&Green's Purpose
We have a vision of people thriving on a sustainable planet.
&Green was created within this context to finance the transformation of global commodity supply chains so that they can have positive climate and biodiversity impacts while still delivering on growth targets.
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2022 Highlights
&Green Highlights
NEW TRANSACTION: MERCON USD 20 MILLION LOAN
NEW TRANSACTION: FS USD 30 MILLION LOAN
NEW TRANSACTION: HDL USD 12 MILLION LOAN
USD 165 MILLION TOTAL CAPITAL DEPLOYED
USD 50 MILLION PARTNERSHIP WITH THE CENTRAL AFRICAN FOREST INITIATIVE (CAFI)
Operational Highlights
This year, we added 3 Full Time Employees (FTE)
Sail Ventures, our investment manager, won the 2022 Asset Manager of the Year – mid size Award.
Four transactions received Technical Assistance (TA) in 2022, financed by &Green’s TA or the IDH TA Facility for &Green
In 2022, we started 2 new partnerships
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Letter from the Board
A YEAR OF DEAL MOMENTUM
On the back of new investors in 2021, &Green closed and disbursed on four transactions within a 12-month period demonstrating we are building strong market interest, and we now have the systems and people in place to allocate funding effectively.
NANNO KLEITERP
Chairperson of the &Green Board of Directors
STRATEGIC PROGRESS
During 2022, &Green added Vietnam as a new jurisdiction to our portfolio. The team closed a corporate transaction with Mercon Group, a top 10 global coffee producer, that focuses our partnership on their Vietnamese sourcing strategy.
This transaction is timely given the EU reached agreement in December on a new law to prevent companies from placing commodities linked with deforestation and forest degradation onto the EU market. While the exact mechanics of the law are still being settled, coffee was listed as one of these commodities fueling expectation that the sector will need to provide evidence it is not linked to deforestation. Vietnam is one of the highest risk countries for the coffee sector. &Green’s efforts with Mercon fit into this agenda and we see opportunity with other actors in the supply chain as well.
In Brazil, we closed a transaction with a company buying corn from farmers in Mato Grosso. Corn is the farmers’ second crop for soy (main crop) and, through the client’s deforestation-free commitment to &Green, it is essentially a soy supply chain approach. The client is also making other impactful changes to its business with the support of &Green, see the portfolio section for more.
I was pleased to announce a planned partnership with the Central African Forest Institute (CAFI) at COP27. &Green intends to scope the potential in Central Africa over the coming years, backed by funding from CAFI and supported by the UN Development Program («UNDP»). The Congo Basin is the largest primary tropical forest in Africa and, with a lack of opportunities for the highest-growth population in the world, the forest faces a continuous and increasing cycle of deforestation. &Green will assess whether there are commercially scalable opportunities to address this threat over the coming years.
Operational Highlights
The financial performance of 2022 was in line with expectations as &Green maintains its ability to preserve capital for investors. Despite increasing our provisions on RLU, the financing was eventually repaid in its entirety with the &Green investment team managing the process well. We are disappointed to be out of that project, as we laid a lot of key foundations with the client for them to grow sustainably in the coming years. Nevertheless, with access to preferential pricing from a large parent company, RLU is primed to be a success and we wish them well.
The rest of the portfolio has been performing consistently, and costs came in under budget. This means &Green remained fiscally sustainable during 2022 having paid all its financing costs, the investment advisor, and all other operating expenses.
We remain vigilant however, given the Fund’s long duration and with principal repayments typically back-ended. The Board remains cautious about the expected financial performance of &Green and is managing the credit risk closely.
Unlike the past two years, &Green was able to have physical meetings in the year, and the Board met twice in The Hague (May and November). All governance bodies also came together for a day in November in which the current state of the Fund was discussed, as well as the Fund’s path forward to scale.
Looking Ahead
2023 is an important year to create a mechanism for scale for &Green. &Green is an open-ended investment approach which needs to reach a critical scale for it to be a relevant tool in actually achieving the zero-deforestation world we want. Governments, and corporates, upped the ante at Glasgow 2021 (COP26) by declaring 2030 as the date to achieve this.
In 2023, we will extend our efforts to bring in further new funding to &Green to allow us to meet our portfolio targets over the coming years. Besides engaging with leading climate donors, multilaterals and development banks, &Green is also deepening its understanding of the requirements for private investors to finance the further scaleup of this initiative.
We will continue to diversify our portfolio in 2023, bringing high value opportunities to the fore and showcasing to the market how financing can be put to work to support the transition towards deforestation-free and sustainable supply chains.
Finally, we remain committed to the highest level of transparency. Our website and reports, most of which can be made public, will continue to provide all stakeholders with the opportunity to engage meaningfully with our approach and our portfolio. The team at &Green continues to seek new ways to explain the mission and theory of change of &Green, and then link that to the impacts being generated by our portfolio.
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The &Green Approach
WHERE we invest
Our focus sectors and Geographies
&Green’s targets sectors linked to land degradation and deforestation . Sectors include agriculture (palm oil, soy, coffee, cocoa among others), cattle/dairy, and plantation forestry (such as rubber).
CATTLE
SOY
COFFEE
FORESTRY
PALM
RUBBER
We concentrate in selected geographies where globally significant commodity value chains are active and there is a clear risk of them being a driver of deforestation , today or in the near future.
&Green finances transactions where there is a clear investment rationale for how our financing will play a demonstrative role in de-linking deforestation and land degradation from commodity production in a way that is commercially attractive. This investment rationale leads to blueprint transactions.
Our current investment portfolio – geography and commodities; at the end of 2022 is:
*Total Portfolio excludes RLU as it was redeemed in the third quarter of 2022.
To mitigate portfolio concentration risk, and minimize the potential impact of sector or country volatility, &Green aims to diversify its geographic exposure in the coming years. This strategy aligns with the principles of best fund management practices.
OUR FOCUS CLIENTS
&Green invests early in transformative transactions led by businesses with the capacity to drive sustainable and deforestation-free production, influencing the industry and driving it towards a sustainable future.
We fund transactions to serve as blueprints which other sector actors can adopt and follow.
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SCOPE
Volume and quality of forest and/or potential of the jurisdiction hold substantial importance on a global scale.
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AMBITION & STRATEGY
Jurisdiction has a clear strategy with targets to track deforestation reduction against historical trends.
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PROGRESS
Jurisdiction’s strategy shows timely progress towards milestones on the path to achieving deforestation reduction targets.
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MRV
Jurisdiction has transparent monitoring, measuring, reporting, and verifying deforestation reduction systems. Forest and peat degradation systems where applicable.
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SOCIAL & ENVIRONMENTAL SAFEGUARDS
Jurisdiction demonstrates progress implementing the Cancun Agreement .