HACIENDA SAN JOSE
Hacienda San Jose (HSJ) is an innovative cattle business focused on the cultivation and dissemination of superior genetics and beef production in the Vichada region of the Colombian Eastern plains. On 31 December 2021, &Green and HSJ concluded a COP 30 billion (approx. USD 7,7 million at the time of execution) 12-year long-term senior secured loan to support HSJ’s ambition to disrupt the cattle sector in Colombia and become the market leader in sustainable deforestation-free beef production. This transaction marks &Green’s first investment in Colombia and in a sector which is associated with poor land management, deforestation , and inefficient farming practices across the country, including in and around the Amazon biome.
&Green’s investment in HSJ will help transform the Colombian cattle sector, which is currently of low quality, inefficient, and associated with deforestation and ecosystem degradation. HSJ is currently operating on approximately 8,800 hectares of land and during the period of &Green’s loan, the business intends to expand to have influence over up to 180,000 hectares of productive land. HSJ will expand its area of influence by acquiring land, implementing its sustainable development model, and selling the productive land in blocks of roughly 1,000 units to private buyers that will agree to a long-term continuation of HSJ’s operational and sustainability management. HSJ is committing to the protection and restoration of up to 27,000 hectares of tropical forest within this expansion area, conserving all forest areas under its (future) management. In addition, HSJ will set aside an equal number of hectares of savannah as natural restoration areas, buffering the conservation forest.
HSJ will catalyze the development of the cattle sector in Colombia by expanding its sustainable intensification model, protecting and restoring forest, and fostering social inclusion and knowledge sharing.
HOW &GREEN’S TECHNICAL ASSISTANCE WAS USED IN THE HSJ TRANSACTION
To improve the prospects of achieving the Facility’s objectives, &Green has established a dedicated Technical Assistance (TA) budget to support its (prospective) clients in reaching the ESMS ‘s standards of &Green, which are required to qualify for financing.
Using the TA budget, &Green supported HSJ with the design of its Land Acquisition Tool (LAT), which was developed in a collaboration with Climate Focus, GANSO, and AMPLO. GANSO is a partnership between Climate Focus and the International Center for Tropical Agriculture (CIAT), created to transform areas with degraded pastures and soils into green, productive, and sustainable landscapes. Amongst other initiatives, they also developed the Aval GANSO standard for sustainable cattle management. AMPLO is a Colombian ESG consultancy, which developed the social component of the LAT and carried out a social risk assessment and stakeholder mapping exercise.
The LAT is designed to guide HSJ in its land acquisition processes. The tool merges the IFC PS , Aval GANSO requirements, and additional social safeguards, such as a screening for links to armed groups, in a comprehensive checklist. The checks are divided in an initial GO/NO GO quick screen, which is desktop-based and requires minimal resources, and a more thorough investment evaluation process. The latter requires site visits, including stakeholder consultations, and results in a cost/benefit analysis that helps inform HSJ’s acquisition decision. HSJ will integrate the tool in its existing systems, covering operational, financial, and legal checks.
LOOKING FORWARD TO 2022
HSJ intends to develop its first farm blocks and bring onboard new investors in 2022.
To do this, HSJ will start the acquisition process of new land, implementing the Land Acquisition Tool (LAT) to secure full integration of environmental and social considerations from the get-go.
In this first year following &Green’s investment, HSJ will work to establish a fully operational Environmental and Social Management System (ESMS), and hire dedicated a dedicated resource to manage the ESMS, LAT and Impact reporting of HSJ.
Furthermore, an Environmental and Social Advisory Board will be established to consult the Board on matters related to the sustainability of the company and its expansion strategy. This Board will include high-profile experts that can bring both environmental and social expertise to the governance body.