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About this report
This Annual Report covers the activities of &Green that took place during the period 1 January to 31 December 2021. That said, it also covers more general themes such as the &Green investment approach and why we do what we do. The report is thus accessible for all readers, whether you have a detailed knowledge of &Green or this report is the first thing you are reading about us.
This 2021 Annual Report provides a comprehensive overview of the &Green universe, from our focused investment strategy, through our increasing portfolio of investments, up to our growing set of contributors and partners.
Compared to previous Annual Reports published since &Green’s establishment (2018, 2019, 2020), this year we wished to give a more visual and interactive experience to our readers. The digitalized Annual Report allows one to easily jump to different sections and the content has been layered to provide more detailed information if needed. A menu has been added on the left side to help navigate through the Report.
&Green’s financial and impact performance have been quantitively summarized in the 2021 Annual Impact Report and the 2021 Annual Financial Report, which can be found on chapter 12 and 13, respectively. These two documents can be downloaded as separate PDFs and provide the ‘hard figures’ behind which the narrative of the Report should always stand.
Lastly, we have defined those words that we feel are key to understanding the nature and scope of &Green’s activities; They look like this . All the defined words have been gathered in the ‘&Green Vocabulary’ chapter at the end of this Report (chapter 14).
With this Annual Report, we hope to demonstrate how &Green is bringing its purpose to life, while remaining committed to the highest levels of transparency in reporting and communicating on our progress.
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&Green's Purpose
In order to create and then maintain a truly sustainable planet that allows its people to thrive, the world needs to reach its global climate change mitigation and biodiversity conservation goals, while still being able to deliver on the growing demand for commodities.
Within that context, &Green supports the transformation of global supply chains by de-linking them from deforestation and producing a positive climate impact. &Green provides the financing to commodity businesses that are inclusive, sustainable and deforestation-free, and are commercially viable and replicable.
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2021 Highlights
&Green Highlights
ADDITIONAL USD 58.25 MILLION FUNDING INTO &GREEN
NEW TRANSACTION: MARFRIG USD 30 MILLION LOAN
NEW TRANSACTION: HACIENDA SAN JOSE USD 7.5 MILLION LOAN
USD 102 MILLION TOTAL PORTFOLIO
&GREEN RE-CONFIRMS INDONESIA AS A FOCUS COUNTRY FOR INVESTMENT
Operational Highlights
Four transactions received Technical Assistance (TA) in 2021, financed by &Green’s TA or the IDH TA Facility for &Green
For the second year in a row, our Investment Manager Sail Ventures has won the 2021 IMPACT Award as the Private Debt Provider of the year
In 2021, we started six new partnerships
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Letter from the Board
Listen to Audio
NANNO KLEITERP
Chairperson of the &Green Board of Directors
A YEAR OF ACHIEVEMENTS
We will look back on 2021 as a year of achievements which had fundamental long-term impact on &Green’s success.
We closed an investment from a leading global impact investor, FMO, the Dutch development bank. Through FMO we received additional funding from a leading climate change donor, the UK government. We expanded our geographic reach to Colombia and, early in the year, we made a strategic investment by financing the second-largest meatpacker globally in Brazil to set highly ambitious and impactful targets on becoming a fully traceable and a deforestation -free actor.
STRATEGIC PROGRESS
In the first quarter of 2021, &Green closed a landmark investment to finance an ambitious traceable and deforestation-free program of Marfrig Global Foods (Marfrig). Marfrig represents ca. 7.5% of Brazilian beef production moving through its slaughterhouses, and around 20-25% of the country’s beef exports. It is thus a significant market influencer.
&Green invested considerable time assessing and engaging with Marfrig to come up with what we regard as fair, but ambitious, targets that the company can agree to as hard contractual commitments as part of the loan agreement. This kind of transaction encapsulates what &Green is setup to do, i.e. supporting leading industry-actors in their transformation to being able to claim a sustainable and deforestation-free supply chain.
The Board is delighted that &Green is progressing beyond its initial focus countries (Indonesia and Brazil), closing its first transaction in Colombia upon the stroke of 2022.
Colombia is one of the most biodiverse countries in the world, with 60 million hectares of natural tropical forest , and is a relatively stable and growing economy. Furthermore, in &Green’s assessment Colombia’s environmental policy is progressive. That said, an informal and highly extensive cattle sector in the country drives not just deforestation but also general ecosystem degradation. We are happy to start a new partnership with a small but influential new actor in the cattle supply chain, Hacienda San Jose (HSJ). HSJ intends to disrupt the sector, bringing the best genetics, and environmental and social management from elsewhere in the globe and applying them to the local context.
COP26 thankfully went ahead, and &Green was able to conclude an investment from the Mobilizing Finance for Forests program of the UK government at the event. We are the first recipient of the program, managed by FMO, and are delighted to form a long-term partnership with the UK government. Besides this, we are happy to see the general focus shift to include a recognition of the importance of protecting global forests at COP.
More than 100 countries signed a pledge to eradicate deforestation by 2030. That is a bold objective. It is achievable, but will require significant interventions from actors such as &Green.
We intend to play our role in achieving this.
Operational Highlights
The financial performance of 2021 was in line with expectations, as &Green maintains its ability to preserve capital for investors. We are pleased that &Green broke-even in 2021, meaning costs (including initial ones when no income was being earned) have now been recouped from the proceeds of the portfolio.
Having said that, given &Green investments are long-term and the largest part of repayments from projects are paid in 8 to 12 years, the Board remains cautious about the expected financial performance of &Green and is managing the credit risk closely. &Green’s first investment, buying a TLFF Note to support Royal Lestari Utama, increased in risk during 2021, due to a lack of further investment from its shareholders.
In line with the previous year, no physical meetings were possible in 2021; however, the Board, Advisory Board and independent Credit Committee members met virtually with SAIL Ventures throughout the year.
Looking Ahead
2022 is another important year for &Green as we keep stretching for scale.
&Green is an open-ended investment approach that needs to reach a critical scale to be a relevant tool in actually achieving the deforestation-free world we want. Governments, and corporates, have increased ambition in 2021, by declaring 2030 as the date to achieve this. It will require substantial capital to showcase how this can be possible, and in 2022 &Green will be focused on growing its portfolio with its available existing funding but we also need to continue our efforts to bring in the funding needed to get to scale. Hence, fundraising is a core focus for the next couple of years.
Furthermore, in 2022 we intend to diversify the portfolio and pipeline as we seek opportunities in various new jurisdictions.
We hope that Covid will play less of an impact in 2022. Nonetheless, we exercise caution on the front and continue to work with a strong network of on-the-ground partners in relevant &Green geographies.
Finally, we remain committed to high levels of transparency. Our website and reports will allow all stakeholders to engage meaningfully with our approach and our portfolio. &Green continues to seek new ways to explain its purpose and theory of change approach and then link that to the impacts being generated by our portfolio.
We thank all the service providers and stakeholders of &Green for their dedication and support.
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The &Green Approach
WHERE we invest
Our focus sectors and Geographies
&Green’s focus sectors are those driving land degradation and deforestation in tropical forest regions and include agriculture (palm oil, soy, coffee, cocoa among others), cattle (beef and dairy), and plantation forestry (including rubber).
CATTLE
PALM
RUBBER
SOY
FORESTRY
COCOA
&Green focuses its investments 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 projects only where there is a clear investment rationale for how they play a demonstrative role in de-linking deforestation and land degradation from commodity production in a way that is commercially attractive and thus replicable.
Geographies and commodities of our current investment portfolio (as of 2021):
&Green intends to diversify its geographic exposure over the upcoming years to reduce portfolio concentration risk, limit the impact of specific sector or country volatility, and align with best practice fund management principles.
OUR FOCUS CLIENTS
&Green invests early in ambitious projects run by influencers who are able to transform industries towards sustainable, deforestation-free production.
Our clients are businesses that are directly or indirectly involved in commodity production. This includes producers of agricultural products, supply chains actors (e.g. traders or processors), service providers to producers, and potentially financiers of producers or value chains. The businesses we work with are innovators in their respective sectors and the projects that they embark on with our funding become blueprints that other actors in the sector can follow.
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SCOPE
The amount and quality of forest and/or peatland potential of the jurisdiction is significant and highly relevant from global perspective.
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AMBITION & STRATEGY
There is a clear strategy with the targets tracking the reduction of deforestation against historic trends in the jurisdiction.
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PROGRESS
Timely progress towards milestones indicated in the strategy of the jurisdiction, on a trajectory towards the targets for reducing deforestation.
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MRV
A transparent system is operational to monitor, measure, report and verify reductions in deforestation, and where relevant forest and peat degradation, in the jurisdiction.
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SOCIAL & ENVIRONMENTAL SAFEGUARDS
The jurisdiction shows progress towards implementation of the Cancun Agreement.