A longtime actor in mitigating climate change
Livelihoods Venture has been operating in sustainable development for 7 years now. In 2008, Danone, the Ramsar Convention on Wetlands and the International Union for Conservation of Nature (IUCN) created the Danone Fund for Nature with the following objectives: restore degraded ecosystems, redevelop local economies and combat climate change.
It was the beginning of Corporate Social Responsibility (CSR), and at the time, Danone, like most large corporations, was buying carbon credits to offset their emissions. Danone realized that it could instead offer added social and economic value while reducing its carbon footprint if it invested directly in project developers and NGOs carrying out ecosystem restoration projects to create, rather than buy, carbon credits. Rather than be a passive bystander, it could be an active player.
This ambitious idea led the Danone Fund for Nature to open up to other likeminded partners. The Danone fund became an independent entity and was rebranded as the Livelihoods Carbon Fund
. Nine other companies- Schneider Electric, Crédit Agricole S.A., Michelin, Hermès, SAP, CDC Climat, La Poste, Firmenich, Voyageurs du Monde- have since joined. The fund’s investors receive a financial return in the form of high quality, certified carbon credits.
Motivated by the success of its first model, Livelihoods Venture created a second fund this year- the Livelihoods Fund for Family Farming (Livelihoods 3F)- whose mission is to secure thriving livelihoods for smallholder farmers' communities through the widespread adoption of sustainable agriculture that delivers value across supply chains and landscapes. Investors include companies seeking to transform their supply chains, private impact investors and public development institutions seeking to maximize their social and environmental impact. For more info, click here
Key learnings from the Livelihoods' funds
Livelihoods Venture has drawn key learnings from its experience:
1) Climate change, environmental degradation and rural poverty are interlinked
The poor are most at risk from climate change. They have few resources to adapt from shocks, and live on the most vulnerable land because it is the most affordable. Most rely on agriculture or fishing, so ecosystems directly impact their revenues. Well-managed, healthy ecosystems increase productivity and help develop the local economy. For this reason, the Livelihoods Carbon Fund supports agroforestry, rural energy, and mangrove restoration projects in Africa, Asia and Latin America. To date, it has planted 130 million trees that will improve the lives of 1 million people.
2) New models are needed to engage the private sector on climate change
A recent executive survey conducted by the Economist Intelligence Unit found that 90 percent of business leaders believe that they have a role to play in building resilience against climate change. Since 2000, global losses from climate change are estimated to have cost $2.5 trillion with more worrying projections of the future impacts on GDP, growth and development. Companies today acknowledge the risks of climate change such as impacts on their supply chains, physical damage to factories and products, and reputational risk. The question is thus not whether we can harness the expertise and capital of the private sector to respond to climate change, but rather how to do so.
New financial models with results-based returns like the Livelihoods funds are needed. The private sector is used to rigorous key performance indicators and must see direct impacts of their investment on their business operations. Businesses have also realized that it’s no longer about a “sustainability strategy”, but rather a “sustainable strategy”- which means truly transforming their operations in a concrete way, rather than just for the sake of projecting a positive image.
The new Livelihoods 3F fund aims to significantly transform businesses’ supply chains. It helps project developers implement sustainable farming practices with smallholder farmers in developing countries. Its objective is to transform 200,000 hectares sustainably and improve the livelihoods of 2 million smallholder farmers.
Companies are able to test and implement large scale sustainable sourcing projects connected to their own supply chains through Livelihoods 3F. In return for their financial contribution, they can capitalize on collective learnings and gain access to likeminded partners. The fund’s founding investors- Danone and Mars, Inc. - buy millions of tons of raw materials annually. Just imagine the tremendous impact when other multinationals join this new alliance.
3) The necessity of putting a price on carbon
When polluting has a price, efficiency and innovation are rewarded. A fixed price on carbon will shift the burden for the damage back to those who are responsible for it. Instead of dictating who should reduce emissions and how, the price for carbon gives an economic signal and polluters will decide for themselves whether to reduce emissions, discontinue their polluting activity, or continue polluting and pay for it.
Pricing carbon isn’t a new idea. Some 40 countries already use carbon pricing mechanisms. However, what we currently lack is a global fixed price on carbon. Ahead of COP21, the UN Global Compact together with UNEP and UNFCCC secretariat and Caring for Climate partners are calling on companies to become Carbon Pricing Champions and to set an internal carbon price high enough to materially affect investment decisions to drive down greenhouse gas emissions.
What’s more, introducing a global carbon price is among the ten recommendations put forth by a special commission called by French President Francois Hollande to advise the French government – hosts of the upcoming COP21– on how to increase international climate funding from both the public and private sectors.
The report, entitled “Mobilizing Climate Finance: A Roadmap to Finance a Low-carbon Economy”
, was authored by the Canfin-Grandjean Commission, headed by France’s former Minister of Development Pascal Canfin and economist Alain Grandjean. It states: “Given the intense international discussion prior to COP-21, we propose that developed and emerging countries agree on a voluntary basis – and outside of the scope of the UNFCCC international agreement – to a ‘carbon corridor’ with a minimum target price of $15-20/ton of CO2 in 2020, and a maximum target price of $60-80/ton in 2030/2035.”
Livelihoods strongly supports a fixed price on carbon, as well as the continued development of rigorous carbon methodologies to better measure our progress. In partnership with the Ramsar Convention on Wetlands, it succeeded in registering a new carbon methodology for measuring carbon sequestration of mangroves entitled the “CDM afforestation and reforestation large-scale methodology.”
4) A real coalition is needed between the private and public sector
When faced with global challenges, no single institution can come up with solutions on its own, which is why a co-creative approach is essential to leveraging impact. Livelihoods’ funds offers a collaborative platform that facilitates the exchange of information and resources between experts and the private and public sectors.
For instance, each of its partner companies has the opportunity to go behind just financial contributions by providing technical and operational support to the fund’s project developers. Michelin- one of the investors of the Livelihoods Carbon Fund- recently sent one of its top rubber expert to train the Maya communities participating in an agroforesty project
implemented by Livelihoods Venture with the NGO Fundaeco in Guatemala to teach them how to best care for rubber trees. The local Maya population has never been exposed to this crop before.
Furthermore, Livelihoods Venture regularly organizes events to foster a sense of community between its partner investors, partner project developers, and partner institutions by spurring mutual capacity building and knowledge sharing. In 2011, Livelihoods Venture organized its first camp in Paris, France, to explore sustainable development practices through the sharing of best practices and methodologies. The 2nd Livelihoods Camp in Araku Valley, India (2012) gathered 140 people from 21 countries, while the latest edition in Ouagadougou (2015) gathered 150 people from 24 countries. (Click here to watch the video report)
Livelihoods Venture is strongly convinced that: “If you want to travel fast, travel alone. If you want to travel far, travel together.”
The COP21 is a pivotal moment for our society to take real action on climate change. Livelihoods Venture is optimistic that new models and innovations can allow us to come together to collectively find the right solutions for tomorrow.