BONN, Germany (Landscape News) – The Tropical Landscapes Finance Facility in Indonesia announced its first transaction on Monday, a $95 million sustainability bond for a sustainable rubber plantation in a degraded Indonesian landscape.
PT Royal Lestari Utama (RLU), a joint venture between Barito Pacific, an Indonesian petrochemical company, and French tire maker Michelin is the first project to receive funds from the TLFF initiative, which was established by UN Environment, the World Agroforestry Centre (ICRAF), ADM Capital and BNP Paribas.
“This is a meaningful breakthrough that shows how blended finance can assist in the development of ambitious production and protection projects on a grand scale,” said Satya Tripathi, executive secretary at TLFF and senior advisor at UN Environment.
“It is a good beginning, but we have a long way to go in delivering the expected impact. It is our hope that this will open doors for other partners who are keen to make a difference by using a similar mechanism.”
In addition to a “lending platform” managed by ADM Capital, the blended finance initiative includes a ‘grant fund’ managed by the U.N. Office for Project Services (UNOPS).
The project in the Indonesian provinces of East Kalimantan and Jambi, which will involve collaboration from the World Wide Fund for Nature will help establish a conservation and community livelihood program.
Out of a concession area of 88,000 hectares, more than half will be set aside for community livelihoods, restoration and environmental conservation.
“The local community will be the true stewards of this collaborative process, and we look forward to working with them in the months and years to come,” Tripathi said.
This will help to create a buffer zone for the Bukit Tigapuluh National Park in Jambi, which is one of the last places in Indonesia where Sumatran elephants, tigers and orangutans co-exist, according to the press release.
At the same time, the natural rubber plantations in Jambi and East Kalimantan are expected to provide around 16,000 fair-wage jobs for local communities. When the plantations are mature, they will provide around 10 percent of all the natural rubber purchased by Michelin.
The finance facility was established with the avowed aim of funneling private sector finance into environmental sustainable development efforts, including lower carbon emissions and reduced deforestation.
We strongly believe that by leveraging ‘private finance for public good’, we can create a win-win model that ensures triple bottom-line returns for people, planet and the investors,” Tripathi said.