Partnership for sustainability

Nature provides the foundation for our existence and is the basis for economic activity. And yet it is facing ever more pressure from human intervention: mining, intensive agriculture, deforestation and unregulated fishing are increasingly threatening natural resources. In many parts of the world, the impacts of this are already clearly visible: soils are degrading, forests are disappearing and water is polluted.

We are seeing unprecedented biodiversity loss. According to figures from the IPBES biodiversity platform, up to a million plants and animals are at risk of extinction. This means that today, the rate at which species are dying out is at least ten times higher than the average rate over the last ten million years.

When humans encroach on nature

The coronavirus pandemic offers a good example of the importance of an intact environment to human survival. Scientists have identified that around 60% of all existing illnesses and more than 70% of new illnesses seen in humans have zoonotic origins, meaning that they have jumped from animals to humans. The more humans invade areas of nature, the higher the likelihood that pathogens are able to spread.

To halt this dangerous trend, new economic practices are needed that rely on sustainability instead of resource depletion, alongside effective nature conservation. This is why KfW established the eco.business Fund in 2014, on behalf of the Federal Government and working in partnership with Conservation International and Finance in Motion.

First in Latin America, now in Africa too

The fund exclusively supports companies that replace conventional production processes with sustainable alternatives. Its work started in Latin America but it has since the end of 2019 expanded to cover Sub-Saharan Africa. The two regional funds work separately but under a single umbrella.

The fields of assistance in both regions are: agriculture and forestry, fishery, aquaculture and ecotourism. To this end, the fund brings together private and public investors who assume different levels of risk. The involvement of public institutions creates a risk buffer for other investors – this makes the fund more appealing and attracts more private capital. In Latin America, private investment now accounts for 44% of the total volume.

A lot has been achieved already

The fund grants “green credit lines” to local banks, which in turn extend loans to local companies, or gives loans directly to companies. These must have sustainability certificates from the Rainforest Alliance or FSC, for example, or be striving to acquire them, or be implementing a sustainable measure in line with the green “fund principles”. Since the fund’s formation, loans totalling around US-Dollar 3 billion have already been disbursed to ultimate borrowers in Latin America.