Livelihoods: What does the criticism on carbon offsetting programs inspire you?

“The tragedy about humankind is to wait for a disaster to happen before we tackle climate change with concrete solutions. We need to urgently realise that environmental disasters can hit anywhere, at any time. In a world of interconnectedness, we should take this as an opportunity for businesses and nations in the developing countries to show how the whole idea of carbon offsets can be turned into high-scale projects with strong environmental, social and economic impacts.

This is exactly what we have been doing with the Livelihoods Funds in Araku Valley, since 2010, when we launched the first carbon project together. The Livelihoods model combines two extraordinary ideas: instead of purchasing carbon from the market, we are in a mechanism of carbon sequestration, which means we invest in parts of the world with land that need to be restored and populations that are ready to be involved. Second, the model helps eradicate poverty thanks to its strong economic development component. This is probably the smartest way to address several Sustainable Development Goals.”              

Livelihoods: What has been achieved in Araku valley since the launch of the first project in 2010?

“The valley of Araku was previously an eco-region that had been highly deforested. Together with the Livelihoods team, we helped plant 19 varieties of trees, among which 1000 hectares of coffee saplings was planted, that not only sequestrate carbon but also generate income. In the second phase of the project, launched in 2018, we are going one step further to transform the valley into a fully regenerative agriculture landscape and address several aspects of climate change simultaneously.

Instead of just looking at the crops produced per household, we are now trying to valorise a holistic approach. For example, solutions to build a regenerative forest, close to these people’s homes, to help them sustainably cut firewood and warm their houses. We observe and nurture land, cattle management and resources management, at the same time. When we explained this to the local communities, it made extraordinary sense. Instead of being perceived as the creators of climate change, these tribes are now becoming role models.

And this, we achieved thanks to the help of private companies that decided to act beyond their boundaries and make a deep change for the communities’ livelihoods.”

Livelihoods: What are the sustainable development goals addressed by this model?

“What we are achieving in Araku relies on an extremely holistic approach and I am not just referring to carbon sequestration or poverty eradication. We are also addressing gender equality, food security, nutrition security to name a few. In the deadlock of international political negotiations, here you have a grassroots and high-scale action plan, which should serve as an inspiration for world leaders! Specifically given the fact that the Livelihoods Carbon Funds are supported by private companies, which are otherwise accused of exploiting the planet resources. Here we implement a model where these businesses pave the way to modern, alternative action for climate diversity.”

This is also a huge opportunity to push the agenda on biodiversity preservation, and couple it with nutrition and balanced-diet issues. Because we are moving from monoculture and industrialised agricultural models to organic, knowledge-based regenerative agriculture. And we are now able to help these communities compete in global markets. It’s a whole set of benefits that this livelihoods initiative is leading to. Referring to it through the only semantics of the word “carbon credits” is a very limited way to express what we are achieving in Araku.”

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Photo credits: Hellio Vaningen / Naandi Foundation / Livelihoods Funds

Livelihoods: What is the Livelihoods-Mount Elgon project about?

Wangu Mutua: “The project is about supporting people trying to get out of a situation where life is not at its best. The farmers of Mount Elgon region are trying to afford medication costs, school fees for their children, a decent house to live in. Farming and milk production are their main source of income and their only solution to get out of poverty.

When we met Livelihoods Fund a few years ago, we were ending the pilot phase of an agricultural carbon project, focusing on soil carbon and food production. But the innovative model of Livelihoods Fund offered us the opportunity to explore the economic impacts generated for the benefit of local smallholder farmers. Together, we focus in developing economic opportunities that help increase milk production, support dairy cooperatives that could connect smallholder farmers to the market and build fully sustainable supply chains.”

Livelihoods: How can the project link carbon offsets with improved revenues for these farmers?

Wangu Mutua: “The Livelihoods model helps couple carbon sequestration with improved food production and farm productivity. On the one hand, farmers are provided with training on sustainable land management practices, that include nutrient management, agroforestry, livestock management crop rotation. All these practices have proved to be efficient to improve the farm’s productivity. On the other hand, the adoption as these sustainable farming practices sequesters carbon while improving soil fertility, increase tree planting and enhancing cow productivity. The quantity of carbon sequestered is turned into offsets provided to the fund’s investors, to reduce their carbon footprint. We are in a win-win situation where the impact generated by the project goes beyond carbon sequestration. This model is helping us tap into resources that would otherwise be out of reach to reduce rural poverty. We are now able to provide the farmers with impactful resources to achieve a decent living and at scale: the overall target of the project is to impact positively 30,000 families and convert 35,000 hectares of agricultural land using sustainable farming practices”.

Livelihoods: To this day, what has changed for the farmers everyday lives?

Wangu Mutua: “Most farmers in Western rural Kenya have no alternative source of income than the production from their farms. They invest a lot of time and sweat to make their farms productive, but most of the time the amount of effort they put it doesn’t lead to a satisfying outcome.

What we have achieved with Livelihoods Fund support is to contribute towards ensuring that the efforts farmers put in the farm, whether in producing milk, maize, or new land practices, help them achieve increased income and improved livelihoods. Our goal is to offer support so that their dreams and aspirations are aligned with what they can earn from their farm’s production for themselves and their families. Household Road Maps and Village savings and loaning are some of the activities promoted in the project to support this.

Today, the farmers who are highly involved in the project have improved their productivity. They can now get their children to school, afford medical care, improve their cows’ health and thus increase their milk production. Emotionally, all these achievements are essential because it gives them purpose to further pursue and succeed in their everyday business.”

Livelihoods: What has been implemented to improve market connection?

Wangu Mutua: “When the farmers try to sell their milk individually, they cannot get competitive prices, because the buyers prefer huge volumes to reduce transport expenses. Bulk buyers pay the price of milk depending on its volume. We have supported 15 cooperatives to date, to help the farmers get together, sell milk collectively, increase their volumes and therefore get better prices.

The Livelihoods model helped us to partner with Brookside Dairy, which is the number one dairy player in East Africa. Together we are building a sustainable supply chain for the benefit of the farmers. Brookside Dairy has committed to purchase milk from Mount Elgon during the whole duration of the project, which is 10 years.

These cooperatives also involve more and more young farmers, as they realize they can play an active role in agriculture and earn a living from it. Collecting and transporting the milk, bringing it to the cooperative and selling it at a good price, are all contributing to creating an attractive business for them.”

Photo credits: Gérard Tordjman / Livelihoods Funds

Livelihoods: What has been achieved within the Livelihoods-Yagasu project in the coastal areas of Aceh and North Sumatra?

Bambang Suprayogi: « What we have achieved together with Livelihoods is the restoration of an ecosystem of mangroves that had been fully destroyed in the past. The devastating effects of the 2004 tsunami showed us that mangrove forests played a key role in protecting the coastal areas and its inhabitants. Between 2011 and 2014, we planted 18 million mangroves on 5,000 hectares to rebuild a natural mangrove barrier, that is essential to maintain life in these fragile areas. In 2018, a new carbon project financed by Livelihoods investors is helping us restore 5,500 additional hectares of mangroves and sequester 2.5 million tons of carbon over 20 years! Both projects will represent a total area of 1,824 kilometres that are vital for the local populations.”

Livelihoods: What would you answer if you were being told that carbon offsets have no impact for the local populations?

Bambang Suprayogi: “I would answer that this is completely wrong. The Livelihoods Carbon Fund model helped us restore a large area of mangrove forests and improve the lives of the local communities. It is a powerful carbon sequestration model that goes beyond carbon offsets. Our project focuses on strong social and economic benefits for the local communities. For instance, in the second project, we are strengthening the development of economic opportunities, linked to the mangrove ecosystem, that benefit the populations directly. We are actually looking at mangrove forests as a whole with its fauna, flora and inhabitants working together to create a fully functional ecosystem”.

Livelihoods: Can you tell us a bit more about the economic activities generated thanks to the mangrove forests restoration for the local inhabitants?

Bambang Suprayogi: “Beyond planting mangrove trees along the coastline, we are now also planting mangrove trees in and around fishponds. We are helping restore previously degraded fish farms, as mangroves are an extremely rich ecosystem that provide a naturel and fertile habitat for fish, shrimp and crabs. Rebuilding these fish farms thanks to the plantation of mangroves helps increase the fishermen income. This is what we call a silvofishery approach: developing fertile fish farms within the mangrove forests. We have developed a total of 14 fishpond communities in the project area. Fishermen have significantly increased their income.

But there are also a lot of by-products that can be extracted from the mangrove trees and sold to the market. One of the activities we are implementing with our teams in the field is batik production. Batik is the traditional textile coming from the mangrove plants’ fibres and dyes! A variety of colours can be extracted from the leaves, branches and roots of the mangrove plants, such as yellow, reds, browns, which are all-natural inks. We have been growing a batik community in the project area that involves 310 working women in the production process: including drawing the pattern, colouring, packaging and marketing. The batik is currently being sold in Jakarta airport, but we are pursuing our efforts to make this community grow and export the fabric internationally.

Food is also another product derived from mangroves: mangrove leaves can produce flour, chips, syrup and candies that we are developing with the local communities who are gathered into cooperatives to help them increase sales.”

Livelihoods: according to you, what is the next step for the project in the coming years?

Bambang Suprayogi: “The carbon project we have been implementing in Sumatra with the support of Livelihoods has proved to be efficient not only on the carbon level, but also regarding the support to local communities and biodiversity preservation. I believe it is now time to bring this model at a wider level, globally, while adapting it to local specificities. Instead of carbon sequestration, we should talk about mitigation and adaptation schemes. Because this is not a time of testing and spreading out ideas, instead it is a moment of focusing on what are the schemes that have brought impact, on all three levels, social, environmental and economic. A lot of actors talk about the carbon price for instance, whereas we should talk about resilience.

Livelihoods’ approach is very interesting in that sense, given the fact that it is a coalition of actors joining forces to build resilient environments, businesses and communities. This ecosystem of actors can now go further and spread its mission at large scale, showing governments and international organizations the way to bring a highly resilient model at global level.”

[1] According to a study published in 2014 by Wetlands International & The Nature Conservancy 

Photo credits: Hellio Vaningen / Livelihoods Funds

Ajanta Dey, Joint Secretary & Programme Director, Nature Environment & Wildlife Society (NEWS) local NGO

Livelihoods Venture: How did the Livelihoods-NEWS project in the Sundarbans start?

“Back in 2010, in NEWS, we were a team of 10, inventing models on how to restore natural ecosystems and submitting them to the government. Our priority was to restore the mangrove ecosystem in the Sundarbans, which is essential for the livelihoods of the communities, especially after the tropical cyclone had hit the region in 2009. We had the model, but the government financing sources couldn’t provide us with the right resources or availability to bring our mission at scale. The Livelihoods Carbon Fund was a huge opportunity for us to deploy a replicable model, with strong impact for the communities. From the beginning, Livelihoods and NEWS’ common goal was to find impactful solutions. And carbon offsetting was a powerful way to achieve this”.

Livelihoods Venture: what benefits did the Livelihoods-NEWS project bring to the communities in the Sundarbans?

“High-scale biodiversity preservation and improved livelihoods:

What is key about the Livelihoods Carbon Funds projects is that beyond carbon impact, they generate strong impact for biodiversity preservation and the livelihoods of local communities. The challenge ahead of us was huge: we had to rebuild an entire ecosystem of mangroves, that constitutes a natural barrier against flooding, but that is also rich in biodiversity. The Sundarbans provide a unique ecosystem and a rich wildlife habitat that was getting threatened and particularly depleted in the biosphere region. What we have achieved together is the restoration of 5,200 hectares of mangroves that have helped improve biodiversity significantly. Fish, birds, shrimps and other crustaceans are back. Today, we count 500 crab collectors instead of 50 before the project was launched, in one afforested island alone and a big bird colony has developed there.”

“The project relies on a strong economic inclusion for the benefit of the local communities:

Second, the Livelihoods Carbon project relies on a strong economic inclusion. It was entirely built with the local communities and adapted to their local needs. At the beginning it was not easy: we had to convince the marginalised communities in the Sundarbans to join the programme. We spent months discussing closely with the communities to explain to them the dimensions of the project, select the areas to restore, select the mangroves species, prepare the nurseries before plantation. We also spent a lot of time structuring our work to implement growth surveillance, reporting and make sure we had the right framework to succeed in our mission in the long run as it is a 20-year project.

During the first four years, the inhabitants of the project’s area, specifically women, invested a lot of time and dedication to prepare the nurseries, transport and plant the trees, water them during the dry seasons and protect them as they grew.

Today, when the village inhabitants visit the mangroves, they are all dressed in green sarees, to show they are on “mangrove watch”, forming a green brigade. They fill in their reports, watch how the trees grow, check their viability. What strongly stands out after 10 years of project implementation is how proud and strongly involved they remain. We count more than 300 mangrove representatives who are fully integrated in the programme and have become the real actors of mangrove restoration.”

“We created the Badabon Harvest brand to develop income generating activities for the farmers:

Badabon Harvest is a brand and programme that uses the increasing demand for fresh, natural and organically cultivated food in Kolkata as an engine for community development in Sundarban.

Learn more here.

In exchange of their time spent to pilot the mangroves growth, we decided to run a program to develop economic opportunities for them and facilitate connections with the Kolkata market where there was a strong demand for fresh, natural and organically cultivated food. In 2018, we created the Badabon Harvest brand with a group of marginalised farmers, essentially the mangrove stewards,  to help them improve their revenues through livestock breeding, organic products commercialisation, improvement of agricultural practices, fish farming etc. This was a profound transformation for NEWS: we now had a different approach from research-based nature conservation to field action-based conservation linked livelihood development along with facilitating the developing of business activities. Through the Badabon Harvest brand, their own company, the farmers now sell their products to the Kolkata market, and this has been achieved thanks to the Livelihoods support which managed to link mangrove restoration with strong economic opportunities for the local communities.”

Livelihoods Venture: what has been the carbon impact of mangrove restoration?

“Another key component of the Livelihoods Carbon Fund model is that it relies on upfront financing. This is a unique feature in impact financing: companies invest at risk in the project. But financing mangrove restoration is profitable for these companies and for the planet. Mangroves are among the best carbon sequestration agents: they stock a lot of carbon in their roots and as they grow. This carbon is transformed into carbon offsets that are useful for the private companies aiming for zero net emissions by reducing the carbon emissions in their value chain and by offsetting what they cannot yet reduce.”

Livelihoods Venture: In which ways did the Livelihoods Carbon Fund help bring NEWS’ mission on nature conservation at scale?

 “NGOs like ours dream about scaling up. The Livelihoods project and our many interactions with the Livelihoods team have transformed us in many ways: our vision, our identity, our capacity to work with the local communities. It has opened many doors with policy makers, partners, fish producers. Just because of the scalability, we had to spread this model of conservation in the Sundarbans, on both scientific and ecology levels. We have widened up our activities and helped our organisation moving from pure conservation focus to conservation linked income generating activities for the local communities. It has been a long and fruitful journey. Protecting or restoring nature cannot work if local communities are not envolved.

As an organization, we moved from 10 employees, including 1 accountant and in 1 office, to 38 employees, 5 accountants and 5 offices! In the Sundarbans, now everybody knows us as “The Green Party”.

Livelihoods Venture: What challenges await the carbon offsetting projects in the next years?

“We need to move on to building integrated mangrove projects. We need to work on the whole value chain of the mangrove ecosystem, hand in hand with the government, smallholder farmers, civil society organisation, Institutes, exporters, importers… because this really is a multi-stakeholder mission.

At global level, carbon offsetting projects are necessary to restore key natural ecosystems and reduce CO₂ emissions. But they are not the only solution. Today, we need stronger political action and policies to reduce CO₂ emissions efficiently, but also to store carbon in soil and forests. It is particularly true for developed countries but also for developing economies like India. The Livelihoods Fund relies on a model that links two different worlds: developed and developing countries, the private and the public sectors’ challenges for the communities and the environment.”

Photo credits: Hellio Vaningen / Livelihoods Funds

“We launched a First Carbon Fund in 2011, with the ambition to support companies in their carbon-neutral approach, while preserving natural ecosystems and the most vulnerable communities that are affected by global warming. Our investment model is based on supporting climate-friendly companies that are looking for carbon credits with high social and environmental value.”

Bernard Giraud, President & Co-Founder of Livelihoods Venture.

Why launching a new Livelihoods Carbon Fund?

Bernard Giraud: « We are observing a strong acceleration in the needs of companies that make commitments to reach carbon neutrality and are setting goals to reduce their carbon footprint, and at the same time to offset their unavoidable carbon emissions. The financial sector is also starting to get involved, as it is looking for investments that couple profitability and high environmental impact.

The Livelihoods Carbon Funds rely on 10 years of experience in impact investing, and in financing large-scale projects in what can call the “green infrastructure”. We launched a First Carbon Fund in 2011, with the ambition to support companies in their carbon-neutral approach, while preserving natural ecosystems and the most vulnerable communities that are affected by global warming. Our investment model is based on supporting climate-friendly companies that are looking for carbon credits with high social and environmental value.

Together with Livelihoods’ partner companies, we have built a robust model that has enabled our first two Carbon Funds outperform and deliver carbon offsets that are consistently above business plan projections. The new Livelihoods Carbon Fund #3, which will be created in 2020, will accelerate and allow both companies and financial investors benefit from this opportunity.»

What makes Livelihoods stand out from other impact funds?

Bernard Giraud: « The robustness of our projects relies on the strong involvement of communities that benefit from Livelihoods’ investments in restoring natural ecosystems, agroforestry, regenerative agriculture and sustainable energy. We invest only when we are convinced that the project will be carried out over the long term by highly involved local communities and partners who have demonstrated their ability to implement this kind of projects successfully.

Livelihoods provides upfront financing to plant millions of trees, provide trainings to the farmers in sustainable land management, soil restoration, production and distribution of rural energy solutions. All benefits go to the local communities, from increased fish stocks thanks to the restoration of mangroves ecosystems in Africa and Asia, to coffee and fruit from the Araku valley in India. In return of its investment, the Livelihoods Fund receives carbon credits that are audited and certified under the highest international standards.

Our specificity relies the fact that we have built a coalition of companies that are investing in our funds and that receive the carbon credits in proportion to their investments. The investors of our Livelihoods Funds, can take part in governance decisions and be highly involved in the projects. They are therefore in a position where they can monitor the quality of their investments, have a strong visibility of the generated impacts, unlike in other carbon credits purchasing scenarios from the carbon markets.”

What’s in for corporate and financial investors in the Livelihoods Carbon Fund #3?

Bernard Giraud: “LCF3 can interest two types of investors: on the one hand, corporates that need carbon credits to offset their unavoidable carbon emissions, and financial investors on the other hand who are looking for impact investments.

A company that invests in equity  in the Livelihoods fund receives high quality environmental and social carbon credits annually at their production cost and in proportion to its investment in the fund. In return, it benefits from a combination of carbon credits from a large investment portfolio, which helps multiply investment opportunities and reduce the investment risk simultaneously. The new Carbon Livelihoods Fund (LCF3) also helps companies make carbon purchasing commitments to financial investors as the fund combines equity investment and carbon credit purchases.  Thus, the company has the possibility to program its carbon credit supplies over time according to its reduction and offsetting goals by selecting its amount of investments both in equity and carbon purchasing.

Financial investors who invest in the LCF3 fund in equity benefit from an annual dividend distribution mechanism that ensures profitability. Financial investors are protected from the risks of fluctuating carbon market prices because all the carbon credits generated by their investment in LCF3 are purchased in advance by major companies according to a pre-negotiated price mechanism in the launch of the fund, which ensures a good balance of interests between financial investors and corporates.”

Beyond carbon credits, what are the other impacts generated by the Livelihoods Funds’ investments?

Bernard Giraud: “First, we measure and verify the carbon impact of our investments very carefully. We work closely with a network of organizations specialized in the certification of carbon credits according to internationally recognized methodologies. All our credits are certified under Gold Standard or Verra, which are the main voluntary carbon standards in the carbon market.

Beyond carbon, the core goal of our projects is to generate a strong social, environmental and economic impact for the populations involved. In each project, we select which United Nations Sustainable Development Goals (SDGs) will be impacted and we set up the goals and impact measurement criteria. For example, our mangrove restoration project in Senegal, launched in 2009, has planted 80 million trees on 10,000 hectares, which is the size of the city of Paris. Over 20 years, the project will sequester about 800,000 tonnes of carbon, but also improve the lives of local communities in 450 villages. In 2018, a study conducted by La Tour du Valat, a scientific organization specialized in marine and coastal ecosystems, measured the social and economic impacts of our mangrove restoration programme in Senegal. The study outlined a sharp increase in fish and shellfish stocks (4,200 additional tonnes per year), restoration of rice fields protected from land salinization, increased incomes for fishermen, women’s groups and farmers. What is important to highlight is that the project has been fully adopted and implemented by the local communities who have expressed a strong feeling of pride, among the 800 villagers who answered the survey. Communities being fully involved in the projects is a key component of the Livelihoods Funds.

What are the key success factors of the Livelihoods Funds and how is risk management anticipated?

Bernard Giraud: “We select the projects and partners we want to invest in very methodically. Livelihoods Venture, which is the social business responsible for project design and monitoring by contract, has developed strong expertise in these types of projects. The Livelihoods Venture team is a group of around twenty specialists: agronomists, forestry experts, carbon specialists, and all of them have strong field experience in the countries where we operate. Each project requires between 6 months to one year of technical and financial structuring with local partners, before they are submitted to the Fund’s Investment Committee.

We apply risk management rules, defined with our investors, including in the diversification of the typology and location of projects, local partners. We ensure a project planning and phasing along time to verify achievements and close field monitoring, by the Livelihoods teams.”