In early 2013, Gunnela Hahn, head of responsible investment
for the 725 million ($811 million) portfolio overseen by
the Church of Sweden, convinced her board of directors to take
a leap of faith. The board voted to allocate 10 million
to the inaugural fund offered by London-based Althelia
Ecosphere, which aims to profit from investing in sustainable
land use in Africa, South America and elsewhere.
Part of a burgeoning field called conservation finance,
Althelias fund appealed to the Swedish church for several
reasons. I think the upside was very attractive, both
financially and from a sustainability point of view, Hahn
says. The diversification benefits were another selling point,
she adds: We preferred it to private equity; its a
real asset that you can see.
At 100 million Althelia, the managers of the Climate
Fund 1 look for opportunities that can generate multiple
revenue streams. Among the funds investments: $7 million
in financing for a $9.15 million farmer-owned cooperative that
oversees the long-term protection of 570,000 hectares of rain
forest in the Madre de Dios region of southeastern
Peru . Some of the money will go toward deploying
sustainable agricultural practices at more than 1,100 small
cocoa farms. When the project reaches full scale, it will
produce at least 3,200 metric tons of certified
deforestation-free organic and Fairtrade
cocoa annually, Althelia claims. Over the next seven years, the
investment will also prevent the emission of 4 million metric
tons of carbon from deforestation, the firm says, providing
more revenue in the form of carbon credits.
So far, the Althelia fund has paid off for the Church of
Sweden, according to Hahn, who says the return has been in the
Other investors in Althelia include
AXA Investment Managers and Credit Suisse Group.
Paris-based AXA IM contributes via its 200 million AXA
Impact Fund, whose investors comprise 14 insurance companies;
Credit Suisse has taken a stake on behalf of its institutional
and high-net-worth clients.
In January the Swiss bank and the McKinsey Center for
Business and Environment published a report called Conservation Finance From Niche to
Mainstream: The Building of an Institutional Asset
Class . This follow-up to a 2014 study by Credit
Suisse, consulting firm McKinsey & Co. and the World
Wildlife Fund focuses on the swift rise of conservation finance
toward mainstream acceptance and examines what must happen to
sustain that trend.