Indigenous communities steward 80% of the world’s biodiversity—a precious resource in the face of escalating climate change. But both Indigenous communities and nature conservation receive woefully little funding.
A new report from social enterprise accelerator NESsT offers solutions to building sustainable bio-economies that satisfy local communities’ economic needs, create new opportunities and protect critical natural resources. In threatened biodiverse regions like the Amazon, “there have to be viable, sustainable, responsible ways to insure the livelihoods of people who live within. It can’t just be about straight preservation and conservation,” says NESsT’s Kirsten Dueck.
Since 2015, NESsT has invested in and worked with 50 small, mostly Indigenous-led businesses and cooperatives in the Amazon basin. Recurring themes across projects include a need for more patient and flexible financing, local network building, and strengthening value chains through procurement and infrastructure.
“The question cannot be just, ‘how do we move more money?’ but ‘what are the mechanisms for connecting that money to the ground in usable, sustainable ways?’” Dueck tells ImpactAlpha. “The Amazon is at the heart of our recommendations for how to do that, but there’s a lot of resonance with with agriculture communities everywhere.”
Capital coordination
Social enterprises in NESsT’s network need different types of financing, and often that means expending critical time and human resources applying for grants and loans and pitching investors. Coordinated, blended finance helps mobilize funders and enterprises around a shared mission and goals.
NESsT’s Lirio Fund, backed by IDB Lab, supports small agri-businesses in the Amazon Andes with a combination of flexible debt, recoverable grants and standard grants. It reinvests fund fees and interest into a technical assistance facility.
IDB Lab supports two other blended-finance bioeconomy initiatives in the region: one in partnership with nonprofit Conexsus and the Green Climate Fund, and the other with Impact Hub Manaus and the Amazon Bioeconomy and Forest Management Multidonor Fund.
Local network building
“Local community organizations and Indigenous federations provide entrepreneurs in the Amazon with an essential support network, in addition to access to markets and business assistance,” states the NESsT report.
The success of its portfolio enterprise Kemito Ene in Peru is enabled by relationships with a network of 18 Asháninka Indigenous communities and 33 annexes in the Ene River basin, and Rainforest Foundation UK, which has helped the organization secure impact bond financing.
AFIMAD, another portfolio enterprise in Peru, has gotten support with sustainable agroforestry practices from FENAMAD, an Indigenous federation, and from World Wildlife Fund, which provides technical support for environmental impact monitoring and other functions.
Scaling local investing
Few local or community-centered organizations can take in the kinds of big checks that institutional investors want to write. The key to scaling investments into such organizations is channeling it through what Dueck calls “enlightened intermediaries.”
“Enlightened intermediaries can deploy money in manageable amounts, based on input from and partners on the ground,” she says.
Models for deploying capital at scale into highly localized strategies exist. Thousands of community development financial institutions are a key capital artery for small businesses across the US. They’re now being leveraged to deploy green capital at scale through the Greenhouse Gas Reduction Fund. Raven Group in Canada is building a network and deal pipeline to funnel capital into Indigenous-led projects and enterprises in the US and Canada.
“Vast sums of money are manageable at scale,” says Dueck.