Impact Investment Initiative Launched to Support Sustainable Palm Oil Farmers in Indonesia
In a bid to mitigate deforestation while enhancing the livelihoods of small farmers, a significant initiative has been launched involving key players in sustainable agriculture. Abler Nordic, a renowned impact fund manager, along with Temasek Foundation, a philanthropic entity based in Singapore, and Musim Mas, a producer of sustainable palm oil, have come together to introduce the Sustainable Oil Palm Replanting Initiative (SOPRI) in Indonesia. This strategic partnership aims to facilitate access to financing and resources for smallholder farmers, allowing them to sustainably replant oil palms and thereby increase their incomes while preventing further deforestation.
In Indonesia, more than 40% of palm oil cultivation is managed by small farmers who are facing significant challenges due to aging oil palms that yield less fruit. As a result, replanting these palms has become both a pressing necessity and an expensive endeavor. Without affordable financing options, some small farmers might be tempted to expand into rainforest areas, inadvertently contributing to rampant deforestation and climate change.
The SOPRI initiative is part of Abler Nordic’s broader Climate Smart Fund, which is currently in a pilot phase supported by funding from Norway's Ministry of Climate and Environment. This fund combines public capital, philanthropic resources, and private investments to create deforestation-free value chains and support projects enhancing the resilience of small farmers.
The Temasek Foundation adds a vital layer to this initiative by providing catalytic capital aimed at securing loans for small farmers, reducing their financial risks and thus lowering the costs of financing for these marginalized communities. In its initial phase, the SOPRI project will support 400 small farmers across 400 hectares in Sumatra, offering them long-term loans for replanting, financial literacy training, assistance in achieving sustainability certifications, support in land title acquisition, and participatory village planning to promote responsible land use. In exchange for this support, farmers will be required to refrain from forest encroachment, a commitment that will be monitored through satellite surveillance and on-site inspections.
This project aims to demonstrate that sustainable replanting is not only financially feasible but scalable. Future phases intend to expand its reach to more than 20,000 small farmers. The Climate Smart Fund will act as the lead organization, managing financial transactions and coordinating implementation with local partners such as Koltiva and Bank Amar.
Musim Mas will provide technical assistance to help farmers achieve sustainable palm oil certification and access markets, while Livelihoods Funds will bring expertise in training and certification, helping farmers transition to sustainable practices. Besides replanting, the project will also investigate climate-resilient agroforestry models, integrating oil palms with shade trees and profitable cash crops, thereby improving soil health, regulating microclimates, and supporting farmers' adaptation to climate change.
Looking ahead, Abler Nordic aims to scale the Climate Smart Fund from its initial $10 million to $40 million at the first closing, leveraging a mix of investor capital, guarantees, and grants to implement concrete and sustainable climate actions at scale. Arthur Sletteberg, CEO of Abler Nordic, emphasized the importance of building long-term relationships with local farmers and communities, reiterating that their approach is complex and innovative but demonstrating promising outcomes thus far. "We believe we have the right model and risk mitigation strategies in place to expand the Climate Smart Fund and bring about meaningful long-term change for both farmers and the climate," he stated.
Sébastien de Royer, Senior Project Manager for Southeast Asia at Livelihoods Ventures, highlighted that their focus is on long-term solutions that tackle challenges at their roots. "Through this partnership, we aim to equip small farmers with the technical support and advice needed to transition to sustainable and resilient agricultural systems," he noted.
Rob Nicholls, General Manager of Projects Partnerships at Musim Mas, echoed the sentiment that this initiative transcends mere financial assistance; it's about empowering farmers with the knowledge and resources necessary to adopt sustainable practices. "We believe that through collaboration and engagement, we can positively impact both the environment and the communities involved in palm oil production," he added.
Heng Li Lang, Head of Climate and Livability at the Temasek Foundation, proclaimed that this trial initiative is poised to become a game-changer. By unlocking financing with catalytic capital, small farmers can sustainably replant without bearing enormous financial risks. The Temasek Foundation is committed to fostering this public-private philanthropic partnership for nature-based solutions, ensuring positive environmental impacts while paving the way for scalable and meaningful long-term solutions.
In Indonesia, more than 40% of palm oil cultivation is managed by small farmers who are facing significant challenges due to aging oil palms that yield less fruit. As a result, replanting these palms has become both a pressing necessity and an expensive endeavor. Without affordable financing options, some small farmers might be tempted to expand into rainforest areas, inadvertently contributing to rampant deforestation and climate change.
The SOPRI initiative is part of Abler Nordic’s broader Climate Smart Fund, which is currently in a pilot phase supported by funding from Norway's Ministry of Climate and Environment. This fund combines public capital, philanthropic resources, and private investments to create deforestation-free value chains and support projects enhancing the resilience of small farmers.
The Temasek Foundation adds a vital layer to this initiative by providing catalytic capital aimed at securing loans for small farmers, reducing their financial risks and thus lowering the costs of financing for these marginalized communities. In its initial phase, the SOPRI project will support 400 small farmers across 400 hectares in Sumatra, offering them long-term loans for replanting, financial literacy training, assistance in achieving sustainability certifications, support in land title acquisition, and participatory village planning to promote responsible land use. In exchange for this support, farmers will be required to refrain from forest encroachment, a commitment that will be monitored through satellite surveillance and on-site inspections.
This project aims to demonstrate that sustainable replanting is not only financially feasible but scalable. Future phases intend to expand its reach to more than 20,000 small farmers. The Climate Smart Fund will act as the lead organization, managing financial transactions and coordinating implementation with local partners such as Koltiva and Bank Amar.
Musim Mas will provide technical assistance to help farmers achieve sustainable palm oil certification and access markets, while Livelihoods Funds will bring expertise in training and certification, helping farmers transition to sustainable practices. Besides replanting, the project will also investigate climate-resilient agroforestry models, integrating oil palms with shade trees and profitable cash crops, thereby improving soil health, regulating microclimates, and supporting farmers' adaptation to climate change.
Looking ahead, Abler Nordic aims to scale the Climate Smart Fund from its initial $10 million to $40 million at the first closing, leveraging a mix of investor capital, guarantees, and grants to implement concrete and sustainable climate actions at scale. Arthur Sletteberg, CEO of Abler Nordic, emphasized the importance of building long-term relationships with local farmers and communities, reiterating that their approach is complex and innovative but demonstrating promising outcomes thus far. "We believe we have the right model and risk mitigation strategies in place to expand the Climate Smart Fund and bring about meaningful long-term change for both farmers and the climate," he stated.
Sébastien de Royer, Senior Project Manager for Southeast Asia at Livelihoods Ventures, highlighted that their focus is on long-term solutions that tackle challenges at their roots. "Through this partnership, we aim to equip small farmers with the technical support and advice needed to transition to sustainable and resilient agricultural systems," he noted.
Rob Nicholls, General Manager of Projects Partnerships at Musim Mas, echoed the sentiment that this initiative transcends mere financial assistance; it's about empowering farmers with the knowledge and resources necessary to adopt sustainable practices. "We believe that through collaboration and engagement, we can positively impact both the environment and the communities involved in palm oil production," he added.
Heng Li Lang, Head of Climate and Livability at the Temasek Foundation, proclaimed that this trial initiative is poised to become a game-changer. By unlocking financing with catalytic capital, small farmers can sustainably replant without bearing enormous financial risks. The Temasek Foundation is committed to fostering this public-private philanthropic partnership for nature-based solutions, ensuring positive environmental impacts while paving the way for scalable and meaningful long-term solutions.
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