Multilateral Investment in Forestry - with Daniel Farchy

Today, I’m joined by Daniel Farchy, an expert in multilateral finance who has worked across the World Bank, the International Finance Corporation (IFC), the European Investment Bank (EIB), and the Green Climate Fund (GCF). In this conversation, Daniel describes the development and impact mandate behind most multilateral finance institutions. We talk about blended finance (particularly what structure works well for forestry) and the power of concessional capital to crowd in more risk-averse investors. Daniel explains the conundrum of the finance available in capital markets compared to the relatively small need for climate and nature solutions – where legally restricted allocations mean the finance pool is not as big as we think. We discuss the heavy lifting that multilateral or DFI finance can do in screening and due diligence. Conversely, this can also be perceived as a downside, as the investment process in such a partnership takes more time.QuoteFor asset owners, that's [forest investment] very attractive because if you're a pension fund, and you need to be able to deliver, a boring, steady, predictable return over 10 number of years, it's great to have that kind of thing in your portfolio because that gives you a certain degree of sustainability of return, which you will not get in much more volatile sectors.Useful ResourcesGreen Climate Fund (GCF)LinkedIn: Daniel FarchyFavourite tree: Diterocarp Production TeamFounding Director and Host: Shauna Matkovich - The ForestLinkProducer and Editor: Magdalena Laas - Unscripted CreativesTimestamps01:20Daniel’s career path03:44Multilateral funding & its limitations07:36What happens with ROI?10:14What should investors be aware of when exploring an partnership with a multilateral16:18Spectrum of investor profiles17:49Blended finance definition22:24An alternative way – a waterfall27:29Pension funds – allocating more capital to nature forestry, regenerative agriculture29:39Where do negotiations get sticky between multilaterals and private investors?35:16Examples where investors pulled out?38:43Tips on engaging institutions for fund managers40:16Actionable advice42:33Contact detailsSound LibraryNature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/SoundcloudSign up now for the ForestLink’s newsletter, where you’ll receive technical advice, reflections, and best-practice guidance to support you with your forest-linked investment strategy or business straight to your inbox. Hosted on Acast. See acast.com/privacy for more information.