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ESG: Governance

EXECUTIVE PERSPECTIVE: New finance mechanism launches for forest protection

Gabriel Eickhoff

10 Oct 2018

In this example of finance merging with sustainability, the CEO of Lestari Capital, Gabriel Eickhoff, discusses a new initiative with Cargill to protect forests.  Tim Nixon, Managing Editor, Thomson Reuters Sustainability.

Tim: Please describe the Cargill project and your role.

Gabriel: Lestari Capital is focused on developing long-term (25 year) financing for conservation and restoration initiatives. Projects are paid to deliver results on the ground, through a financial vehicle designed by our company. Cargill’s financing to this first project helps the company meet a core tenet of its commitment to sustainable palm oil, by supporting biodiversity conservation and indigenous livelihoods in its sourcing area. Plans are already underway to link Cargill with a second project, in addition to other companies.

Tim: Is Cargill developing new supply capacity?

Gabriel: No, Cargill is ensuring existing palm oil product achieves sustainability certification. By financially supporting a conservation project, Cargill’s plantation in West Kalimantan will meet conservation finance requirements from the Roundtable on Sustainable Palm Oil (RSPO). Cargill sees landscape conservation and restoration as a core tenet of its sustainable supply commitments, along with efforts to expand market share for certified sustainable products.

Tim: What is this initiative developing a supply of?

Gabriel: Lestari Capital is helping to build a marketplace for verified results from forest conservation, peatland restoration and biodiversity protection projects (supply). We’re currently focusing on developing finance sources from commodity markets, such as palm oil supply chains (demand). We aim to scale this approach to meet demand from other industries, while also maintaining a focus on the rights of indigenous peoples through community forestry.

Tim: Is this land being converted to agricultural production?

Gabriel: No, the land is being protected from conversion to a commercial logging concession. Through Lestari Capital, Cargill is supporting a Community Forest (hutan desa) project in the Heart of Borneo region, which is home to endangered species, including orangutans and a highly biodiverse wetland. By adding an environmental asset to Cargill’s supply chain, the company is supporting a critical element of the natural climate solutions required to meet the objectives of the Paris agreement.

Tim: What could have happened without Lestari’s engagement?

Gabriel: The risks of running a conservation project for 25 years are daunting and our company mitigates those risks. Companies would likely struggle to identify a high-quality project that meets RSPO criteria, and then face difficulties addressing eventualities such as project failure or encroachment that go along with a 25-year contract. Our financial vehicle compliments the RSPO’s framework, by adding elements of transparency and quality through internationally recognized standards. We also have safeguards in place for inflation, project budget overrun and to manage environmental risks.

Tim: What is driving corporate interest in you, and who pays your bill?

Gabriel: Clients work with us because we effectively address stakeholder pressures by providing a credible path to action on sustainability commitments. We also deliver private sector efficiency to a traditionally donor-driven space by reducing overheads and pushing for greater scale. We want to move beyond CSR, and every day we strive to incorporate conservation into supply chain and other corporate costs, as we have done with Cargill.

We are a startup that has been incubated by donor organizations with a path to revenue sustainability once we reach scale. This work has been funded by donors because they see the potential for our vehicle to finance conservation and restoration more efficiently and on a greater scale, while strengthening demand for projects that protect critical areas.

Tim: What is the mission of your organization?

Gabriel: Lestari Capital was founded to address a critical financial gap for conservation and restoration initiatives. Lestari, which means “everlasting” in Indonesian, signifies our commitment to durable landscape-scale conservation and restoration outcomes through an efficient, scalable, market-based approach.


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