Letter from the Programme Manager

Dear reader.

FMO is excited to present the second half year report of Mobilising Finance for Forests (MFF). The programme was officially launched in February of 2021 with a £150 million commitment from the UK government. This year, the programme was expanded to £152 million. The additional £2 million commitment from the UK will finance the programme’s Evaluation Framework, which consists of Programme Evaluations as well as Scoping and Thematic Studies.

Much of the first half of 2023 has been spent on building a larger pipeline to meet the programme’s investment targets and on operationalising the new FMO Forestry Strategy. The market research carried out in Q1 combined with a series of on-site visits resulted in the development of an exciting pipeline that is diversified both in terms of business models and geographical scope. The diversification of the pipeline illustrates the ongoing operationalisation of the strategy.

Two key highlights of this half year were also the successful FMO Investor Dinner and P4F-MFF co-hosted conference: Investing in Forests Lessons Learned. These back-to-back events were held in London and attended by key commercial and public stakeholders for the sustainable Forestry and Land Use sectors (FSLU). The event design enabled participants to engage pragmatically about challenges and opportunities for private investments into FSLU. This approach was well received by stakeholders, and allowed for concrete, transparent discussions to take place, and for valuable insight to be exchanged throughout the conference. The conference also furthered the MFF-P4F collaboration and contributed to building the MFF pipeline.

In line with recommendations from the UK government, we have continued to ramp up the activities of the MFF TA facilities. The MFF TA Facility (Component 1) implemented a number Technical Assistance projects within the &Green fund's portfolio of companies. These include an evaluation of Marfrig's supplier monitoring and control procedures to support enhanced supply chain traceability. Another project looks at the development of a deforestation-free landscape approach within HDL’s sourcing area. The TA Facility (Component 2) played a key role in organizing the MFF P4F event. Terms of Reference for pre-investment TA project support were also developed in alignment with the UK government.

In May, MFF carried out its Annual Meeting. The two-day meeting focused on strategic discussions regarding the development of the programme. MFF received an A at its second Annual Review. We are happy with this score and will keep working towards implementing the recommendations of the UK Government.

We look forward to further developing the programme throughout the rest of 2023.

Outlook

The investment teams expect at least two CIPs to be passed by the end of the year.  These are exciting developments that put MFF well on track with its annual output targets and impact ambitions.

Over the past 6 months, FMO and the &Green Fund have prepared all required documentation for submission of a Funding Proposal to the Green Climate Fund (GCF) Board. In this proposal, FMO acts as Accredited Entity to allow &Green to request USD 189.35 mln concessional financing from the GCF. This funding is part of &Green’s strategy to mobilise private investments. The proposal was approved during the 36th Board meeting of the GCF, taking place from 10 to 13 July 2023 in South Korea.

The TA facility is also looking forward to a series of events. These include the release of an external knowledge product titled: Implementing Approaches to Carbon Credit Integrity: How can investors put their policies into practice?’. The product is the result of MFF’s DFI Carbon Community of Practice (COP). The COP provided a platform for five DFIs to exchange expertise on commercial and integrity considerations of carbon credit investments. We also look forward to a first Institutional Investors COP session looking at financial structures of Nature Based Solutions funds, and to the release of an ESG guide for forestry investments.

In the next section we present the following unaudited financials:

  • Statement of financial position

  • Statement of comprehensive income

  • Statement of cash flows