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.
For 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.
LinkedIn: Daniel Farchy
Favourite tree: Diterocarp
Founding Director and Host: Shauna Matkovich - The ForestLink
Producer and Editor: Magdalena Laas - Unscripted Creatives
01:20
Daniel’s career path
03:44
Multilateral funding & its limitations
07:36
What happens with ROI?
10:14
What should investors be aware of when exploring an partnership with a multilateral
16:18
Spectrum of investor profiles
17:49
Blended finance definition
22:24
An alternative way – a waterfall
27:29
Pension funds – allocating more capital to nature forestry, regenerative agriculture
29:39
Where do negotiations get sticky between multilaterals and private investors?
35:16
Examples where investors pulled out?
38:43
Tips on engaging institutions for fund managers
40:16
Actionable advice
42:33
Contact details
Nature by MaxKoMusic/Soundcloud
Sopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud
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