Sustainable palm oil production with a triple bottom line

FERDMAGASINET 02-2019 NMI with partners meeting Governor  foto NMI in

The Nordic Microfinance Initiative (NMI) and the Norwegian Ministry of Climate and Environment are collaborating in relation to a microfinance fund for Indonesia, the objectives of which are to conserve the rainforest, provide a better life for local small-scale farmers and, over the longer term, deliver a sustainable return for both state and private investors.

“The new fund will help farmers in Indonesia to produce more palm oil without having a detrimental impact on the rainforest in their area. The rainforest has until now been very much at risk of being cut down in order to make space for oil palm plantations, which has negative environmental consequences”, explains Arthur Sletteberg, the Managing Director of NMI, in an interview with Ferd Magazine.

Capital and knowledge
Two reasons why the rainforest is cut down are inefficient farming and poor access to capital. It will now be possible for small-scale farmers in West Kalimantan on Borneo to apply for cheap loans. And, with a little capital and the help of some agricultural expertise which will also be financed by the fund, farmers will be able to significantly increase the amount of oil they harvest from their existing plantations. This, in turn, will enable them to feed their families without having to clear new areas for production. The farmers will also for their part have to undertake not to clear any rainforest, and the fund will ensure this condition is actually met through a combination of satellite surveillance and employees on the ground.

Broader public-private collaboration
NMI was set up in 2008 at the instigation of the owner of Ferd, Johan H. Andresen, and was from the start a unique public-private collaboration that sought to achieve social targets while also generating an attractive return for investors. It has since then performed well in both these areas. The involvement of the Norwegian Ministry of Climate and Environment, however, represents an important broadening both of this collaboration and the areas in which the fund works.

“Climate change measures are now becoming a key target, giving us a triple bottom line for the first time”, concludes Arthur Sletteberg.

The fund will have approximately NOK 90 million to invest in a first phrase. This will enable loans to be granted to around 3,000 farmers, which will prevent 750 hectares of rainforest from being lost. The long-term target, however, is to attract more investors and more capital to give the fund sufficient capacity to make loans to a total of 25,000 farmers. This would save around 20,000 hectares of rainforest, which would represent a reduction in greenhouse gas emissions of around 4 million tonnes of CO2 over a ten-year period.

Read the full article (only in Norwegian) in the Ferd Magazine.

Christian Halvorsen
Contact person
Christian Halvorsen
Head of Risk Allocation
+47 67 10 80 14

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