Land Degradation Neutrality Fund (LDN) is a blended finance vehicle investing in projects that directly or indirectly reduce or reverse land degradation. It invests debt (mezzanine, profit-sharing loans) and equity (minority and majority positions), with investment sizes ranging from $5-20 million and a tenure of 10 to 15 years. The target size of the fund is $300 million, of which 20-30% are reserved for first loss capital.59 Through its investments, the LDN aims to fill the market gap of providing financing with long tenure terms, flexible repayment structures and longer grace periods to land restoration activities.60 The fund is co-sponsored by the United Nations Convention to Combat Desertification, and investors include the EIB ($50 million) and French Agency for Development as anchor investors, private capital providers like Fondaction, BNP Paribas, and the de-risking partners IDB Invest, GEF and the Government of Luxemburg (amongst others). LDN also includes a technical assistance facility, which is managed by IDH, to provide pipeline for the investment fund. LDN’s goal is to transition half a million hectares of land to sustainable land management practices, expected to result in the storage of 35 million tons of CO2 equivalent and create or support 100 thousand jobs. Within its impact framework, the fund is also committed to promoting gender equality and social inclusion.61 An example investment of the LDN is the Urapi programme, which is, in partnership with four Peruvian coffee cooperatives, implementing agroforestry projects on 9,000 hectares of degraded land.62
59 10 September 2019. 2019. ‘PRI Awards 2019 Case Study: Land Degradation Neutrality Fund’. Principles for Responsible Investing. 10 September 2019. https://www.unpri.org/pri-awards-2019-case-study-land-degradation-neutrality-fund/4845.article.
60 ‘Land Degradation Neutrality Technical Assistance Facility (LDN TAF)’. n.d. IDH - the Sustainable Trade Initiative. Accessed 22 October 2020. https://www.idhsustainabletrade.com/landscapes/ldn-taf/.
61 10 September 2019. 2019. ‘PRI Awards 2019 Case Study: Land Degradation Neutrality Fund’. Principles for Responsible Investing. 10 September 2019. https://www.unpri.org/pri-awards-2019-case-study-land-degradation-neutrality-fund/4845.article
62 ‘Land Degradation Neutrality (LDN) Fund Makes First Investment towards Sustainable Land Management’. n.d. IDH - the Sustainable Trade Initiative (blog). Accessed 22 October 2020. https://www.idhsustainabletrade.com/news/land-degradation-neutrality-ldn-fund-makes-first-investment-towards-sustainable-land-management/.