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Cooperative carbon finance

Reversing the trend of land degradation, food insecurity and stagnating food productivity necessitates bold leadership and risk-taking. The transition to a more sustainable, carbon-negative and climate-smart agricultural system requires significant amounts of financing. 

Traditional ways of thinking and financing currently hinder the financing of the implementation of agroforestry at scale. Loan size, tenors and pricing at commercial terms do not match the demand required for sustainable long-term change. Additionally, microfinance has its limitations.  

Meanwhile, our carbon removal units are ex-post and only generate farmer income approximately 2 years after planting. That’s why we — together with Rabo Foundation — are developing a complementary, ground-breaking financing solution to bridge this pre-finance gap. 

Our approach 

Our unique approach is threefold, a mechanism that results in fairer interest rates, allows for longer tenors, and mitigates currency risk. This is due to three factors.  

1. Proceeds flow from Acorn to investors

Firstly, with the international Carbon Removal Unit revenues, a unique situation occurs: (parts of) the pay-out can be withheld to repay the investments in agroforestry. Carbon proceeds flow directly from Acorn to the investor(s). No cash flows from local farmers to Acorn or the investor are required, and no unwanted FX risks occur.  

2. Farmers are financed by future CRUs 

Secondly, there is no cash-out for the farmer, which could end up pressuring their livelihoods. Rather, the investment is financed by future CRU proceeds. 

3. Risk is reduced for investors and farmers 

Thirdly, the cooperative character of carbon finance reduces risks for both investors and farmers due to operational risk pooling. After all, farmer communities repay as a group, so there is no exposure to individual farmer (temporary) defaults. 

To download the visual representation of our approach, please click here. 

Note: Acorn is investigating various financing solutions. The CCF is currently in formation.

The project pipeline

Acorn currently has a project pipeline consisting of 23 projects, involving over 550.000 farmers in 10 countries. For more insight into this pipeline, its structure, and its risks, please contact us directly using the contact information below. 

High-level fund characteristics 

  • Total target size Cooperative Carbon Fund: EUR 100.000.000 – 250.000.000

  • Fund structure: Closed  

  • Investment horizon: 8-10 years 

  • Interest rate: Target of 8%  

  • Targeting group: Smallholder farmers   

  • Geographic focus: Global scope, particularly in South-East Asia, Sub-Saharan Africa and Latin America, including Least Developed Countries (LDCs)  

  • Investment ticket size:  Preferably EUR 25.000.000 - 50.000.000 and/or 10% of the fund size

  • Repayments: Based on CRU sales, via direct cash sweep mechanism 

Contact 

The fund is expected to kick off in Q1 2023. For more information, please reach out to Max.Berkelmans@rabobank.com or Margreet.Muizebelt@rabobank.com

Team

Margreet MuizebeltFinance LeadLinkedIn
Max BerkelmansBusiness Consultant FinanceLinkedIn

Project partners

gizrenatureOne acre fundSolidaridadFarmstrongkaderes

Buyers

microsoftSC logoBainDLL logoFalcon Coffee

Strategic partners

maastricht universityPlan vivothird millenum allianceWUR

Remote sensing partners

52impactspace4goodsatelligenceagerpoint logo

Project partners

logo wetpaveda logocomacofarm Africatrees 4 Kenya

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