Jenny Sansom from Environmental Funders Network and Tom Colborne from Esmée Fairbairn Foundation share progress from the Environmental Finance and Learning Fund: the projects supported and how the group are learning together to invest for environmental impact.
The Environmental Finance and Learning Fund (EFLF) is a collaboration between Esmée Fairbairn Foundation and Environmental Funders Network (EFN), now nearing the end of its second year.
It brings together a group of fifteen small trusts, foundations and individual funders who wish to learn more about environmental impact investing. These participants donated a combined total of £679k which Esmée matched 3:1 resulting in an allocation of £2.7m to invest into environmental projects aligned with Esmée’s aim to improve Our Natural World. Participants learn from observing Esmée's investment process, from the projects themselves, and through a three-year learning programme.
The EFLF has three main outcomes:
- Increase the funds available for investment into environmental projects, particularly for early-stage ventures with the potential to scale.
- Build the knowledge and confidence of participants
- Create a network of environmental investors with the skills to support each other and collaborate after the programme is over.
This is a learning fund, not an investment fund, so investment returns are recycled into new environmental investments as part of Esmée’s social investment allocation.
The EFLF Portfolio
To date, £2.5m has been committed to five environmental projects using a diverse range of investment mechanisms, with varying terms, returns and risk profiles, providing a snapshot of Esmée’s approach to building a balanced impact-first investment portfolio. The EFLF portfolio includes:
- An investment to support the Sheffield and Rotherham Wildlife Trust to purchase Ughill Farm, a 130 hectare site of important environmental significance. The Trust will learn about nature-friendly farming approaches, as well as conserving and restoring vital habitat. This investment has now been fully repaid.
- Equity in Woodland Savers, a new venture that will support communities to own and manage woodland, restoring their ecological health and protecting them into the future.
- A bridging loan to support the Kindling Trust, a community of sustainable food innovators in the North West, to buy Kindling Farm and develop a farming blueprint for the future.
- A convertible loan to Ooooby, a tech venture that supports small-scale agroecological farmers and food producers to sell directly to local customers.
- The Real Farming Trust’s Loans for Enlightened Agriculture Programme which supports small-scale agroecological farming enterprises with funding and business mentoring.
We expect the final investment to be made shortly, completing a high-impact portfolio that will provide rich learning for participants.
Learning and building confidence together
Participants attend quarterly learning sessions with expert speakers from Esmée's Our Natural World team, grants and investment portfolio and the wider environmental sector. They’ve also presented their own ideas and challenges in small groups, enabling them to compare experiences, gain different perspectives and share learning.
At one session we heard from the Wyre Rivers Trust on the financial collaborations to address flooding in the Wyre river catchment in the north west, which has involved creating leaky dams, ponds, rewetting of peat, and creating new woodland and hedgerows. The project has brought together a partnership of charities, government, utilities, insurance companies, funders and investors.
How it’s working: feedback from participants
Our recent mid-term survey provides encouraging insight into progress:
- 58% of respondents report that their environmental investing has already increased as a result of the programme.
- 50% plan to increase the funds they commit to environmental investments in the future.
- A third of respondents report that their environmental giving has increased as a result of the programme.
- 75% report increased confidence and skills for environmental investing.
Participants reported that they appreciate the chance to work with other funders, talk things through and hear their often very different perspectives and critiques on investment opportunities:
Going through the case studies with the Esmée Fairbairn team has … enabled many of the EFLF participants to contribute their expertise to discussions. I feel this is where I have learned the most. It’s also useful hearing such a diverse group’s perspectives on a potential transaction, as there are often quite different views.
EFLF Participant
The majority of participants told us that they have made useful connections through the peers and speakers they’ve been introduced to by the EFLF. The many benefits of this include finding out about new networks and syndicates, comparing their experiences with those of others, and meeting other investors which has given them confidence to go ahead with their plans.
What next?
There’s a lot more to learn and discuss in the second half of the programme as we focus on supporting and monitoring project progress.
The regulatory environment for Carbon Credits, Biodiversity Net Gain and Nutrient Neutrality continues to evolve before us, and we’ll continue to consider implications for projects and investors.
We’ll also be working with participants on the plan for what happens after the three-year programme finishes, as we continue to address the critical need for increased investment in early stage environmental innovation.
