Investing in Southeast Asia’s sustainable businesses: Notes from USAID Green Invest Asia’s journey

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Christy Owen, Chief of Party, USAID Green Invest Asia

The first month of a new year is always a time of reflection.  When USAID Green Invest Asia completed its first year in 2018, I couldn’t help but think of what we’ve learned so far as we tackled the challenges – and opportunities – of increasing private investment for sustainable land use in Southeast Asia.  These five key first-year truths are carrying us into 2019:

  1. Not all money is created equally. Businesses have a wide variety of financial needs depending on their size, development stage, assets base and long-term growth vision. This requires a broad understanding of what type of finance is out there and how to mobilize it best.  From development finance institutions to impact funds, venture capitalists to commercial banks, USAID Green Invest Asia has engaged with some 50+ investors with an interest in agriculture, forestry and other land use in Asia to determine the best fit. Exploring innovative finance mechanisms such as blended finance instruments or examining loans tied to environmental, social, and governance (ESG) criteria, we continue to expand awareness of how sustainable finance must become more than a “nice to have.”
  2. Vetting sustainable business is dirty-boots work.  Our team made dozens of trips to survey operations of just as many companies. We pored over hundreds of pages of company financials. We logged hundreds of hours on calls to places ranging from the Netherlands to Ho Chi Minh City.  Of more than 100 companies we contacted in 2018, we are directly engaging with 10, with more transactions under review. These companies are in various stages of due diligence – from desk to field- but it is clear there are no shortcuts to gaining ironclad confidence in an investment.
  3. Doing the right thing isn’t so easy. There are agricultural or forestry business that have decided to become more sustainable, whether it is to get a foothold in a multi-trillion dollar, growing sustainable product marketplace, shareholder pressure, UN Sustainable Development Goals alignment or personal conviction. But it’s hard to go green, and even harder to measure what isn’t.  How do you measure your carbon footprint when the emission for a product grown in the shade can differ from that same product grown in the sun? We took 78 carbon measurement calculators on the market, analyzed their appropriateness for our business clients, and kept narrowing the field until we found the most accurate, multi-purpose tools for land use. Carbon assessment has been the number one request from businesses and investors.
  4. A sustainable supply chain starts and ends with more women.  We are finalizing a four-country study on women in the coffee value chain in Southeast Asia, and another one on the role of women driving sustainability, that interviewed more than 4,000 people – mostly women – in Cambodia, Singapore, Philippines and Vietnam.  Based on preliminary findings from both studies, we can confidently conclude women play a critical role in coffee production, but more women are needed to increase productivity and quality to meet growing global demand. And not just to save the morning espresso.
  5. Public-private sector partnerships are tough marriages. Anyone who tells you otherwise isn’t telling the whole truth. It involves two entirely different work cultures, vocabularies, even leadership styles (when was the last shareholder meeting you attended with consensus-led decision-making?) But to work along the entire supply chain, it requires both sectors with their distinct clients, histories, strengths – and liabilities. Responsible business requires worlds colliding and people passionate enough to work toward a future that places a higher societal and economic value on long-term returns – versus short-term profits – from Southeast Asia’s forests and land.

Christy Owen

As we ease into 2019, we raise a toast to all those who risk breaking with tradition to forge new customs, collective truths and ways to do business.

USAID Green Invest Asia supported a client running a rubber plantation in Indonesia (Royal Lestari Utama) to provide, at maturity, 10 percent of Michelin’s natural rubber worldwide. We will support New Forests, a sustainable real assets manager with investments in Malaysia, Indonesia, and Laos, that was acquired through the world’s first forestry equity fund and is dedicated to sustainable forestry in Southeast Asia.

USAID Green Invest Asia supported a client running a rubber plantation in Indonesia (Royal Lestari Utama) to provide, at maturity, 10 percent of Michelin’s natural rubber worldwide. We will support New Forests, a sustainable real assets manager with investments in Malaysia, Indonesia, and Laos, that was acquired through the world’s first forestry equity fund and is dedicated to sustainable forestry in Southeast Asia.

We can’t find and support such companies quickly enough, given the urgency of the task to improve land use. From organizing a private sector dialogue on sustainable rubber in Vietnam (the world’s third largest rubber exporter) to facilitating the first learning lab on sustainable agriculture in Asia for the Aspen Institute of Development Entrepreneurs or advocating the need to increase private investment in sustainable land use at responsible business forums, more than 1,000 people heard from us in 2018.

We hope to count you among those we work with in 2019. Connect at info@greeninvestasia.com or www.greeninvestasia.com.

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