Land Degradation Neutrality Technical Assistance Facility (LDN TAF)

As investments in nature are needed more than ever, and are increasingly gaining traction, the challenge is to identify environmental and social risks and to demonstrate positive impacts associated with investing in nature-based projects in a standardized and comparable manner. To help create a clear track record of projects that can be assessed on risk-return-impact profiles, a certain degree of standardization is needed, while maintaining scientific rigor.

The LDN TAF therefore supported the LDN Fund in developing a methodology for measuring and tracking progress on LDN impact at investment project level, directly tied to SDG target 15.3. This was done by partnering with Trends.Earth, an initiative by Conservation International, GlobalGeoHub, and in close consultation with the UNCCD scientific community. Building on the UNCCD’s LDN Scientific Conceptual Framework, the methodology looks at three sub-indicators: land cover, land productivity, and soil organic carbon (SOC).

Based on a one-out-all-out principle (each of the three LDN sub-indicators needs to showcase either a stabilization or improvement), a positive overall change indicates land increasing in productivity and health, and land degradation being reversed. Most indicators are measured using remotely sensed satellite imagery, complemented for selected cases by field-level soil sampling. The LDN TAF supports investees of the LDN Fund in setting an LDN baseline using this methodology, while building capacity with project developers to integrate continuous monitoring of LDN into their operations, and (if relevant) aligning this work with local government target setting units. This not only allows companies to report on progress and comply with environmental and social action plans, it also enables them to practice adaptive management, minimizing land degradation risk and optimizing positive environmental, social and financial returns resulting from restoring land.

The methodology, including the first two pilot studies, can be downloaded here.

The LDN TA Facility is strongly linked to the LDN Fund. The TAF will only support project which are considered potential investment projects by the LDN Fund. In this, besides the LDN Fund website and financing criteria, good sources of information are:

• EIB’s Natural Capital Financing Facility: Investing in Nature: Financing conservation and nature-based solutions.
• World Resources Institute: Glossary of Financing Instruments
• World Resources Institute: Attracting private investment to landscape restoration: A Roadmap
• Online community of the WWF Landscape Finance Lab
• Draft Checklist for Land Degradation Neutrality Transformative Projects and Programmes
• STAP Guidelines for screening projects

The aim of the LDN TAF pre-investment support is to mobilize project proposals of higher technical quality, and with greater potential for Sustainable Land Management and restoration impacts and broader environmental and social co-benefits for the LDN Fund, and as a result for LDN Fund to develop a balanced portfolio of projects selected for investment.

For pre-investment support, the LDN TAF selects projects that have potential to be invested into by the LDN fund, and be investment-ready within 24 months.

The LDN TAF can support projects that have potential for LDN Fund investment with TA for:

(i) Enhancing technical, operational and financial design and structures;

(ii) Project preparedness support related to broader social and environmental impact.

In order to be eligible for LDN TAF pre-investment support, a project needs to demonstrate it meets the LDN TAF eligibility criteria.

The list of eligibility criteria, those of the LDN Fund, and those of the TAF, can be found here.

The application process for the LDN TAF pre-investment knows 5 stages:

• Stage 1:          An Expression of Interest, where the project developer and the project are screened for eligibility
• Stage 2:          Submitting a full proposal, including a budget
• Stage 3:          An organizational assessment
• Stage 4:          Project Selection Committee
• Stage 5:          Contracting

The TAF is governed by three bodies: the LDN Fund and TAF Strategic Board, the TAF Donor Committee, and the Project Selection Committee.

The TAF and the LDN Fund are overseen by a shared Strategic Board. Based on reports from the TAF and the LDN Fund the Strategic Board provides guidance to the TAF Donor Committee and the Fund Advisory Board regarding the LDN Fund’s strategy, regulatory and market-driven factors and LDN aspects. The Strategic Board also makes recommendations regarding high level resource allocation and prioritization of LDN TAF activities.

The Strategic Board meets twice per year, and summaries of the minutes are available on this website.

The second governance body of the LDN TAF is the Donor Committee. The Donor Committee provides aligned oversight for the operation of the LDN TAF, including reviewing the LDN TAF Annual Plans and Reports, and approving the Project Eligibility Criteria and Project Selection Criteria.
The TAF Donor Committee will interact with and take into consideration recommendations received from the Strategic Board.

A third governance layer in the LDN TAF is the Project Selection Committee. This Committee has the mandate to make the final decision on LDN TAF project selection, in line with the LDN TAF operational manual, including the Project Eligibility Criteria and Project Selection Criteria, as approved by the Donor Committee.
The Project Selection Committee ensures alignment with the LDN Fund by requiring a letter of no-objection for LDN TAF project applications.

The Land Degradation Neutrality Fund, co-promoted by the UNCCD, is a first-of-its-kind fund investing in profit-generating sustainable land management and land restoration projects that contribute to SDG 15.3.

The LDN Fund provides long-term debt and equity financing for sustainable land use projects that reduce or reverse land degradation. It is structured as a blended finance fund, pooling resources from both public and private investors committed to the goal of stopping land degradation. The LDN Fund is designed to offer financing solutions that are not readily available in the market, providing finance and strategic benefits in ways other investors or banks might not, e.g. longer tenors, longer grace periods, more flexible repayment schedules. Indicative investment features are the following:

• Instruments: debt (mezzanine, profit sharing loans) and equity (minority or majority position)
• Tenor: 10 to 15 years
• Investment ticket size: from USD 5 to USD 20m, with a sweet spot around USD 10m

The LDN Fund is managed by investment manager Mirova, based in France.