Published 2 years ago.
About a 5 minute read.
Image: Rodolfo Clix/Pexels
/ This article is sponsored by
With so little time left, we must prepare for the colossal
climate challenges yet to come. We hope our approach to public-private blended finance will inspire other multinationals, investors and climate funds to support protective measures that ensure the climate resilience of their supply chains and the global economy.
Mitigation has been the focus of most climate change work for the last two
decades, but efforts are not happening fast enough globally. It’s time to also
focus on adaptation. We no longer have the luxury of
to address climate change only by lowering greenhouse gas emissions. Our new
reality forces us to quickly protect vulnerable communities before they are
severely impacted by the tremendous consequences of a warming planet.
Public-private partnerships that can finance adaptation in places where
communities are most vulnerable to floods, droughts and other climate-related
risks can be part of the solution. Recently, in partnership with WWF, the
Global Environment Facility (GEF) and luxury brand Chanel, South
Pole launched the Landscape Resilience
The Fund uses a blended finance
(using public and
philanthropic finance to mobilize private capital flows) approach, which may be
the most effective way to galvanise leaders to take on the huge task of global
climate change adaptation — and, more importantly, close the yawning adaptation
In most cases, adjusting to climate change creates direct private benefits.
Farmers and companies are already adapting agricultural practices and operations
to changing temperatures and rainfall patterns, simply because it makes business
sense: smallholder farmers, especially those in developing countries, are the
most vulnerable to the effects of climate
yet they produce 80 percent of agricultural output, putting many supply chains
In the words of Andrea
Chanel’s former chief sustainability officer: “Chanel’s involvement in the
Landscape Resilience Fund provides an opportunity to explore different
approaches and methodologies that could help advance changes in our own supply
chain and business practices as we progress on our own business transformation.”
Truly sustainable businesses address the many interconnected social and environmental challenges that brands and their customers face — and strive for net-positive outcomes and impacts, in addition to growth. SB's latest guidebook can help your company navigate the path toward enhanced brand sustainability with key insights, actionable steps and a holistic framework that defines a roadmap for good growth.
At the same time, adaptation measures will also create public benefits. For
example, investments in adapted, early-warning systems against floods or in more
accurate weather data provide a value-add to the overall economy and society.
Germany, for example, would have been able to better prepare for this year’s
catastrophic flooding with improved flood alert
Finally, there are plenty of situations where investments in adaptation — in the
form of climate-smart
climate-resilient infrastructure or better climate-monitoring technology —
create both private and public benefits. This is when blending finance is so
important: Commercial capital can unlock private goods, soft capital unlocks
public goods, and blended finance can enable solutions and investments that
benefit both businesses and the public.
Blending finance is a proven approach for optimised risk management. The private
sector is well-equipped to manage project implementation risks, but it may not
be best suited to take on policy risks or investments in innovative approaches
that competitors can easily replicate.
The Landscape Resilience Fund is an example of how blended finance can optimise risk management. The private small and medium-sized enterprises (SMEs) take on the implementation risks of projects with cocoa growers and rattan harvesters that help them access better
farming materials, such as drought-resistant seeds, as well as training. In
addition, public and philanthropic funding from the Landscape Resilience Fund
absorbs risk through technical assistance, and provides venture debt with
favourable conditions, turning risky investments into good business cases.
The third reason for favouring blended finance is a practical one: We simply need it! To begin with, just 5 percent of overall climate
goes towards climate adaptation — and virtually none of it comes from the
private sector. Of the tracked adaptation finance, over 95 percent or around
per year is public. And this is less than 25 percent of the projected costs for
adequately financing adaptation over the next decade, with a projected $140
billion to $300
per year required in 2030 for developing countries alone.
Public finance for adaptation is expected to increase over the next decade, but
so will the scale of adaptation challenges. Financing needs can only be met if
scarce public finance is spent in a way that helps mobilise scalable sources of
capital from the private sector.
The Landscape Resilience Fund is a great example on how to achieve this: an
initial commitment of $1.3 million by the GEF helped mobilise $25 million of
private finance from Chanel, which in turn is now catalysing even more private
investments from SMEs and other investors.
Blended finance can address multiple barriers holding back private sector
investments in climate change adaptation: Not all innovations can be protected
with patents, and so private actors cannot harvest all returns — which leads
many to underinvest without public finance backing. Many businesses also prefer
to follow industry standards, and need pioneers to blaze the trail on
adaptation-related investments. Under the Landscape Resilience Fund, Chanel —
supported by public finance from the GEF — has already taken that leadership position by
committing to financing adaptation in
With so little time left and so much to gain, we need to learn about how to
prepare for the colossal climate challenges that are yet to come. We hope our
approach to public-private blended finance will inspire other multinational
companies, development banks and climate funds to invest in protective measures
that ensure the climate resilience of their supply chains and the global
Published Nov 10, 2021 1pm EST / 10am PST / 6pm GMT / 7pm CET
This article, produced in cooperation with the Sustainable Brands editorial team, has been paid for by one of our sponsors.