IDH Innovative finance

The innovative finance team supports IDH’s sector programs to meet their key sustainability targets. The team focuses on the agendas of smallholder farmers in the following crops: cocoa, coffee, palm oil and cotton; achieving a living wage in the Malawian tea sector; and finding innovative solutions to increase farm-level investments (i.e. access to finance for these small-scale producers). The team’s core work is to catalyze financial institutions and IDH supply chain partners to make highrisk investments in smallholder farmer operations, which will improve both the sustainability of these supply chains and/or landscapes and the livelihoods of the producers. The team works on developing prototypes of different innovative financing mechanisms that could be leading examples for value chain financing. The team also started to work on a deforestation agenda in 2015 by leading the development of the Production-Protection-Inclusion (PPI) approach and taking the lead in incorporating a fund that will make sustainable agriculture investments to combat deforestation once incorporated; and started to scope a fund that will make responsible apparel investments at the mill and factory level (to be initially funded by C&A Foundation). Institutional funders have formally approved the innovative finance work until the end of 2017. The team has catalyzed two financial institutions and two supply chain companies to directly finance smallholder farmers at scale for the first time, which proves the innovative character of the work and the added value to the IDH commodity programs.