Tropical Landscapes Finance Facility – an ADMCF Alliance

Established in 2016, Tropical Landscapes Finance Facility (TLFF) is a partnership among ADM Capital/ADMCF, BNP Paribas, UN Environment and World Agroforestry Centre established to drive long-tenor private sector capital at scale into commercial projects in Indonesia that stimulate green growth and improve rural livelihoods.

Under TLFF, ADM Capital/ADMCF are Facility and ESG Manager, while BNPP is structuring partner, arranges and sells the notes that provide liquidity to projects. UNEP and ICRAF host the Secretariat in Jakarta and provide oversight for the Facility. UN Environment is also raising a grant fund to provide blended finance for transactions.

On February 26, 2018, TLFF completed its first transaction, a landmark US$ 95 million sustainability bond to help finance a sustainable natural rubber plantation on 90,000 ha of heavily degraded land in two provinces in Indonesia, Jambi, Sumatra and East Kalimantan. The TLFF I transaction, a loan to Indonesia’s PT Royal Lestari Utama (RLU), incorporates extensive social and environmental objectives and safeguards and benefitted from a partial guarantee from USAID Development Credit Authority.

Planted areas (estimated at 34,000 ha at maturity) will serve as a buffer zone to protect the threatened Bukit Tigapuluh National Park from encroachment, while at maturity, the transaction will provide 16,000 fair wage jobs and offer 7,000 ha of plasma rubber for smallholders. Following an HCV/HCS Assessment, WWF worked with the company to establish “Go”, “No-Go” areas for planting.

Beyond the USAID guarantee, other blended finance has helped catalyse the transaction. USAID’s Green Invest Asia supported a Carbon Study for the project, while UK Department for International Development and the Department for Business, Energy and Industrial Strategy (BEIS) Partnerships for Forests have provided grant support to establish a Wildlife Conservation Area managed jointly by WWF and RLU adjacent to the National park.

The RLU project has, to date, achieved significant positive environmental and social impacts including:

• 2016: ADMCF and ADM Capital were awarded the Convergence Design Funding Award 2016 for TLFF
• 2019: TLFF won the Triple A Asset Award Sustainable Finance 2018
• 2019: TLFF I transaction was awarded the Climate Bonds Initiative 2019 Green Bond Pioneer Award for international leadership in Green Finance
• 2020: By end of 2020, +11,100,00 rubber trees are planted over +23,000 Ha; provided 4,259 direct jobs (30% held by women), RLU released its 3rd annual Environmental Social Governance audit report to noteholders and 2nd annual Sustainability Report to Stakeholders.
• 2021: Within the year, 4,611 native trees and 3,277 seedlings were planted, 70 new houses built for employees and workers, provided 3,886 direct jobs (31% held by women), RLU established a COVID-19 Crisis Management Team & COVID-19 Task Force at each site, by the end of the year, 98% of employees were vaccinated at least once, 94% were vaccinated twice. Established a 9,700 Wildlife Conservation Area in collaboration with the Provincial Government of Jambi, the Indonesian Ministry of Environments and Forests, NGOs and Indigenous community leaders.
• 2022: TLFF successfully discharged its inaugural transaction, (USD 95 million) loan with the bond repaid in full. Note: On 21 June 2022, the Michelin Group announced that it had acquired PT Barito Pacific’s shareholdings in RLU, making it the sole owner of the project. The change in ownership structure triggered the repayment on 18 August 2022 of the long-dated sustainability bond, which was arranged by BNP Paribas and issued to RLU as TLFF I in 2018. Read press release here.

Further impacts can be found our Fact Sheet.