Jurisdictional blended financing, a progressive approach, empowers districts to expedite their green growth transition. This is achieved by developing combined financing structures and mechanisms that ensure the financing matches the impacted scale and agreed-upon performance measurement, thereby keeping all stakeholders well-informed and updated.

The session started with Filantropi Indonesia outlining the importance of addressing economic, environmental, and social agendas at the jurisdiction level to advance the SDGs Agenda and identify the critical needs for financing to upscale the initiatives. LTKL demonstrated the stage of Indonesia’s jurisdictions and the challenges and opportunities. Tropical Forest Alliance shined the light on how private sectors hold a firm commitment to delink deforestation from their supply chain in their production sites. And, with district good governance and accountability, the jurisdictional approach offers a promising future for districts to be the private sector’s preferential sourcing areas.The discussion identified a potential pipeline currently being developed in collaboration with supply chains in Aceh Tamiang, Siak Palalawan, Jambi, and other areas. This pipeline, a key component of the jurisdictional blended financing strategy, aims to support various initiatives such as smallholder certifications, forest restorations, community livelihood diversification, financial inclusions, and good agricultural practices.

When implemented, these initiatives will contribute to the green growth transition and improve these areas’ overall sustainability and resilience. This collective approach highlights the green growth transitioning process’s shared responsibility and collaborative nature.

From the collective learnings of each stakeholder, critical areas need to be addressed for jurisdictional works to scale up the works, i.e., aligning targets across non-state actors, private sectors with governments, aggregating the present models while inviting private sector investment and philanthropy collaboration, and finally the importance of laying out the financial structures. Jurisdictional blended finance holds promise for addressing climate, social, and environmental challenges at scale, leading to impactful results. It’s equally important to identify financing structures that align with metrics, potential incentives, and delivery agreements across supply chain actors, commercial investors, grants, governments, and start-ups.

The JCAF #25, a significant event in the jurisdictional blended financing landscape, was co-convened between d Filantropi Indonesia and Lingkar Temu Kabupaten Lestari. These organizations, are known for their expertise and commitment to sustainable development and facilitating leading districts to transition towards green growth goals, respectively. The event was attended by key jurisdiction supporters and philanthropist organizations, further emphasizing the importance of collaboration across stakeholders. For jurisdictional blended financing to succeed, it requires aggregated models, a scalable pipeline, and private sector involvement. Government leadership should ensure that policy instruments can move at scale while providing support to de-risk the supply chain through smallholder assistance and other intensification programs. Jurisdictional Blended Financing from Philanthropy Lens, Filantropi Indonesia

Addressing climate change while improving economic growth and social inclusions has been amongst others on Indonesia’s SDGs agenda. However, in the process, the works are considered fragmented, and lack of coordination creates inefficiency and ineffectiveness.

Jurisdictional Approaches hold a promising future to address sustainability challenges at scale through coordinated and monitoring actions at the jurisdiction level within multistakeholder and inclusive frameworks, offering hope for a more efficient and effective approach. Furthermore, innovative and blended financing is not just a beneficial addition but a crucial necessity. These critical instruments are essential to scale up our current schemes and provide alternative financing schemes to bridge the gaps of conventional funding, grants, commercial investments, supply chain productions, and philanthropist interventions.

The urgency of the situation, which demands immediate action, underscores the importance of these blended financing schemes as our best bet to meet the concerted targets and action plan, enabling scalable actions at the agreed matrix of assessment. The JCAF #25 aimed to present blended financing schemes through engagement and financing structures at the jurisdiction and landscape levels, accelerating Indonesia’s 2030 Sustainable Development Goals and Climate Agenda.

On the other hand, we enhance both the private sector and financiers’ interest in mobilizing their investment to ready jurisdictions. 

Accelerating Private Sector Commitment towards Deforestation and Conversion Free from the Supply Chains, Tropical Forest Alliance (TFA) TFA focuses is to accelerating private sector engagement and strengthening policy towards deforestation and conversion-free commodity supply chain. TFA consistently facilitates and accelerates ground-up models implemented by partners and those working from demand-side countries. Consumer Goods Forum, with 407 companies, can be part of the solutions from consumer goods models, with 25 companies part of the Forest Positive Coalition of Actions.

These companies face the most significant risk and yet have opportunities to separate deforestation and conversion in agriculture within their strategic corporate planning while viewing the value to minimize the cost and increase value. Three things Forest Positive Coalition of Actions has been undertaking:

1. Delinking supply chain from deforestation footprints while improving transparency and capacity building
2. Supply chain involvement
3. Mobilize resources into the landscape beyond the value chain; context beyond the supply chain is critical beyond the supply chain.

The jurisdictional Approach is about strengthening governance on land use planning, providing resources and technical assistance, and enforcing connections and regulations. With the hope to ultimately ensure those jurisdictions/landscapes will be implementing good governance, this will enable the private sector to produce sustainable commodity productions while contributing to jobs and economic growth of the district.

TFA’s support, through its unique ‘blended finance’ approach, offers a venue for philanthropy and impact investment, consensual finance, commercial finance with appropriate risk-adjusted return, and the engagement scheme. This support is crucial for the success of sustainable commodity production goals. The interactive discussion session is of utmost importance as it aims to delve into how the financing structure and appropriate blended finance can be based on the presence of an enabling ecosystem. This ecosystem is crucial for enabling the pursuit of sustainable livelihood goals, a topic that is not only relevant but also critical in today’s business landscape.

The State of Jurisdictions in Indonesia & Opportunities for Blended Financing The discussions raised a variety of responses stemming from key stakeholders working directly with communities supporting private sectors, developing pipelines with private and communities, and mobilizing support to address challenges in the communities. 

From a philanthropic lens, the Bakti Barito Foundation representative shares the philanthropic approach to improve smallholder farmers’ well-being through productivity increases. The smallholder of rubbers owned 2 HA areas of land will be supported through concessions in their replanting program. Bakti Barito engages with local civil society to improve farmers farming skills and resilience which indirectly impacts farmers’ financing.

However, through their education program in 25 schools in Indonesia, Bakti Barito Foundation highlights partnerships with the government at the district level to improve social and environmental aspects – including various knowledge provision on i.e. waste recycling that unlock business opportunities for young generations that aligns with government targets of sustainable development goals. The matching scheme of 1:1 enables 25 schools to be supported through Barito and government joint collaboration.

Yayasan Agri Sustineri Indonesia (YASI) shared that their business model highlights the importance of creating ecosystems to develop microfinancing to lowering the risks of smallholders by providing them with access to banking while ensuring private sectors’ risk mitigations. The scheme is not centralised but an orchestrated approach to build an ecosystem within the affected area combining grant from civil societies and in-kind support from the government. Communities are empowered through knowledge transfer in sengon farming and risk-mitigation practices to lower the risks and increase their loan scoring, in juxtaposition to providing them access to financing, with local banks and credit unions and advocacy of intensive to the government. The initiative enables to create six service systems, with YASI working closely with off-takers and the government and building a good rapport of credit analysis of smallholders. With smallholder farmers’ land are certified, government income from tax can be increased. Value added brought from each area can be added and tracked, government can build a closed-loop system and strengthen public services and fiscal sustainability.

Concluding the discussion from ADM capital, it was crucial to emphasize the need for a clear outline of the pipeline opportunities and sector-wide partnerships. This roadmap is essential for the district to advance an equal balance of economy and environment and transition towards a green growth district through blended financing. Private financing schemes differ, including loans, grants, fiscal, and equity, and can be blended with other schemes, i.e., grants and philanthropic funding. An assessment of the impact on livelihood and forest conservation needs to be made while finding the right implications. Then clear prioritization with achieved target and partnership within that jurisdiction must be outlined, and then the suitable financial structures in combination with other schemes be used. The challenge is to identify an investment pipeline that can be incubated at saleable investment.

Jurisdiction Collective Action Forum (JCAF) Dialogue #25
6 May 2024, Jakarta