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C2 - Internal Natixis

LAND DEGRADATION NEUTRALITY FUND

An innovative fund project dedicated to sustainable land use and natural capital

January 2018

Strictly confidential - This commercial document is intended for Professional clients only in accordance with MIFID An affiliate of:

C2 - Internal Natixis Strictly Confidential 2

Foreword Parties involved

Established in 1994, the United Nations Convention to Combat Desertification (UNCCD) is the sole legally binding international agreement linking the environment, poverty and development to sustainable land management in the drylands. The UNCCD is particularly committed to a bottom-up approach, ensuring the participation of local communities in combating desertification and land degradation. The secretariat of the Convention also facilitates cooperation between developed and developing countries, particularly

regarding knowledge and technology transfers for sustainable land management practices. The Global Mechanism (GM) is an organ of the United Nations Convention to Combat Desertification (UNCCD), mandated to support UNCCD country Parties in the mobilization of resources for its implementation. As the operational arm of the Convention, the Global Mechanism supports countries to translate the Convention into action and to achieve Land Degradation Neutrality at the national level.

Mirova, the Responsible Investment subsidiary of Natixis Asset Management, develops an engaged approach aiming to combine value creation and sustainable development. Mirova’s philosophy is based on the conviction that integrating sustainable development themes can generate solutions that create value for investors over the long term, not only thanks to a better appreciation of risks, but also by identifying favourable investment opportunities in a changing world. Mirova offers a global responsible investing approach with a single offer revolving around 5 pillars: equities, bonds, infrastructure, Impact investing,(1) voting and engagement. Mirova has €8bn in AuM and €40 bn in voting and engagement. The company brings together 68 multi-disciplinary experts, specialists in thematic investment management, engineers, financial and ESG(2) analysts, specialists and experts in socially conscious finance and project financing. Source: Mirova as of 30/09/2017

(1) Impact Investing: management having a strong social or environmental impact. (2) ESG: Environnemental, Social & Gouvernance In September 2017, Mirova completed the acquisition of a 51% equity ownership stake in impact investment manager Althelia Ecosphere. Althelia is dedicated to sourcing and financing sustainable land use, biodiversity, and ecosystem-based climate activities, with an emphasis on blended value investments that seek to deliver the highest calibre social, environmental and economic performance. Created in 2012, the manager has successfully raised and partly deployed a fund aiming to invest in land based projects in the forestry sector that generate carbon credits in Africa, Asia and Latin America. Commitments were secured from prominent private and public sector

institutions ‘Mirova Althelia’, the rebranded entity, will allocate more than €1 billion in assets under management to natural capital investing over the next 5 years. It will bring together the required strategic vision and expertise to scale up this nascent but promising market, and serve institutional clients seeking market-level returns through high impact investment solutions

addressing major global environmental challenges such as climate change, protection of landscapes, biodiversity, soil and marine resources

Party Presentation Role

Co-promoter - Initial Concept - Enabling environment - Institutional coordination

Co-promoter - Fund strategy - Business Model - Structuring - Fund management

Strictly Confidential


LAND DEGRADATION

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A global challenge with severe consequences

What is at stake?

Poor land management practices, often fueled by exploitation for short-term economic gains instead of favouring long-term sustainability, have led to the loss of more than 25% of the world’s arable land in the last two decades. 2billions hectares of land are degraded worldwide, and we continue to degrade another 12 million hectares of productive land every year

“Land and natural capital suffer from over-exploitation and under-investment”

Why is it important? As well as the direct economic value of using land and its resources, land-based ecosystems and their management can have substantial consequences:

Climate change

Poverty Social instability

and conflicts

Migrations Biodiversity loss

Food security pressure

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!



LAND DEGRADATION NEUTRALITY AS NEW OBJECTIVE

Political momentum and development of solutions

Political objective

Increasing awareness that the cost of inaction is significantly higher than the cost of action led to the emergence of the Land Degradation Neutrality (LDN) concept, and its inclusion in the UN Sustainable Development Goals and other initiatives.

To date, more than 100 countries have committed to one or more LDN-related initiatives, creating an enabling environment for LDN investments

“Reaching Land Degradation Neutrality (LDN) means decoupling development and growth from land degradation and natural capital depletion”

Implementing Sustainable

Land Management

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LDN is linked to many other SDGs, and serves as a catalyst for making progress


CONVERGENCE OF INTERESTS

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Investing in sustainable land management can make economic sense

Private industry interest in sustainable supply chains

Volatility in commodity supply and prices are causing businesses to rethink their supply chain operations, and long-term factors such as climate change impacts are reducing productivity.

Companies are also concerned about their reputations, highlighting reputational risk as their biggest risk-related concern

Sustainable land use practices

Research departments, international organisations and civil society have developed good practices in the field of climate-smart agriculture, sustainable land management and integrated landscape management approaches

“Agroforestry, agroecology and sustainable agriculture techniques are proven and well-known”

Sustainable Investment

opportunities

Public support for

LDN

Industry support of sustainable

supply chains NGO support of sustainable

agriculture



BUSINESS MODEL

Combining landscape and supply chain approaches

Sustainable land management activities at the cross-road between the landscape approach and the supply-chain approach, for either local or international markets



THE LDN FUND PROJECT CONCEPT

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A mission-driven impact fund project

‘To be a source of transformative capital bringing together public and private investors to fund triple bottom line projects that

contribute to Land Degradation Neutrality’

The LDN Fund project’s mission(1):

(1) According to UNCCD Decision 3/COP12 ‘The Conference of Parties […]requests the Managing Director of the Global Mechanism, in consultation with the Executive Secretary, to develop options for increasing incentives and financial support, including assisting in the possible creation of an independent LDN fund, to be made available for the full realization of LDN initiatives’.

Expected impact



INVESTMENT CRITERIA

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Producing impact and financial return

Investment Criteria

The LDN Fund will invest worldwide, with a targeted capital allocation of at least 80% in developing countries, throughout the following key sectors:

- Sustainable agriculture;

- Sustainable forestry;

- Other LDN-related sectors, such as green infrastructure and ecotourism

A three-fold investment approach



UNDERLYING ASSETS

Producing positive impacts and financial returns

Typical investment opportunities

The LDN Fund will use long term debt and equity to finance projects and programmes with clear visibility for market demand, that will meet high environmental and social standards



MANAGEMENT TEAM

Althelia acquisition by Mirova on September 30, 2017

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• A highly regarded

impact investment

manager in the natural

capital field

• A 5 year track record in

the natural capital space

• Proven capabilities in

innovative product

structuring

• A historical focus on

highly innovative

projects with high

impact

• Best-in-class ESG

implementation and

impact reporting

Mirova Althelia: a European

leader in natural capital

with an investment platform

targeting EUR 1bn AuM by

2022.

• A very experienced

player in the sustainable

investing field

• A high standard real

assets operating

platform (processes,

skills, IT tool)

• A true global reach

thanks to NGAM

distribution platform

• A capacity to create

private - public

partnerships at global

scale on frontier impact

investment (LDN project

with the UNCCD)



FUND PROJECT STRUCTURE

A layered structure combining public and private capital

Increasing private investment in sustainable development

The LDN Fund project will use a blended finance approach with a layered capital structure, to bring in private investors that may otherwise not have invested in sustainable land management projects.

Structure

- The LDN Fund will be structured as a layered fund with three classes of instruments (notes, shares) - This capital structure can offer appropriate risk-return profiles for different investors - Junior shares de-risk more senior tranches, encouraging investment from private investors



A COALITION OF PARTNERS

USD 120+m of soft commitments to date


Sponsors

Anchor investors

De-risking partners

Private investors

Technical assistance Civil society African partners

Initial contributors


CONTACTS

A team at your disposal

Gautier Quéru, Director LDN Fund project [email protected]

Boris Spassky, Investment Manager LDN Fund project [email protected]

Anne-Laurence Roucher, Head of Development, Mirova [email protected]

Ange-Wilfried Ezoua, Development team, Mirova [email protected]

Download the market study on land degradation neutrality and natural capital on: http://www.mirova.com/Content/Documents/Mirova/publications/va/MIROVA_STUDY_Unlocking%20the%20Market%20for%20LDN_EN.pdf


mailto:[email protected]






http://www.mirova.com/Content/Documents/Mirova/publications/va/MIROVA_STUDY_Unlocking the Market for LDN_EN.pdf






Disclaimer This commercial document is intended for Professional clients only in accordance with MIFID. If no and you receive this document sent in error, please destroy it and indicate this breach to MIROVA. MIROVA Regulated by AMF under n°GP 02-014 Limited liability company - Share capital € 7 461 327, 50 RCS Paris n°394 648 216 Registered Office: 21 quai d’Austerlitz – 75 013 Paris Mirova is a subsidiary of Natixis Asset Management - Under Mirova’s social responsibility policy, and in accordance with the treaties signed by the French government, the funds directly managed by Mirova do not

invest in any company that manufactures sells or stocks anti-personnel mines and cluster bombs.

- The fund project has not been authorized by any supervisory authority.

- This Presentation in no way constitutes an offer or a sales promotion to a person regarding whom it would be illegal to make such an offer. This Presentation may not be used as an offer or a sales promotion in countries or in conditions where such offers or promotions have not been authorized by the competent authorities. Each investor must ensure he is authorized to invest in the Fund project.

- Investments in the fund are mainly subject to loss of capital risk.

- This presentation (the “Presentation”) is being circulated as an information-only document and does not constitute an offer, a proposal, or a solicitation to investors to invest in the funds described in this document and managed by Mirova nor does it form the basis of, or constitute, any contract. These products and services do not take into account any particular investment objectives, financial situation nor specific need. Mirova will not be held liable for any financial loss or decision taken or not taken on the basis of the information disclosed in this document, nor for any use that a third party might make of this information. This Presentation in no way constitutes an advice service, in particular an investment advice. In any case, you are responsible for reading regulatory documents of the fund and collecting any legal, accounting, financial, or tax consultancy service you may consider necessary, in order to assess the adequacy of your

constraints to investment and its merits and risks. This document is a non-contractual document and serves for information purpose only. This document is strictly confidential and it may not be used for any purpose other than that for which it was conceived and may not be copied, distributed or communicated to third parties, in part or in whole, without the prior written consent of Mirova. This Presentation may not be used in some juridictions where such offers or promotions have not been authorized by the competent authorities. Each investor must ensure he complies with these requirements and prohibitions. No information contained in this document may be interpreted as being contractual in any way. Information contained in this Presentation is based on present circumstances, intentions and beliefs and may require subsequent modifications. No responsibility or liability is accepted by Mirova towards any person for errors, misstatements or omissions in this Presentation or, concerning any other such information or materials, for the adequacy, accuracy, completeness or reasonableness of such information. While the information contained in this Presentation is believed to be accurate, Mirova expressly disclaims any and all liability for any representations, expressed or implied, with respect to this Presentation or any other written or oral communication to any interested party in the course of the preparation of information concerning the Fund. Prices, margins and fees are deemed to be indicative only and are subject to changes at any time depending on, inter alia, market conditions. Mirova reserves the right to modify any information contained in this document at any time without notice. More generally, Mirova, its parents, its subsidiaries, its reference shareholders, the funds MIROVA manages and its directors, its officers and partners, its employees, its representative, its agents or its relevant boards will not be held liable on the basis of the information disclosed in this document, nor for any use that a third party might make of this information. This document consists of a presentation created and prepared by Mirova based on sources it considers to be reliable. However, Mirova does not guarantee the accuracy, adequacy or completeness of information obtained from external sources included in this document.

Contacts: Philippe Zaouati, Gautier Quéru CEO, Mirova Team Leader, Mirova [email protected] [email protected]

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