2017 Banco Hipotecario Casal 18 lower res

Miguel Menéndez, owner of Casal coffee company. Photo courtesy of Fund.

Promoting Sustainable Business Practices

Earlier this year, we closed a $5 million investment in the Fund, which lends, through local financial institutions, to businesses using environmentally sustainable practices in the agriculture, forestry, fishing, and tourism sectors in Latin America. This investment increases our portfolio exposure in Latin America and our focus on supporting environmental sustainability businesses and practices.

The fund’s mission is to promote business practices that contribute to biodiversity conservation, the sustainable use of natural resources and climate change mitigation and adaptation through private enterprises. Specifically, the fund serves some of the most biodiverse countries in the world, operating in highly biodiverse areas that are endangered by human activity. The initial focus of the fund is on biodiverse countries in Latin American, for example, Colombia, Panama, Ecuador and Costa Rica.

Since being launched in 2014, the fund has promoted capacity building with financial institutions while helping private businesses improve sustainability practices. One example is El Salvador’s family-run Casal coffee company. Fair-trade and sustainable coffee has gained traction in the past decade, but producing it isn’t easy. In some countries, coffee production is notorious for deforestation issues and threatening local ecosystems. Additionally, in El Salvador, coffee crops are more vulnerable to infestation by pests or viruses. As an aging plantation, Casal was looking to maintain the quality of their product while protecting themselves from environmental factors.

Casal has improved their shade-grown coffee system, gained access to a wider variety of seeds and conducted overall sustainability renovations on their plant, all with the help of the fund’s financing. Shade-grown coffee “forests” benefit the wider ecosystem, and the new seed varieties are more resistant to climate change and to pests and diseases, but also offer a wider variety of coffee profiles and aromas. Casal’s final cup of coffee is sustainable, delicious, and award-winning. The family won the Taza de la Excelencia (Cup of Excellence) for three consecutive years in El Salvador’s national competition, competing against 300 other entries.

The fund was founded by four partner organizations - BMZ or the German Federal Ministry for Economic Cooperation and Development, KfW, the German government-owned development bank, impact investing fund advisor Finance in Motion, and non-profit environmental organization Conservation International. We are excited to help the fund and these organizations advance this work, while building our own environmental sustainability portfolio.