Launched in 2022, ADM Capital Climate seeks to help finance the vast shifts underway in the power, food and land use sectors in Asia. Drawing on the firm’s experience in Asia Pacific lending and ESG and Sustainability leadership, ADM Capital Climate works with the world’s leading development finance institutions and internationally recognised impact investors and NGOs to deliver investment vehicles built on partnerships, community and conservation.
Trillions of Dollars Needed Annually
Climate change is an urgent threat to economic progress, global food security, our natural systems, and livelihoods. Many communities are already experiencing increased climate impacts: wildfires from extreme heat and moisture loss; devastating floods from extreme rain events and typhoons.
The World Economic Forum’s Risk Report ranks these environmental threats at the top of their list. In 2021, the generally conservative UN Science body, the Intergovernmental Panel on Climate Change (IPCC) issued its sixth assessment report (AR6), which is an urgent call to action. Atmospheric CO2 levels are higher than at any time in at least 2 million years and it is now unequivocal that human influence has warmed the atmosphere, ocean, and land. Unless drastic action is taken, we will fall far short of the upper limit of the 2°C climate threshold agreed in the Paris Agreements. Trillions of dollars annually and concerted action are needed to effect the transition to net zero by 2050, which is where we must be.
Climate Change: Both Risk and Opportunity
Major shifts in consumption patterns, technologies and regulation will be needed to drive the substantial and sustained reductions in GHG emissions required. We will also need to adapt to our changing climates. This represents both risk and opportunity to our portfolio companies. As risk managers we must quantify the risk climate change represents to our investments, while as asset allocators we can play a role in supporting transition to a low carbon and climate resilient economy.
Since 2006, ADM Capital Foundation (ADMCF) has supported research, education and targeted action on climate and its related components such as land use, air pollution and water scarcity. Among the initiatives ADMCF has helped create relevant to climate change are: Tropical Landscapes Finance Facility, China Water Risk, Clean Air Network and HK2050IsNow. Each of these have involved wide engagement and formed a base of knowledge and research for ADM Capital.
Climate Thematic Fund
Smart Landscape Fund (ACLF)
The Asia Climate-Smart Landscape Fund (ACLF) aims to build on two-decades of ADM Capital private lending, the integrated E&S risk management processes and practices honed over years of investing as well as ADMCF research and support. ACLF seeks to fill the gap in the market for medium to longer-term lending in the smaller ticket sizes (USD 5-20 million) where capital markets unit economics and even DFI investment is not cost effective. ACLF incorporates several blended finance instruments and will lend to SMEs engaged in sustainable agriculture production, land regeneration and forest protection. The Fund aims to finance SMEs that achieve both financial and sustainability returns.
The fund fills a structural credit gap in the Indonesian market. SMEs are critical to the economy yet struggle to access finance given perceived risk, smaller amounts and longer tenor needed. ACLF will help build new sustainable business models should serve as proof of concept for banks and other potential lenders.
ACLF will act as a demonstration fund in Asia where there are very few Asia-based, Asia-focused investment managers lending into agriculture despite the importance from an economic, social and environmental perspective.
Climate Thematic Fund
Elkhorn Lending Fund (ASLF III)
The Elkhorn Lending Fund (ASLF III) aims to address funding gaps in sustainable urban development in Asia by providing medium term, senior and subordinated debt financing solutions.
With the Elkhorn Lending Fund, ADM Capital sees opportunity to extend private credit to support Asia’s urban transition to low-carbon economies. The fund offers investors an opportunity to deploy capital into Asia’s fast-growing sustainable infrastructure and smart city development while fulfilling positive impact investment objectives.
Climate Thematic Fund
Tropical Landscapes Finance Facility (TLFF)
The TLFF consists of a Lending Platform and a Grant Fund. Under the Lending Platform, medium to long- term loans will be issued by TLFF and will be securitized through a Medium-Term Note (MTN) program where appropriate. The Grant Fund provides technical assistance and co-funds early-stage development costs, offering an opportunity for corporate and private foundations to leverage their funding with private finance.
The TLFF Secretariat, hosted by ICRAF, works in a collaborative manner with stakeholders and offers comprehensive support towards the achievement of the stated goals of the Tropical Landscapes Finance Facility. The Secretariat assists and provides administrative support to the TLFF Lending Platform, TLFF Grant Fund and all other related entities.
