Nature-based solutions (NbS) –actions and policies that protect and sustainably manage ecosystems to help solve societal problems– are potentially powerful mechanisms for addressing our ecological crisis. It is estimated that they could contribute up to 30% of the climate mitigation needed by 2050 to meet the Paris Agreement’s objectives. At present, global funding for NbS stand at US$ 154 billion annually. But with nature deteriorating at an ever-accelerating pace, this funding needs to increase roughly threefold to US$ 484 billion by 2030 to stand any chance of meeting the UN’s Sustainable Development Goals.
Private capital is a vital source of funding for accelerating and scaling up the impact of NbS as needed. Market conditions in recent years have become highly favourable for such funding, thanks to international protocols like the UN Global Biodiversity Framework creating strong mandates for businesses to halt and reverse nature loss. Additionally, voluntary carbon markets –the purchase of carbon credits emitted by projects aimed at reducing or removing greenhouse gas emissions– were valued at US$ 2 billion in 2021, four times higher than in 2020. Despite this however, private capital currently represents just a measly 17% of funding for NbS globally.
To address this, there is an urgent need to attract more private capital to NbS and ensure both meaningful ecological benefits and returns. This is especially true in Asia, which receives just 10% of global NbS funding despite its ecological significance and vulnerability, and where the NbS market is further compromised by greenwashing and opacity.
Enter Tula.
What is Tula?
Tula –whose name appropriately means ‘balance’ in Sanskrit– is a platform focused on finding and scaling up existing nature-positive projects by attracting private capital to them (thereby bringing ‘balance’ to local ecosystems). Co-founded by partners with decades of experience in institutional capital deployment (see below), since 2006, the team has mobilised capital in 6 countries in the Asia-Pacific region.
Tula Co-Founders
Jean-Marc Champagne:
Having worked at world-leading investment banks like Merrill Lynch and BNP Paribas, Jean-Marc brings nearly 20 years of experience in equities and equity derivatives to Tula. From 2015-2022, he worked as the Head of Bankable Nature Solutions Asia-Pacific and Environmental Finance for WWF, where he oversaw the origination and implementation of bankable conservation projects for the Dutch Fund for Climate and Development (DFCD). As well as Tula, he has also co-founded Seneca Impact Advisors to scope for and develop nature-positive projects. At Tula, he works on project origination.
Grace Hui:
During a 7-year career leading the Hong Kong Stock Exchange regulatory function, Grace initiated and established sustainable business practices there such as ESG disclosure and carbon markets for the Pearl River Delta Greater Bay Area, and pioneered Asia’s first Sustainable and Green Exchange platform (STAGE). She has also worked as a grants manager for the European Climate Foundation’s decarbonisation project in China and as a voluntary carbon markets advisor to the Asia Carbon Institute. She now uses her extensive experience and network to raise awareness for Tula-supported projects. At Tula, she focuses on business relationship development.
Tom Holland:
Tom brings 25 years of experience in venture building and investment management in Asian emerging markets to Tula. His credentials include working for JP Morgan, co-managing Cube Capital and founding Development Finance Asia (DFA): a sustainable investment platform with successful investments in 7 Asian countries. He has also been responsible for several NbS projects, sits on the Mongolia council of The Nature Conservancy, and co-founded Rent2Own, Myanmar’s largest rural non-bank finance institution which has planted over 300,000 trees for its social responsibility programme. At Tula, he is the key person responsible for funding deployment.
Tula is seeking to set up a nature impact-focused platform in Asia Pacific, supporting NbS centered conservation projects aimed at greenhouse gas mitigation, climate change adaptation and improving landscape resilience, among many other things. The focus on Asia is rooted not only in addressing the private funding deficit in NbS there, but also in the considerable potential impact for funders. The Southeast Asian NbS market alone is worth US$ 70 billion.
The Platform
Tula aims to support a diverse array of NbS projects that generate and increase commercial value from ecosystem services, agroforestry, carbon credits and equity, whilst also delivering tangible environmental and social returns. These include climate change mitigation and adaptation, increased biodiversity, habitat restoration and water conservation. Tula will support managers, project developers and entrepreneurs with established strategies for delivering environmental returns, and seek high growth opportunities in companies developing key technologies.
As well as Tula’s three co-founders, the platform will be supported by a seasoned team with extensive financial knowledge and experience in project sourcing, structuring and management in Asia. Tula will also work in partnership with six companies and conservation NGOs whom the partners work closely with, which will act in advisory and consulting roles and provide unparalleled access to a pipeline of potential projects. Projects already supported by Tula include mangrove restoration in Myanmar, supporting community forest protection in Cambodia using income from microcredits, and water conservation in Australia.
Project Case Study: Community Forestry in Cambodia
Cambodia has one of the highest deforestation rates in the world, having lost an area of forest over 24 times the size of Hong Kong since 2001. Community forestry represents a potentially effective means to combat this, putting local communities at the centre of forest management decisions and securing long term rights for them to maintain and restore forests on their land for their livelihood needs. However, most community forestry programmes rely on donor funding, which is insufficient to ensure the financial stability needed to increase their scalability and resilience, leading to the conversion of community forests to more profitable land uses.
One reason for the reliance of community forestry programmes on donor capital is because private funders often perceive them as too risky. One potential solution to this is to provide microcredit – small amounts of money lent to businesses within developing countries– to community forest institutions via a credit facility (on the condition of sustainable management practices). Such credit could simultaneously encourage better forest management and be used to reliably generate revenue for community forestry programmes, potentially making them more attractive for private funding.
In Cambodia, the community forestry NGO, RECOFTC, has its own Community Forestry Credit Scheme aimed at providing credit to community forest programmes and linking the returns to sustainable forest management. However, since its inception in 2014, it has been limited by a reliance on grant funding, allowing it to service just 105 of the 800 community forests in Cambodia. In 2022, a partnership with RECOFTC and Development Finance Asia (DFA) was established to survey the operational and financial practices of RECOFTC –and 22 of its community forests– to assess the scheme’s potential for scaling up via private funding.
The joint assessment found that while many of the community forests were sufficiently well organized, well managed, well-governed and technically capable of successful sustainable management, they did not have the financial means or centralisation to restore degraded forests. Going forward, Tula would therefore aim to improve this by applying its successive forestry restoration model to RECOFTC’s Cambodia programmes. Not only has this model been used to successfully restore native forests in Myanmar by the Asian Community Reforestation Enterprise (ACRE), but it also generates considerable revenue from sustainable timber harvesting in the restored forests.
RECOFTC is now also looking to link its community forest programmes to an embedded microcredit platform to provide them with revenue to expand forest protection and local incomes. Here, Tula would be offering its expertise in financial inclusion within emerging markets to help RECOFTC’s platform meet global microcredit standards to increase its attractiveness to private funders.
Author: Thomas Gomersall, Seneca Impact Advisors
For more information, please contact info@senecaimpact.earth or visit the Tula website.
