Agroforestry investment opportunities

This November, the Mobilizing Finance for Forest team spoke to Diego Lozano, and Paula Sanchez, founding partners of Campo Capital. Their work is focused on structuring, developing, and managing agroforestry projects and investments through nature-based solutions, that will ultimately serve to mitigate climate change.

The planet needs a portfolio of NBS projects, and we are part of this portfolio. 

Can you tell me a bit about your work with Campo Capital?

The planet needs a portfolio of NBS projects, and we are part of this portfolio. The world needs more innovative forestry projects that include native species. The forestry world has grown, and whilst a large amount of research exists about exotic species, there is still limited knowledge about the native ones. Our fund can help to fill this gap. We aim to deploy agroforestry projects that produce carbon credits from native species, selected harvesting of high-quality timber and agricultural products from native palms, cacao, coffee, native fruits, and nuts, etc.

Campo Capital started off as a project developer, and is in the process of setting up a fund. Can you tell me about your journey so far in setting up a fund?  What key lessons would you share with other emerging fund managers?

The Campo Capital journey started 13 years ago, when we started as entrepreneurs. To manage a fund, you need a positive track record. As an operator of forestry projects, we have achieved this over the past 11 years. Our first introduction to native-grown species was a byproduct of our coffee and cocoa projects. We have since built up a portfolio of carbon projects and been certified, audited, evaluated, validated, and verified, so we have a long experience in achieving a high standard in all of our activities.

We have also conducted studies, consultancies and research with different types of private, multilaterals, and many other institutions interested in sustainable development. All of these projects have provided us with the knowledge and resources to make effective investment decisions.

Over our history, we have worked with a range of stakeholders, from indigenous communities in the Peruvian Amazon, to Timberland Investment Management Organizations (private equity) in the USA, to governments in different countries, carbon credit developers in Asia, and many others. This range of partnerships has brought us an understanding of different approaches and needs, enabling us to make better investment decisions, by considering all points of views in order to generate better outcomes for all stakeholders.

Overall, we believe that our key lesson is that we have to have patience and resilience to create a track record that can support us as emerging fund managers. For us, it has been a very long journey, which reflects the long timeframe of the asset class we work in. We are still beginning our fund journey, but we are proud to announce that we already have received seed investments from entities like the Restoration Seed Capital Facility and SVX, as well as co-investments in some of our pipeline projects..

We don´t need only extraordinary ideas to make a better world – sometimes, we only need simple ideas done right.

What does success look like for Campo Capital? How do you measure impact, and why have you chosen these indicators?

We think of success in simple terms: our goal is to do everything in the right way. We don´t need only extraordinary ideas to make a better world – sometimes, we only need simple ideas done right.

Doing things in the right way means planting the trees that belong to each ecosystem. This demands less effort and brings more biodiversity benefits. If you have a water source or a natural forest, treat those areas with respect and help their natural regeneration and protection - don’t destroy them. Respect also extends to all the people involved in the project: communities must have the best deals when benefit sharing, employees must have an enjoyable work atmosphere, and the investors and corporates whose resources we aim to treat with as much care as if it were our own. Reporting and transparency with all stakeholders is key to maintaining these high standards.

Having said this, our main indicators and impact will be measured with the benefits that we can achieve for different ecosystems (for example carbon sequestration, or biodiversity health). If used well, these resources will provide good economic returns for investors and communities in the project landscapes, and contribute positively to the SDGs.

What emerging opportunities in the forestry, sustainable land use and nature-based solutions sectors are you most excited for? How can investors take advantage of, or grow these opportunities?

We are excited about the opportunities that native trees and fruits, marine ecosystems, and everything in between can bring to the sector. At the moment, these elements are still developing, but are quickly starting to become interesting alternative assets for investors.

Investors are beginning to change their view on these assets from ‘romantic’ projects promoted by well-intentioned NGOs to seeing them as real assets fit for sophisticated investors. It is a matter of which investors will take advantage of these opportunities and interact with this emerging market first.

We think that all environmental markets and nature-based solutions projects are here to stay, and that the first investors that have the courage to invest capital will make huge gains in the future. No matter how effective technological solutions will be in contributing to climate change mitigation, it is not the whole solution. Planting trees will always be a positive action with benefits beyond carbon.

What does the sector as a whole need in order to scale and reach maturity?

The sector needs institutional investors, family offices, and big corporations that believe in these new projects and measure all the impacts beyond the financial ones. It also needs patient capital- as the best versions of these projects have not been created yet, and needs someone who believed in the first version to start the development process.

What crucial themes are you expecting to be addressed at COP28, and what actions do you want to see as a result of the conference? 

We think that the beginning of transactions of the Internationally Transferred Mitigation Outcomes (ITMOs) market under article 6.2 will be a big milestone. Also, there is a huge uncertainty about REDD+, so we hope that some steps will be taken in order to recover the trust in these types of projects. We also hope that new biodiversity projects or labels will increase the appetite for big scale projects. As Campo Capital, we will be attending two weeks of the conference. We are expecting to have conversations about our funds with many different players, including investors interested in these agroforestry-based solutions investments.

About the founding directors

Diego Lozano has experience in more than 200 projects in the agricultural and forestry sector, and has been responsible for managing resources or assets for more than USD 4 billion. He has held several senior management and consulting positions for both national and international governments, and multilateral companies. He specializes in project and asset management, investment banking, and financial consultancy. As an entrepreneur, he co-founded Campo Capital with Paula in 2010.

Paula Sanchez has over 15 years of experience in the forestry sector. Predominantly focusing on Latin America, Paula provides expertise in land regulation in Colombia, linking land to agricultural and forestry projects, and certification projects. As co-founder of Campo Capital, amongst other things Paula has also been responsible for the structuring of the legal component of carbon emission reduction projects, and has assisted with the issuance of 1,200,000 carbon credits under the Verra standard for projects operated by the organization.