Crop Trust Finance Director Janet Muir on Sustainable Finance Solutions at GLF Climate
The Crop Trust's Director of Finance, Janet Muir, delivered a keynote speech at the 5th Investment Case symposium of the 2021 Global Landscape Forum Climate Conference "Food, Forests, Finance" about innovative and sustainable finance solutions.
Watch her address or read the full speech below.
My name is Janet Muir and I am the Director of Finance of the Global Crop Diversity Trust. Thank you for joining me here today at the Global Landscapes Forum 5th Investment Case symposium.
The topics that are being discussed this week include nature-based finance solutions that are innovative, sustainable and scalable. I’d like to present to you an example of an innovative, scalable, sustainable finance solution that is working right now—and that’s the Crop Trust’s Endowment Fund.
The Crop Trust’s mission is to ensure the conservation and availability of crop diversity for food security worldwide for generations to come. When the Crop Trust was established under the International Treaty for Plant Genetic Resources in the early 2000s, the international community had the great foresight to not leave the funding of crop diversity to chance. They established a mechanism that would generate permanent and self-sustaining income every year to conserve and maintain crop diversity, forever.
While universities have been using endowment funds for decades to support their programs and scholarships, this is one of the very few times that an endowment model has been used to provide an innovative permanent solution to fund a global challenge.
Quite simply, an endowment fund is a large pot of money that is invested in the capital markets to generate a return. This return is withdrawn every year to fund the essential costs of protecting the crop diversity held in seedbanks. Since 2004, the Crop Trust has received over USD 245 m in contributions, mainly from governments, which it has invested in a diversified portfolio. The value of the Endowment Fund now stands at USD 330 m, and this is after withdrawing over USD 55 m to fund our work. This year alone, USD 10 m will be withdrawn, while still keeping the fund's capital intact.
So, this model works. Based on its current size, the Endowment Fund is now able to generate an annual income of at least USD 10 m forever. And it is scalable—with more contributions, the fund can generate more income.
However, the Crop Trust needs to raise the Endowment Fund to USD 1 bn to generate the USD 40 m in annual income we need to protect the world’s crop diversity in perpetuity. Reaching USD 1 bn will requires not just individual donations but innovative solutions using private capital and government support. We have developed a food security bond proposal to issue long-duration bonds to investors that will be supported with government guarantees to de-risk this investment. I truly believe that the endowment model, in conjunction with blended finance solutions, is the way forward for funding the conservation of global common goods.
In closing, I note that the Crop Trust is a signatory to the United Nations Principles of Responsible Investment and is a responsible asset owner.
Not only is it important for the Crop Trust to generate an income from the capital markets, it is equally important to us that our investments are fully aligned with our mission and that we consider environmental, social and governance integration into our investment process to be an important component of our investment strategy.
I wish you successful discussions as part of this important symposium.