The Kasigau corridor REDD+
project in Kenya

Showcased as the ultimate initiative to fight climate change, the European Investment Bank (EIB)’s participation in the Althelia Climate Fund is nothing like the social and environmental success it was described to be – say the NGO Re:Common and Counter Balance in a new report released today.

Contributing up to €25m in the fund, the EU’s bank joined Althelia’s 'path breaking proposal' to 'enhance the environment' through the funding of some 20 projects that (claim to) reduce emissions in the land use sector by generating 'forest based carbon and other environmentally certified credits for sale to the voluntary offset market'.[1][2]

Yet, four years after the EIB announced its investment and three years into the Fund’s eight-year lifetime, things don’t look too bright. Indeed, of the initially planned €150m, Althelia managed to raise just €101m – €15m from the EIB–, of which just 50% is committed to projects in the current portfolio[3].

But even bigger concerns arise when looking at the projects themselves, underlines the report. Indeed, Counter Balance and Re:Common have closely followed this investment into the Althelia Climate Fund[4] and recently conducted a field mission to visit the Kasigau Corridor REDD+(programme for 'Reducing emissions from deforestation and forest degradation') project area in Kenya, the first project to be financed by the fund .

While unveiling that Althelia’s initial 'Emission Reduction Purchase Agreement' with the Kasigau project fell through in July 2016 and was converted into a loan,[5] the findings of the mission call into question the compatibility of this investment in REDD+ with the EIB’s development mandate.

Jutta Kill, author of the report, remarked:

“The land use restrictions imposed by the Kasigau Corridor REDD+ project hit pastoralists and ethnic Taita and Duruma communities particularly hard while these groups receive very few if any of the benefits the REDD+ project provides to local communities”.

In light of these findings, Re:Common and Counter Balance call on the EIB to re-assess the effectiveness and compatibility of the bank’s investment into the fund with its development mandate.

“Further disbursements to Althelia and new financing commitments to REDD+ projects should be halted until a comprehensive evaluation is carried out”, claimed the Director of Counter Balance, Xavier Sol.

“The whole model of outsourcing the management of EIB resources to investment funds in the name of effectiveness and sustainability should be questioned. We call on the European Parliament to look into the failure of Althelia and other EIB-backed investment funds”, stated Antonio Tricarico, programme director at Re:Common.

[1] EIB Environmental and Social Data Sheet Project 2010-0720. 18 December 2012, accessed 14 October 2016.
[2] EIB (2016): The climate finance pioneer. 04/2016.
[3] Althelia Climate Fund 2015 Audited Annual Report, P. 13, shows a 'Gross Commitment' of €48,986,623 to five projects and €5,169,727 to “Other investments” that are not further specified in the Audited Annual Report. The 'Estimated present value' of the five projects is given as €25,142,353 – roughly 51% of the 'Gross Commitment'.
[4] Re:Common & Counter Balance (2014): Banking on Forests.
[5] Pers.com. Althelia Climate Fund in a letter of 25 November 2016 to Counter Balance.