29 May 2017

Greening the Big League

La Liga Agrícola Industrial de la Caña de Azúcar, or LAICA, is big. Membership in the organization, known in English as the Costa Rican Sugar League, comprises some 8,000 growers and 13 sugarcane mills. As part of the UN Global Compact for implementing universal sustainability principles, three league sugar mills are owned by Fair Trade-certified cooperatives composed of thousands of smallholder farmers. For more than 75 years, LAICA has been bringing producers and buyers to the bargaining table to hammer out prices and other key decisions related to the country’s sugarcane industry, a sector responsible for more than nine percent of jobs in Costa Rican agriculture.

LAICA’s depth and breadth make it prime partner for the eco.business Fund. Advised by Finance in Motion, one of the world’s leading impact asset managers, the fund supports biodiversity conservation and the sustainable use of natural resources in Latin America. To meet this mandate, eco.business provides financing to qualified local banks and financial institutions who on-lend to agricultural businesses committed to conservation and biodiversity goals.

In Costa Rica, the fund’s loans to Scotiabank and Banco Davivienda support the league and its wide-ranging efforts to increase the sustainability of the country’s sugar industry. LAICA members have lowered energy use with lighting upgrades, motion sensors, and by taking advantage of gravity when moving goods vertically. They have also sharply reduced solid waste output, their reliance on fossil fuels, and water consumption. LAICA and its members have been switching to mechanical harvesting systems to avoid pre-harvest burning, and they are using biological pest controls and biodegradable chemicals.

Most recently, the league has been implementing a zero carbon policy, which members are attempting to achieve by reducing the amount of synthetic fertilizers used, replanting forests in the unproductive areas of the farms, saving water by eliminating the sugarcane washing process, and changing to dry cleaning for organic residues, which significantly reduces waste water.

“LAICA is a great vehicle for effecting change on a large scale,” according to Sandra Abella, who manages the fund’s investment activities from Finance in Motion’s Bogota office. Due to the league’s large membership and various activities, eco.business – through its local partner institutions – reaches a broad swath of important businesses in a centralized manner. “We can support a wide range of initiatives in line with conservation and biodiversity goals for a diversified set of players through one single agency.”

A sterling example of how LAICA members are promoting biodiversity conservation comes in the form of the Hacienda El Viejo national wildlife refuge. Covering more than 1,300 hectares, this private refuge belonging to league member and sugar producer Hacienda el Viejo has dedicated 80% of its area to the “tropical dry forest,” a classification met by only 2% of the world’s woodlands, making it a conservation priority. The company’s refuge boasts nearly 190 species of flora and some 270 species of fauna. Additionally, 260 hectares of wetlands have been created to provide shelter, food, and habitats for dozens of species of aquatic resident and migratory birds, which has increased the number of species from four to 31. Even the endangered Jaribu Stork is calling the refuge home.

By funding LAICA, water and natural vegetation have been protected through the conservation of springs, the recovery of surrounding vegetation, and the restoration of areas alongside streams and riverbanks. Biodiversity has been conserved and even restored, and the use of pesticides and fertilizers has been reduced. Sugarcane burning has been eliminated at certified Fairtrade Cooperatives. All of this has had a direct impact in improving the lives of millions while developing a solid franchise and differentiation for LAICA. The investment has helped improve the health and safety of farmers and their families and has allowed farmers to engage and transition to certified sustainable agriculture benefiting current and future generations.

A similar version of this article appeared in Finance in Motion’s Agents of Change – Impact Investment Report 2016.