On April 4, 2022, ClimeCo, a company that develops and manages environmental commodities, announced its partnership with YAKOPI (Yayasan Konservasi Persisir Indonesia) and PUR Projet to reforest 6000 acres of vital mangroves in the Aceh and North Sumatra regions of Indonesia.
ClimeCo will fund the reforestation of these mangroves by selling the resulting third-party verified carbon credits and implementing the project through their local partnerships with YAKOPI and PUR Projet.
This investment will thus support climate restoration, gender-equitable employment, ecosystem services payment to local communities, ecotourism business development, and a pilot program for locals to implement silvofisheries; a form of sustainable aquaculture that integrates planting and maintenance and protection of mangrove forests in aquaculture ponds.
Mangroves sequester three to five times the amount of carbon as regular forests.
Then, just one day later on April 5, 2022, ClimeCo announced that it has raised over $50 million in an investment round led by Warburg Pincus, a leading global growth investor, and The Heritage Group, which made ClimeCo’s first outside capital investment in early 2021. The financing will be used to fund corporate and project-level growth initiatives. As part of the capital raise, ClimeCo also gained access to additional funds for project equity financing.
Indonesia is home to over 20% of the world’s mangroves. In the last three decades, roughly 40% of Indonesia’s mangroves have been lost due to shrimp and fish aquaculture, leaving many former shrimp ponds abandoned and local communities with little access to economic opportunities.
The North Sumatra region has lost 60% of its pristine mangroves due to unregulated aquaculture, putting coastal resilience, biodiversity, and wildlife habitats at enormous risk. Aquaculture isn’t the only culprit in the loss of mangroves; in the Aceh region, a substantial amount of its mangroves were lost due to a tsunami in 2004.
“The improved livelihoods of the local communities and the long-term success of this mangrove reforestation project are interdependent- with the support of our partnerships, this project has all the right elements to achieve both,” says ClimeCo Program Development Manager David Chen.
Participants in the voluntary carbon markets are becoming more aware of the environmental, social, and economic co-benefits of mangrove reforestation/conservation projects, and demand for these carbon offsets is accelerating.
“For years, clients have looked for ways to support carbon emission reductions in the oceans. Mangrove projects offer a locally beneficial, third party verified, registry approved method to do so,” says ClimeCo Vice President, Voluntary Markets Dan Linsky.
The new $50 million equity and financing line will allow ClimeCo to execute on major decarbonization projects for clients around the world. With these investments, ClimeCo will continue to grow its global project development efforts in reforestation, mangrove restoration, and ocean plastic recovery/reuse, as well as its foundational industrial gas and agricultural methane programs. ClimeCo is also expanding into carbon capture, utilization, and storage (CCUS) and other high-impact, emerging decarbonization asset classes to support its energy-intensive, trade-exposed clients in the cement, ammonia, and hydrogen sectors.
The investment will also allow ClimeCo to build out its team through organic growth and additional mergers and acquisitions, further strengthening its vertically integrated model targeting sustainability, policy and advisory to project development and environmental credit transactions.
“ClimeCo is a vertically integrated global company focused on decarbonizing the most challenging industrial sectors,” says William (Bill) Flederbach, CEO and President of ClimeCo.
“We operate at the forefront of an exciting transformation as global businesses, governments, and environmental advocates recognize that environmental markets are the most efficient way to address environmental challenges. We are growing incredibly fast to meet this demand, and it’s the right time for Warburg Pincus and The Heritage Group to invest in our brand. Their networks and passion for project investments align perfectly with our vision,” he added.
Warburg Pincus has a strong track record of investing in companies committed to the growth of Environmental, Sustainability, and Governance (ESG) practices across all sectors, including low-carbon opportunities. Notable ESG investments include Assent, Eco Material Technologies, FlexXray, Fortius, Gradiant, Monolith, PTSG, Scale Microgrid Solutions, Solar Mosaic, and TRC.
“As one of the leading platforms in the carbon management and environmental solutions space, ClimeCo has the unique opportunity to help clients reach their sustainability goals. We strongly believe in the transition to a low-carbon economy, a shift that builds upon our experience investing in renewables, energy transition, and decarbonization investments for the past two decades. Our investment in ClimeCo underscores our commitment and thesis-driven approach to investing in innovative decarbonization platforms,” said Jeff Luse, Principal, Warburg Pincus.
“ClimeCo has built a premier decarbonization platform, supported by a strong reputation and track record of execution. We are excited to partner with Bill and the ClimeCo team to support the company’s mission to provide the market with leading sustainability solutions, helping clients identify and manage climate risks while offering cost-effective decarbonization solutions that are critical to catalyzing a transition to a low-carbon economy,” added Leela Ramnath, Senior Vice President, Head of ESG, Warburg Pincus.
Luse and Ramnath will serve on ClimeCo’s board of managers. Their experience will help ClimeCo with business scaling strategies and global ESG depth and reach.
The Heritage Group is a fourth-generation, family-owned business, managing a diverse portfolio of companies specializing in heavy construction and materials, environmental services, and specialty chemicals. With more than 5,000 employees and 30 operating companies worldwide, The Heritage Group aims to build a safer, more enriching and sustainable world by harnessing the power of family.
“The Heritage Group has been working closely with the ClimeCo team for several years, and this latest investment symbolizes our optimism about the continued growth of this platform and its efforts toward decarbonization,” says Chad Peterson, president of Heritage Sustainability Investments (a subsidiary of The Heritage Group). “We are excited to support this next chapter of growth for Bill and the entire ClimeCo team.”
YAKOPI is a local Indonesia group dedicated to restoring mangroves and providing employment opportunities for local women and youth. Directed by Eling Tuhono, YAKOPI are experts and local leaders in mangrove restoration and will be responsible for managing many logistical aspects of the program on the ground.
PUR Projet is a certified B Corporation that specializes in designing and implementing agroforestry projects, nature-based solutions, and sustainable supply chain interventions. As an on-the-ground project developer, PUR Projet will manage components of the carbon offset certification, help navigate local culture/politics and advise on reforestation efforts.
ClimeCo says it has witnessed substantial, diverse, global interest in the purchase of mangrove projects from its carbon offset buyers. Such interest is grounded in corporate and consulting staff recognition of the charismatic, abundant, substantial, and important co-benefits of mangrove projects.
ClimeCo has transacted hundreds of thousands of mangrove-derived voluntary CO2e reductions so far in 2022. From shoreline protection to habitat restoration, generating new jobs to rebuilding food supplies, the seemingly endless list of mangrove restoration impacts in addition to carbon capture and storage has been very moving to carbon offset purchasers.
All images courtesy of Yakopi.