By Chris Lang
Yesterday, REDD-Monitor wrote about the Althelia Climate Fund. The post was based on a new report published by Re:Common and Counter Balance. The report focussed on Althelia’s REDD projects in Kenya as well the financial structure of the fund.
One of the questions raised in the report relates to the returns generated by the Althelia Climate Fund.
One of the backers of the fund is the Church of Sweden, which invested €10 million in 2013.
In a 2016 interview with Institutional Investor, Gunnela Hahn, the head of responsible investment for the Church of Sweden, said that “the return has been in double digits”.
Jutta Kill, the author of the Re:Common and Counter Balance report, commented that,
[Hahn’s] comment raises questions about how the Althelia Climate Fund has been able to generate such returns given the small published project portfolio, the deflated carbon credit price and the figures shown in its 2015 Audited Annual Report.
After writing the post yesterday, I sent the following questions to Gunnela Hahn and asked for an on the record response:
- Can you please confirm that the Church of Sweden has received “double digit” returns on its investment in the Althelia Climate Fund?
- How much is Church of Sweden’s return on its €10 million investment so far?
- Does the Althelia Climate Fund pay out a dividend? If so, how frequently?
- Is the dividend a fixed amount, or does it vary depending on how the projects have performed since the previous payment?
Hahn replied this morning with the following clarification (quoted here in full):
I think I need to modify that answer a bit. Althelia does not pay out any dividends, so the figures I refer to are desk figures, not realized. And they are very volatile, could go up 30-40% one year and down 20% the next year, but keep in mind it is not realized. The figures I refer to are however on called capital. The targeted return is 8-10% on the committed capital, and Althelia seems to be on track with that target. So, at least it will be double digits for committed capital if we reach 10% return from committed capital, and for sure double digits will be the case for called capital.
Maybe you should ask Althelia to get a better understanding?
Apart from attractive returns, I think there are so many sustainability advantages with their project model, ranging from all the benefits that forests have for the planet and its inhabitants (climate mitigation, biodiversity, regulator of soil, water, moist, temperature) as well as better livelihoods for local communities, better agricultural practices, etc etc. – Althelia sets a great best practice target that others should get inspired from. For me, they are a very positive change agent that we would need to see more of!
REDD-Monitor will follow up with some questions for Althelia. Watch this space.
Oh bless her, she doesn’t recognise a pyramid selling scheme when she sees one!
All that paper value going up and down each year dependent entirely on accounting fiddles, but no underlying assets to talk of…And meanwhile ‘management fees’ of extortionate proportions constantly being withdrawn….??