Executive Summary
The Environmental Finance and Learning Fund (EFLF) was a three-year collaborative programme launched in April 2022 by Esmée Fairbairn Foundation (Esmée) and Environmental Funders Network (EFN).
The EFLF aimed to unlock significant new funding for nature recovery and to build the environmental investment market by increasing the number and volume of investors offering impact-first investment to highly impactful environmental initiatives. It was designed to help participant funders ‘learn by doing’ about environmental investing, building their knowledge and confidence and supporting them to invest directly in initiatives with positive environmental impact. It consisted of two elements: a funding pot and a three-year learning programme.
Funding pot for environmental impact
£2.7m
total funding pot over three years.
15
funder participants contributed a total of £679,000 with Esmée match funding 3:1.
6
investments made in projects with differing risk profiles, on areas including nature restoration, sustainable food, and healthy marine environments.
A three-year learning programme
Co-designed with funder-participants, and led by EFN, the learning programme ran alongside the funding pot, enabling participants to learn in real time about Esmée’s social investment process, as well as from experts and each other.
83% of funder participants increased their confidence and skills in environmental investing through the learning programme.
The learning programme featured quarterly learning sessions based on an ‘open-book approach’ to learn from Esmée’s investment processes. Sessions included environmental experts from Esmée’s team, speakers from portfolio investees and external environmental and finance experts. Participants co-designed aspects of the programme, which included small-group ‘Action Learning’ sets, and optional sessions on specialist topics such as due diligence, investment types and legal forms. There were also opportunities for participants to present investments that they had made or were considering. Six investments were made over the threeyear programme all of which promised strong positive environmental impacts for nature restoration, a more sustainable food system, promoting healthy marine environments, or a combination.
Characteristics of participant funders at the outset
• 50:50 foundation vs individual participants. It is acknowledged that the categories of ‘individual’ and ‘foundation’ overlap.
• Low or no employees. The majority of participants didn’t employ staff, and the maximum number of employees was two.
• All participants were actively giving to environmental causes. The majority were giving less than £50k per year, although some were giving over £500k per year.
• 7 out of 15 (46%) were active investors, having made environmental investments in the last financial year.
• Participants had a range of environmental funding priorities ranging from ecological restoration, regenerative farming and community engagement.
• The geographical focus for giving/investing was restricted to the UK for some and others funded internationally.
EFLF has made good progress towards its intended outcomes. We know that the process of moving from grant-making to investing takes time, from the experience of this initiative and other impact investing networks, and it may take a number of years to see the full benefits of this work.
Outcome 1.
To increase the skills, knowledge and confidence of participants to make environmental investments
Results
• 10 of 12 respondents (83%) told us that they are more confident in their knowledge and skills for environmental investing as a result of the programme.
• Participants’ confidence for environmental investing grew across multiple measures, most notably in understanding business and financial models, understanding the range of investment types within the market, and risk assessment.
• 11 of 12 participants (92%) reported that their learning goals had been fully or partially met by the programme.
Outcome
Results
• Participants made specific positive changes to their practice in environmental investing which are attributable, in part, to the programme.
To increase the value of environmental pathfinder funding and numbers of investors offering it
• The number of active environmental investors increased from five to eight during the programme.
• Participants’ levels of environmental investing increased during the programme1.
• Six participants (50%) gave higher priority to environmental benefit in their funding decisions at the end of the programme, compared to the beginning.
• The number of participants who plan to increase their environmental investing in the future increased by 25% from six to nine2 .
• Participants also reported that their environmental giving increased during the programme.
Environmental pathfinder funding is defined for this programme as social investing with an environmental focus.
At Esmée Fairbairn Foundation, their approach is impact first, and financial returns second.
1 Excluding those who dropped out.
2 Data from mid-term and final surveys
Outcome
Results
• All participants are interested in co-investing with Esmée in the future, and some would like to co-invest with their EFLF peers and other funders.
To create a longterm network of active environmental investors for collaboration and co-investment
• Participants’ feelings of connectedness to other people and organisations involved in environmental investing increased through the programme.
• The creation of a peer network was valuable to some participants in multiple ways, although not all participants found it valuable.
Executive Summary
Barriers to environmental investing
The barriers cited by participants as preventing them from doing more environmental investing included lack of investment opportunities, the high resource requirements in terms of knowledge, skills, and time and the high level of capital required. In addition, the fact that early stage ‘environmental pathfinder’ investments are often risky, long term and illiquid with low returns was seen as a barrier.
Recommendations
For Esmée
Continue to build a pipeline in this sector, aiming to offer at least two co-funding opportunities per year to EFLF alumni and other small funders.
For EFN
Continue to provide forums for learning and networking about environmental investing such as the Environmental Impact Investing Group, aiming to engage at least 35 new funders per year.
Promote this ‘open-book’ learning and co-investment approach to other large funders as an example of good practice over the coming 12 to 18 months.
For Esmée and EFN
Esmée Fairbairn Foundation
An independent UK funder, Esmée Fairbairn Foundation aims to improve our natural world, secure a fairer future and strengthen the bonds in communities in the UK. We unlock change by contributing everything we can alongside people and organisations with brilliant ideas who share our goals.
Registered charity 200051
020 7812 3700
info@Esmeefairbairn.org.uk
Esmee Fairbairn Foundation
@esmeefairbairn.bsky.social
@EsmeeFairbairn
@esmeefairbairn
www.esmeefairbairn.org.uk
Environmental Funders Network
Environmental Funders Network works to transform environmental philanthropy in the UK: increasing funding levels, improving effectiveness and supporting people and organisations helping to create a thriving planet.
Environmental Funders Network is a charity registered in England and Wales (no. 1181318) and Scotland (no. SC050579).
info@greenfunders.org
www.greenfunders.org
Design: Steers McGillan Eves
