December 13, 2024
Rainforests are essential for storing carbon and mitigating climate change, yet two decades of palm oil expansion in Indonesia have driven significant forest loss. To help combat this, Abler Nordic has now secured a credit guarantee from Temasek Foundation to support its Climate Smart Fund, aimed at reducing deforestation, increasing smallholder farmer incomes, and building climate resilience in Indonesia.
The credit guarantee from Temasek Foundation— the philanthropic arm of Singapore’s government-owned Temasek International— will help lower financing costs for farmers, reduce risk for private investors, and allow Temasek to back an innovative solution that fosters sustainable farming practices and climate resilience in Indonesia.
Temasek Foundation’s backing, along with USD 10 million in pilot funding from Norway’s Ministry of Climate and Environment and Norfund’s guidance, shows how public funding sets the stage for blended finance as the fund scales to attract private investors and maximize climate impact.
“As climate change intensifies, smallholder farmers are caught in a vicious cycle of low productivity and environmental degradation. The Climate Smart Fund offers a promising model that addresses poverty alleviation alongside climate mitigation and adaptation, equipping farmers with the tools they need to thrive sustainably.”
Anne-Beate Tvinnereim, Development Minister of Norway, speaking from COP 29
The Climate Smart Fund provides long-term, affordable working capital to farmers cultivating coffee, cocoa and oil palms in Kalimantan and Sumatra. With limited yields, many of these farmers expand into forests, risking deforestation and loss of biodiversity.
To counteract this, the fund provides replanting loans, quality seeds, sustainable fertilizers, and climate-smart agricultural guidance, enabling farmers to sustainably increase yields and reduce forest encroachment. Satellite and on-ground monitoring cover 200,000 hectares of conservation zones to track encroachment.
To meet the urgent need for climate adaptation, intercropping strategies are used to diversify farmers’ incomes and build resilience. For cocoa and coffee farmers, climate-adaptive loans are provided through partnerships with Koltiva, Swisscontact, and ICRAF, facilitating shade-grown agroforestry systems. These systems combine cocoa and coffee with shade trees, creating cooler microclimates and conserving soil health—helping farmers adapt to rising temperatures and unpredictable rainfall, as well as generating extra income from diverse crops.
In palm oil cultivation, Abler Nordic and partners Livelihoods Fund, SNV, and Musim Mas are testing similar agroforestry models to replicate positive outcomes.
Beyond climate mitigation and adaptation, the fund strengthens communities by helping farmers secure land rights, achieve global sustainability certifications, and improve traceability. In its pilot phase, the fund has trained 2,100 farmers and increased their annual incomes by typically 35%.
Participatory land-use planning has been completed in six villages, engaging 16,500 residents and covering over 100,000 hectares. Land rights for the first batch of farmers have been secured and 350 farmers have received Sustainable Certification, with 400 more registered for audit.
Now scaling to support 15,000 to 30,000 farmers by 2030, Abler Nordic aims to expand the Climate Smart Fund in the first close to USD 40 million through a combination of investor capital, guarantees, and grants. With Temasek Foundation’s credit guarantee offering private investors added confidence, the fund seeks to attract a blend of public and private financing to drive sustainable, climate-resilient agriculture across Indonesia.
