Project detail - MITSIRY Biodiversity and Climate Fund L.P.

Who is our prospective customer?

The Mitsiry Biodiversity Climate Fund (MBCF) is a Madagascar and South-West Indian Ocean focused investment fund that aims to provide growth capital and debt to small- and medium-sized enterprises (SMEs) operating at the intersection of climate, biodiversity and inclusive growth. The Fund targets a total size of USD 50 mln and will be managed through a joint venture between Miarakap, a Madagascar-based investment management company, and Kinomé, a France-based climate and biodiversity advisory firm with a proven track record of operations in Madagascar.

What is our funding objective?

FMO’s proposed investment is up to USD 7 mln in equity in MBCF. The investment will support the Fund’s establishment and deployment of long-term growth capital to Malagasy SMEs operating in climate- and biodiversity-relevant sectors, in line with the Fund’s investment strategy.

Why do we want to fund this investment?

MBCF provides much-needed capital to the South West Indian Ocean region, where climate- and biodiversity-relevant SMEs face a persistent financing gap. In Madagascar, deforestation and biodiversity loss are closely linked to limited economic opportunities in rural areas. Through its climate mitigation and nature-positive investment approach, the Fund aims to create economic value from standing forests, supporting sustainable land use, employment and livelihoods, while addressing both environmental degradation and its underlying socioeconomic drivers. FMO’s investment aims to support activities that contribute to biodiversity, contributing to SDG 13, in line with the FMO's methodology to determine the green finance attribution. FMO’s investment further aims to support activities that contribute to financial flows to LDCs and Inclusive growth contributing to SDG 10.

What is the Environmental and Social categorization rationale?

The investment has been categorized as E&S Category B+ given the Fund’s strategy to invest in scalable SMEs in Madagascar, with a focus on the sustainable use of natural resources such as spices, cocoa, and essential oils, nature-based solutions including seaweed farming, ecotourism, and agroforestry, as well as climate mitigation activities like renewables, reforestation, and land restoration. MBCF’s portfolio will potentially trigger IFC Performance Standards (PSs) 2 to 7. This implies exposure to a wide range of material environmental and social (E&S) risks, including biodiversity, land, community labour, and carbon integrity issues. Overall risk exposure is therefore considered high, but the B+ classification is considered appropriate due to the SME focus and relatively smaller scale of impacts. Key actions include strengthening E&S capacity, refining and calibrating E&S tools and procedures, and strengthen monitoring and reporting systems to ensure the Fund can adequately manage the risks and materialize positive impacts.