The Rockefeller Foundation has officially published its annual Zero Gap Fund: 2023 State of the Portfolio report, where it highlighted the critical role of catalytic capital in addressing the world’s most pressing challenges. Before we dig any further, we must acknowledge that the Zero Gap Fund was launched back in 2019 in partnership with the John D. and Catherine T. MacArthur Foundation to promote investment in scalable and innovative impact-driven investment solutions. In essence, the fund would deploy patient, risk-tolerant, and flexible capital into promising financial strategies and mechanisms aimed at increasing large-scale private investment for the UN Sustainable Development Goals (SDGs). Anyway, going by the available details, the report revealed how, as of December 2023, the Zero Gap Fund had facilitated the mobilization of over $1.04 billion in private finance across 12 high-impact investment strategies. To go a little deeper, the Fund in question would particularly conceive two whole new investments last year i.e. Blue Forest’s FRB Catalyst Facility and the Trailhead Capital’s Regeneration Fund I. Although slightly different in the way they pursue it, both these funds are geared towards emphasizing the importance of collaboration between finance, science, and communities to address the effects of climate change and build resilient ecosystems.
“Across its portfolio, the Zero Gap Fund invests in disruptive technologies and tech-enabled companies to address climate change, regenerative agriculture, financial inclusion and access to essential services. The Fund channels impact-focused market opportunities to mainstream investors, reducing traditional market barriers to mobilize private capital at scale,” said Maria Kozloski, Senior Vice President of Innovative Finance at The Rockefeller Foundation. “As the Zero Gap Fund’s portfolio matures and climate change worsens, we are seeing proof of concept for solutions and strategies that are critical to for deliver positive impact to at-risk people, communities, and ecosystems.”
Fair enough, taking a closer look at some of the investments in Zero Gap Fund’s portfolio, we begin from Blue Forest’s Forest Resilience Bond I (FRB I). This one leverages a public private partnership structure to mobilize private capital for investments in forest restoration and fire risk mitigation, thus protecting communities and ecosystems on public lands. As of 2023, FRB I has helped the world avoid 27,280 metric tons of CO2e emissions, restore 2,675 acres of terrestrial ecosystems, as well as protect 27,601 acre-feet of water supply. Next up, we have Lightsmith’s CRAFT, which basically finances solutions for climate adaption and resilience so to improve the lives of under-served communities globally. Up until now, CRAFT has successfully reduced 1 million tons of net GHG emissions, while simultaneously creating more than 1,300 net new jobs as of 2023. We referred to Zero Gap’s Blue Forest’s FRB Catalyst Facility, but what we still haven’t mentioned is how it banks upon the public private partnership structure of the Forest Resilience Bond to create a pooled, revolving investment facility, and therefore, accelerate the financing of critical ecological restoration projects. As of 2023, the facility has helped us prevent more than 26,300 metric tons of CO2e emissions.
Joining the same would be Trailhead Capital’s Regeneration Fund I, a fund that supports businesses developing sustainable and regenerative practices in agriculture and food systems, via carbon sequestration, biodiversity, land preservation, water conservation, as well as food waste and quality management. So far, the Regeneration Fund I has successfully conserved 411 million gallons of water, avoided more than 11,000 tons of CO2e emissions, and impacted 3.4 million acres of land across their portfolio companies.
“We are proud to support the Zero Gap Fund and The Rockefeller Foundation with one of our field partnership investments as part of the Catalytic Capital Consortium–an investment, learning, and market development initiative to increase the knowledge, awareness, and use of catalytic capital globally,” said John Balbach, Director of Impact Investments at the MacArthur Foundation.
