 So, yeah, thank you everyone for joining us. We are really excited to be hosting a session on pay for impact. So my name is Rebecca Kadiru. I'm the Managing Director for Solidaridad in North America. And Solidaridad is a global nonprofit network organization that works to promote sustainable and ethical supply chains globally. One of our core goals moving into the next five-year planning period we have for ourselves is really focusing on building an economy and sustainability solutions that work for everyone, particularly those at the bottom of the pyramid. And so we're really excited to host the session on pay for impact. I'm going to give an introduction to our speakers and then I'm going to just run through a brief of how the session structure is going to work. So we have from Solidaridad, from our Brazil office, we have Monique Vani, who is our manager, our global digital innovation manager. We have Frederick Klossin, who leads our impact investment team out of the Netherlands. And then we have Hammond Mensa, who leads our impact investment team out of our West Africa office in Ghana. And then we also have Ani Patan Powers, who is joining us from the United Kingdom, though originally from South Africa, if I think I've got it correctly. And then we have Karim Harji, who is also joining us from Oxford University as well. So we're really excited to have everyone here. Our session is going to look like this. We're going to run through a test case of what a potential impacts and pay for impact scenario looks like. And then we will break up randomly into four breakout sessions that will represent four stakeholders in the process. So farmers, investors, verifiers and outcome payers. And then we will come back together and share those learnings. So we're excited for this to be an interactive workshop. And I am going to hand this over to my colleague, Hammond, who's going to walk through a little bit more on what pay for impact means and the test case that we are going to be doing in this session. So thank you, everyone, for joining. All right. Thank you very much, Rebecca. And good evening, good morning, good afternoon, everyone. The problem that we are trying to solve at the moment is that according to data available at the World Bank, only 2% of the $391 billion in climate finance go to farmers. And there are two challenges that we see. One is that farmers lack the technical knowledge to adopt resilient behaviors. And in even situations where they have the technical know-how or the financing or the inputs to adopt such behaviors, measuring the impact of their actions in a manner that is transparent and cost effective is an issue. And therefore, we haven't seen the finding from climate finance flow into production or into food production. Why it is important that we solve this problem is that smallholder farmers or farmers in general amongst some of the most vulnerable to climate change, farmers are also instrumental in safeguarding the food chain for a vast majority of the global population. And then agriculture also has a capacity to play a crucial role in carbon sequestration. So it is important that the problem that we have identified is resolved. So we have looked at the structure that you see on your screen currently, which we believe would promote the flow of climate finance into the farming space. And the actors that we have in there are the investors and these are investors who are looking for ways of expanding their ag sector portfolio in a cost effective manner. And there are also, of course, the impact makers, which are the farmers and also service providers to farmers who are looking for financing for their operations. There are corporates, both public and private, who are interested in paying for climate or positive climate outcomes. And of course, the independent verifiers who play the role in ensuring that predefined outcomes are verified and made available to all the actors within the chain so they can take decisions with respect to the flow of financing from investors to the impact makers. Next slide, please. So in terms of what we have done so far, this is an aggregation of a number of partnerships and platforms that we have within Solidaridad that has culminated in this project known as Farm Impact. And the main aim of this platform is to solve the difficulties that we have in measuring adaptation impacts because, as was said earlier, it is a hindrance to investment in climate smart agriculture. So what has been done on this platform is that we have developed a cost effective or lean way of assessing climate risk or climate vulnerability. Once the assessment is done, the output from that assessment is used to generate a pathway towards farm level resilience for smallholder farmers. Smallholder farmers who adopt or implement this plan generate tokens that they can monetize to do various things. And as part of this platform, also we have created an opportunity or a platform for farmers who have the tokens to be able to connect to investors who are interested in purchasing these tokens. Farmers can now use the incomes that they make from selling these tokens to pay for inputs or reduce the cost of borrowing for investment into their farms. Next slide, please. So these are the key actors that we are looking at. The impact makers specifically for this session, we are looking at cocoa farmers in Ghana and Côte d'Ivoire who currently live on less than $1 a day, even though they produce about 60% of the global cocoa output. And also SMEs who provide services to smallholder farmers who are not able to do that on their own, either because they lack the money to do that or they lack the manpower. To provide the services on their own. And then for the investors, currently there is a demand for about $240 billion for farm level investments, which has not been met at the moment. And the reason why the funding is not flowing is because value chains in the cocoa space are not tight enough. They are pretty loose. Farm operations are not as professionalized as they ought to be to be able to attract the kind of investment that is needed. Traditional verification methods are prohibitive because they rely largely on boots on the ground. And then new technologies that have come up also do not have ground access and therefore deploying that have a few gaps that have to be addressed. And then of course the auditing system also lack continuous improvement mechanisms. Outcome payers are public and private funders who are interested in paying for climate outcomes at a smallholder level. Next slide. So I would hand over to my colleague Manik Vani who will take us through the rules for the breakout sessions. Thank you. Hi. So I think that we should sit down with our individual stakeholders. However, it is that we are going to be distributed and have a little bit of a look at what motivates them, who they are, what they need and what they are looking for and see what that means in terms of designing such a financial instrument. What are the specific needs and what are the specific processes and aspects of this product that each of these stakeholders is going to need. Each of the leaders of the state of the groups will take you through. And then that will let us come back to the session with everyone together and understand what are the building blocks of a solution that meets all of these needs. How do we construct something that is a meeting point for all of these often conflicting interests and how do we build something that will bring them together. I would like us to pay special attention to some specific issues which have to do with making these things efficient and scalable, but also ethical, especially relating to privacy and security of data of farmers, which is often an issue when we are trying to verify on-farm practices. I think that is it for the moment. Should we break out? Sure. Just finishing off the... I'm going to spend a couple of minutes now with... It's okay. Maybe I got it. I'll just share my screen here. A couple of minutes now with each of the rooms to report back on their discussions. And then I'll try and pull it all together for us to finish. So can we start with the farmers, Hemans? Tell us how your discussion went and what you have come up with here. Discussions went very good. We were fortunate to have someone who had worked in the cocoa landscape in Sehry also in Ghana. No way. We had someone from USAID in ours. I mean, I think it's totally randomly. And we had some great allocations. Yeah, that was one of those fortuitous moments. So that was good. And in terms of discussions or what were proposed, there was a proposal to look at the minerals that sit underneath the farmers field. Currently, there is a lot of illegal mining happening in the cocoa landscape. And that is a big source of worry for cocoa farmers. So if farmers have the rights to the mineral that sits underneath their farm, I believe that would go a long way in stemming that. Land rights. And let me take that together with tree rights. Land rights, tree rights, big issue in Ghana and Côte d'Ivoire. Situations where farmers are tenants. It becomes very tough or almost impossible for them to implement good ergonomic practices, especially when it comes to rehabilitating or renovating their farms. Because as soon as you remove the old trees, the land reverts back to the landlord. So that's a big issue that ought to be looked at. Cash incentives to prevent deforestation. Deforestation is not a big issue in the cocoa landscape. It threatens trade development. And so we also came up with a proposal to look at cash incentives to prevent deforestation. And then, of course, there was an interactive voice response, or what was referred to as a talking book for delivering a good ergonomic advisory services to cocoa farmers. In terms of desired impact. But I'm sorry, I'm going to stop you from going through each bullet point. Tell us what your solution looks like in the middle of the week. Great, great. So the solution is a digital tool that collects data on the adaptation behavior of farmers. So they can generate points and trade those points for money. So they can invest those money in farm-level productivity activities. One thing that also came up was to ensure that there are quick wins to encourage continuous investment. We don't wait until the end before farmers begin to benefit from this solution. So that was the outcome of our conversation. Excellent. Is there anyone else that was in the farmer discussion that wants to add anything? You all did, Hammond, speak for everyone. You all got all good? I guess. All right, excellent. Great. It was perfect. Perfect, wow, that's impressive then. All right, Frederick. Yes, can you hear me? Yes. Good. Investors. Yeah, we definitely had the best brains at the table. And I'm really grateful for my fellow companions in the breakout room. Without them, we would never have this brand new product at the table, which is, I think, a crushing, eye-striking new solution that will completely disrupt the whole impact investment industry. So, yeah, bear with me. The bar is being set very high, I know, for the other groups. But the product that we're looking at is that we want to make sure that blended capital comes in when impact is being verified. And only, you know, the current system is that blended capital comes in, in a lump sum often, at fund level, to actually take the first losses or, you know, make sure that the returns are better, you know, given the risk. And now we want to change that system that instead of putting it all at once at the table, what all donors do, we only do that when impact is being verified. So, that is quite a change for investors, because at that moment, you know, investors really need to prove that the impact that they achieve by their capital allocations is real. So, and then, of course, you know, we make use of the new technology with the verified impact, and we will, you know, hear more about the other subgroup, you know, how that will play out. But that's actually the basic thing. And, you know, we were so happy and champagne was flowing all over the tables, until the moment that we start challenging ourselves, which was actually one thing we should not have done, because then the big questions came up. And one of these big questions was like, what happens when inintended site effects occur, you know, this system is so rigorous, it actually measures, you know, exactly what's happening on the ground. But what what happens when, you know, you know, farmers plant trees, they use a lot of water. And then you're actually overshooting your actually goal. So that became a real question. So how can pay for impact avoid these unintended side effects? And that's what we hope that will come out of one of the next groups, a solution. But that's it, Oni. Yeah, it was an honor. Very interesting. Did Frederick, did Frederick cover everything anything else anyone wants to add from the investor group? All right, the verifiers. We're all talking about all of this impact that we want to have. How do we actually make sure it's real? Maybe I'll start on you and then I'll let Monique jump in. So we had some really good discussions. I think we were just getting into the solution when time ran out. But we think we have a good number of things that maybe respond to what people have said so far. So just in terms of the kinds of things we discussed, initially, we talked quite a bit around also making sure that it includes, you know, farmer perspectives, provides values to farmers, and then there's different ways in which you could provide value to make it easy for farmers, etc. But when we think about the kind of complexity of this ecosystem, there are a number of almost like decisions or choices that we have to think about, because one of them is, you know, who does verification provide value to. And so that's one of the questions that we'll come back to shortly. We also talked about some of the tradeoffs between, for example, costs and accuracy that we can get a lot of data, we can get incredibly precise data, but it also costs money, even if we're using technology to be able to do this. So, you know, at some point, that becomes a really important piece when we think about how we're engaging on the ground. A number of people also just, you know, made this point around the relationships that you need on the ground to do this well, to be able to enhance your credibility and trust, and that both in this sector as well as maybe in some of these regions, the assumption is that maybe this just doesn't exist on its own. So both the verifier as well as the kind of approach you take needs to be able to enhance the credibility and trust as a result of the process. And it should strengthen and contribute to building some of that social capital within the community. We talked a little bit about incentives that are being tested, for example, in other areas we know nudges, and those kinds of incentives can be helpful. There's also monitoring incentives that can be used. And then we spent a bit of time on thinking about some of the ethical principles, and the big questions are really, you know, whose data, who owns the data, how do we think about use and ownership in ways that actually protect farmers in this case, and again, enhance credibility and trust in the process. And it was important, I think pretty much every comment was that it should be community driven. And so Monique, maybe I'll hand it over to you to fill in a couple of other points and talk about the components of the solution. Yeah, so I think verification is where everything, all the complications of Frederick's accession kind of fall. And verification is something that then needs to be negotiated, and the trade-offs in order to have trust need to be clarified and systematized. I think that's the best that we can achieve. I mean, we can't expect to do away with complexity, but I think we need to identify and map the pros and cons as we go along. So for example, we were talking about, if you're talking about cost versus accuracy, for example, I don't think there's going to be one solution. I think that different investors are going to have different comfort levels of what they're looking for. And what you have to be able to offer is options along that gradient, and technology helps us do that. So you can say, oh, I want everything to be third party verified, or I'm happy with some proxy indicators and some spot checking, and you're going to have to build a lever along that verification gradient to meet different investor's needs. And this is why having things that work on platform models where different competing interests can work together is also crucial so that you can have these different layers and these different orientations working together. Another thing that I find key is we cannot go into positions where we shy away from real community impact in adaptation because it's complicated to verify. We need to move past this deadlock and start working with what we have and let the advances of AI and other things take away the complexity with time. Because or else we're going to end up with climate finance that when it goes to farmers continues to go to large mitigation schemes for large farmers and what small holders need really is adaptation funding. So we need to find the levers of simplification and get into it because if we shy away from complexity then the farmers will not receive the investment. So we have to parameterize and move ahead. I mean that was like a master class in like impact verification. I feel like I should have been taking notes. Excellent. So then our last piece was around the outcome payer. I told my group we had the hardest one but that's what you always tell the teacher anytime you need to any group so but I'm sorry to dissuade all of you from they know you actually believe me. So we also had an amazing group because we actually had someone from a DFI around the table and so Zach was able to to guide us as we were as we were looking at what would be important to the outcome payer. So I think I might put Zach and Marianne and Elsa maybe even on the on the spotlight here. Does anyone else want to I've been talking a lot. Does anyone else want to talk about kind of what we what our discussion looks like. Everyone's gone back into conference mode. Just sitting and listening. All right. Wait Elsa you're you've unmuted. Go ahead. Oh dear. I just wanted to say that I don't know if I feel comfortable enough to present what we what we discussed. So no I'd rather leave it to you. Sorry. No worries. That's fine. All right. Well I've given you guys a chance please weigh in as you go. But so really from the outcome payers perspective you know one of the things that we discussed a lot was both the weighing up of both a mission oriented outcome payer as well as a financially aligned outcome payer. So someone like a development finance institution like USAID who is needs to buy these outcomes because it's part of what their social contract is. That's what they do is they create development and create social environmental outcomes as opposed to potentially a corporate or an insurance company that is financially incentivized to create these environmental outcomes or for instance a corporate with this large supply chain that would be interested in being able to have the transparency around their supply chain from a farming perspective. So it's both of these things and potentially you know both and not either or. And so one of the things that we talked about is as the outcome payer what what could one idea could work because one of the things that USAID and other development institutions have is they do have a kind of a set of criteria and one of the things that we talked about from my experience building outcome-based contracts is that the complexity comes in getting the different stakeholders around the table to actually come to an agreement because there's so many limitations sitting around the table that finding the section that overlaps can be very difficult. And so one of the things that you know that Marianne Brokaw brought up was just around wanting a long-term program like something that was going to be here for a long time. And so we played around a little bit with you know would it be something where USAID potentially would be willing to be the payer for a certain period of time with the idea that you can that you'd have to over time get additional outcome payers potentially more financially aligned outcome payers that would come into this type of contract over time. So kind of like a Gabby model where they would essentially fund it over period and then hopefully you would get it to a point where you had kind of more financially motivated outcome payers. And then I think just one last thing that I'll bring up here obviously we talked about data privacy as well and that would be something really important. So one more thing that we talked about which is important for all of us I think is around the contracting of this and we have in here you can see the force majeure or what's called a MAC clause material adverse change clause. And so there's been a lot of interesting work done on the contracts of outcome based instruments and and one of the pieces that is very interesting is around what happens in a time of crisis or when things don't go as you expect them to go. And Deborah Baranson put a lot of work on this from NYU and what she's found is that essentially the best way to deal with this is something called incomplete contracting which means you come back to the table. So not every scenario is actually worked out in the contract and so you're willing to come back to the table to negotiate and to be able to find something that works for everyone because people's everyone's incentives should be aligned to actually creating the impact. So something that we have to consider when we think about outcome based contracting. All right so we kind of created something don't you guys think? We have farmers that are able to there's a bunch of different ways that Hammond and your group on impact makers created ideas that would be able to use the technology that Monique and Karim and your group talked about being able to collect on a regular basis and I think you know Frederick this idea of linking it in with blended finance is a great one. There's lots of work being done we're about to start a big project with Roots of Impact and UBS on this. I think it's a really interesting way to think about you know how do we align the outcome payers into an investment agreement that then aligns the incentives of the investors themselves and it provides from the outcome payers perspective the trust and the verifiability of what they're actually looking to create in the long term. So I think that you know there's there's a lot of ways in what we're talking about to be able to link in multiple different parties and to be able to potentially build a structure that allows ongoing impact verification as well as the contracting the financial contracting to make money flow. Before we turn it over to Karim to wrap us up quickly I'd love to hear from anyone else anything that you took away from this questions that you still have that you know haven't been answered from this. Yeah I mean from I think that the suggestion to ensure that blended finance is flowing as verification is done is a very good one and that ties into the suggestion that was made in our session that farmers must be given quick wins and not wait until the end of the period to deliver the payment to them so that's that's what I took away from from this one so good job impart investors and outcome payers and verifiers. Yes I think this notion that you need to be able to again this platform model not the platform as in an IT platform but a platform business model where different interests on both sides at community level but also different profiles of investor from institutional to donors come together in ways that are more seamless is crucial to us cracking this thing in an efficient way especially because we're talking about not only the different types of investment but the different investment cycles and periods of time that you're going to need to sustain change over time so if we're able to find smarter ways of collaborating that don't involve massive MOUs and contracting and agreements and endless conferences for different institutions to collaborate then I think we'll have done a great thing as well. Annie if I just go that then thank you so much for having me in this workshop and it was actually Freda amazing doing the moderation of it and I was just very inspired because we are we are working right now in in the cacao industry in Colombia supporting ex cocaine producers and work victims and one of the things that we approached was to actually invest in giving them a smartphone with a platform that allow us to lay down the foundation so that in the future these producers can have easier way to collaborate with stakeholders like at USAID or with investors and how do we aggregate them digitally so we could reduce some of the cost of operations the risk but what is most important what you just what I just heard from Monica it is how can we create a decentralized system where you know where we reduce some of those risk of like I don't want to share data because this isn't we don't want to share this and how do we create something that is a little bit more traceable transparent but mostly that allow us to forge trust among different stakeholders and that at the end can benefit not only the producers for sure but obviously also how we do business as investors as a dfi and certainly as a local partners so thank you so much very inspiring sounds like you've got a perfect platform to use it what else anyone else take anything away yeah yes um sorry um can I speak noise good yeah so I also took something away from from the verification team um uh to the effect that we cannot have a one size fits all and therefore there is a need for us to create various um verification uh requirements across that gradient for for various for various constraints so so that that's a that's a very good one that I took away and also from the uh the outcome peers team uh forward contracts or forward agreements was a very good one which I took away so bravo everyone excellent yeah I think there's I think there's also um something that um this is something haven't said something to me the other day actually but that's I think it's also come up here is that we can start layering financial instruments as well because if we feel like there's a payout for a final impact we can start pre-financing impact to finer to farmers and and and uh kind of so carbon bartering or whatever mechanism you want to call it so they start getting a kind of you know immediate uh pre-finance to adopt the practices that will generate the impact you can start combining these instruments in ways that will really create interesting propositions across stakeholders without just one stakeholder having to be involved if you can find different ways of putting together the pieces of a puzzle that could be really interesting as well environmental invoice factoring yes that's cool yeah uh great crim do you want to have an episode sure thanks annie so yeah I really enjoyed the discussion um and certainly um hopefully you found this format refreshing I know several of you enjoyed this it's something that annie and I've used in in our teaching recently and we think it's much better than your standard kind of panel um you know discussion where you're talked at in this way hopefully a Sergio you you described right you could see how this could be adapted to your own work and and you are part of the solution so maybe just a couple of kind of higher level comments you know back to the theme that we were we were starting with around why pay for performance is exciting we know the status quo doesn't necessarily work as well there's the opportunity to be a bit more efficient and and effective um you know get more impact for your dollar or shilling align incentives improve transparency we hear all of these things right but when we talk about what it means in practice this is exactly the kind of discussion we just had and so some takeaways are you know Hammett as you you really reiterated from you know what Monique was saying there are different configurations of verification and there's also in these kinds of um collaboratives different enabling conditions so we have to be clear around what is it that we're actually solving for what we think good enough looks like and then the opportunity again to bring those ethical principles at each stage of the design process and the way that we did today um if you think about putting the lens of the farmer or a community at each stage of design so that in a sense empowerment is the goal it's not just a byproduct you know in our group we talked a lot about trust as well you know sometimes that is seen to be a thing that happens after you know after you do this well and make all the mistakes and etc then there will be more trust but if you design with trust in mind it completely changes the way perhaps everything happens and so I think that that's actually quite encouraging um that I think all the groups talked about that of course there's complexity in terms of all the things we talked about different kinds of data etc different stakeholders we saw that play out today and I think one lesson though is that each of us probably could better now appreciate what others might be designing for and and you know when you look at instruments or tools and and see that perhaps they're incomplete or don't account for things it's because perhaps some of the sharing hasn't occurred in the way that we we tried to almost role play out so I think one message perhaps is that um as impact investors more broadly are recognizing that they need to be aware of and account for both positive and negative impacts part of how we have to be better around is designing processes like this so that as we think about what each stakeholder would optimize for what they think good enough looks like that essentially they have the option to come together before a design is finalized or before governance structures are finalized and so when verification regimes you know are actually designed to include community at the front end I think it's quite exciting and Sergio you pointed this out that the option to strengthen trust itself I guess could be quite transformative if you build it in right from the beginning so I think it's quite exciting this I know is a much different discussion than we've had five years ago when we talk about pay for performance where it was all about the structures and the financing and all of the stuff that made it less accessible to community and I think this kind of discussion hopefully it you know shows that we we moved I think past that or at least moved a lot forward compared to five years ago so maybe on you that that's it for me excellent thanks Rebecca is there anything that you would like to add no I just wanted to add that we had some questions in the chat about you know following up with the recording of this and if anyone is interested in getting the slides that we put together and as a group that we filled in we don't have a way of from this presentation of getting your contact so if if you're interested in it please kind of drop your contacts in the chat or you can come by solid air that also has a booth so you can leave contact information there and so yeah I see you've pasted it on in there as well excellent and thanks everyone I appreciate the the time and energy of participating in a in a workshop format versus I think a lot of people kind of log on just thinking they can listen in so thank you for the time and effort of doing that excellent yes I agree I think there was a few sort of startled people when they came in and they were all you know we had to go right back out and then join back in so excellent well thank you guys so much and thank you Rebecca and Libby for all the work that you did put together and I hope everyone else has a great rest of so captain we will see you soon see you soon everybody thanks thanks for listening in thank you bye thank you thanks for joining