Alterfin's New Environmental StrategyInterview with Pallavi, Environmental and Social Impact Manager

With this strategy, we are bolstering the resilience of the beneficiaries of our agricultural partners while safeguarding the ecosystems that are vital for their future.

Interested in learning more? Explore the core principles of our new Environmental Strategy through the following discussion.

Since its inception in 1994, Alterfin’s mission is and has always been to alleviate poverty. How does environmental sustainability tie into this mission, and why must these themes be addressed together?

That's right; fighting poverty is at the heart of Alterfin's mission, aligning seamlessly with the United Nations' first Sustainable Development Goal.

First of all, it is important to emphasise that poverty is not an isolated issue; it is deeply intertwined with other global challenges, including the pressing environmental crisis.

But then, what is the concrete link between these issues?

The impacts of climate change hit poor and vulnerable populations the hardest. Their livelihoods and well-being are severely threatened despite contributing very little to the causes of this crisis.

"Small-scale producers are widely recognised as custodians of biodiversity."

This is why fighting climate change cannot be limited to reducing greenhouse gas emissions or slowing environmental degradation; it involves protecting and empowering these vulnerable communities. By equipping them with the necessary tools and opportunities, we can help them adapt, recover, and flourish amidst these challenges.

It is within this context that Alterfin’s new Environmental Strategy takes on its full meaning. More than a mere climate initiative, this strategy reflects a strong social commitment, recognising that to create a lasting positive impact, it is essential to address poverty and implement climate solutions in tandem.

Protecting the planet is already one of Alterfin's impact pillars, but where does its impact stand today?

Before diving into what Alterfin is doing now, let’s take a moment to revisit some key figures to understand the context we’re in.

Globally, agriculture and food systems have a significant environmental impact, primarily due to commercial farming and livestock production.

• Over 50% of habitable land is used for agriculture, responsible for 80% of global deforestation.
• The agricultural sector consumes over 70% of freshwater resources and generates approximately 30% of global greenhouse gas (GHG) emissions.
• Poor agricultural practices have degraded one-third of the world’s soils, reducing their ability to support crops.

These figures show that agriculture—as it is practiced today—places immense pressure on our natural resources. This is further emphasised by the fact that 70% of agricultural land is allocated for livestock and animal feed, leaving just 30% available for growing other crops, including fruits and vegetables.

Of this smaller fraction, only 15–20% of products carry environmental certifications (such as Organic Agriculture, Global GAP, or Rainforest Alliance), which ensure sustainable farming practices.

At Alterfin, we are proud to note that 71% of the smallholder farmers we support through our partners hold at least one environmental certification. This is a positive step forward, but it raises an important question: What about the remaining 29%?

Exactly. How can we ensure that these producers follow sustainable practices?

It’s important to note that having a certification is not always necessary for several reasons:

• For some value chains, there may not be enough demand for certified products.
• Additionally, maintaining these certifications can incur significant costs.

However, this doesn’t prevent us from ensuring that producers adhere to sustainable agricultural practices.

At Alterfin, we conduct comprehensive social and environmental assessments for each investment. These evaluations examine critical factors such as soil management, deforestation risks, water usage, waste management, climate resilience, and biodiversity.

Smallholder farmers are widely recognised as custodians of biodiversity. Unlike large-scale commercial farms, they often promote crop diversity and avoid monocultures, which helps protect and strengthen ecosystems.

"Our priority hasn’t been to demand more from our partners, but rather to protect and prepare them for the growing challenges of climate change."

Through responsible partner selection and these robust assessments, we ensure that 100% of Alterfin’s agricultural investments prioritise sustainability.

Could you provide our readers a concrete example of Alterfin's current efforts?

Of course! Our collaboration with Mavuno Organics, a producer of organic, rain-fed avocados in Kenya, exemplifies the positive impact of our efforts.

Through our Technical Assistance project, we financed a study focused on income and market diversification, which has empowered Mavuno to enhance the resilience of its farmers. Rather than relying solely on avocado cultivation, these farmers are now actively exploring alternative crops and income-generating activities, ensuring more stable incomes.

This approach is essential to tackle challenges such as crop losses due to climate change or market fluctuations while enhancing farming operations' overall sustainability.

"Although our investments are already environmentally sustainable, we aim to go even further."

And to answer a question you might have: no, not all avocados are bad for the environment. Mavuno’s approach is exemplary: their small-scale farmers utilise only rainwater for irrigation, and the naturally drought-resistant avocado trees contribute positively to soil health. This makes their cultivation particularly valuable, especially considering the common concerns surrounding avocado farming's water usage.

What makes this example particularly compelling is that, when faced with the risk of insufficient yields, Mavuno’s farmers chose a sustainable approach: diversifying their income rather than intensifying production, thereby avoiding an increased environmental cost.

It’s clear that Alterfin is already making significant positive contributions on the environmental front. So why launch a new Environmental Strategy now? What impact are you aiming for?

The main reason is simple: we need to amplify our impact!

The climate crisis compels us to consistently push our boundaries, making it crucial to take bold action as the challenges before us continue to escalate.

While our investments are already environmentally sustainable, we want to go further by adapting our operations and exploring new solutions. This strategy is built around two major objectives:

1. Strengthening the resilience of our partners and beneficiaries to the effects of climate change by reducing their economic vulnerability.
2. Ensuring thriving ecosystems by maximising the positive environmental impact of our agricultural portfolio.

"Resilience has become our top priority."

These commitments form the foundation of our Environmental Strategy, shaped directly by the challenges we observe on the ground through our collaboration with partners.

What are the next steps? How does this fit into Alterfin's long-term vision?

It’s time to roll up our sleeves! A strategy is only valuable when it leads to concrete actions.

To implement our new Environmental Strategy, we will fully integrate it into our existing systems. To achieve this, we have developed a detailed action plan for 2025. This plan details the necessary steps, clarifies each team member's responsibilities, sets deadlines, and defines key performance indicators (KPIs) that will enable us to monitor our progress effectively.

Thank you, Pallavi, for your inspiring insights! Any final thoughts on what you've learned while developing this strategy?

Absolutelty! Here are the key lessons I’ve taken away, ideas that, although they’ve been in my mind for a while, really came together this year:

• First, the deep connection between the environment and poverty.
• Next, the realization that—yes—Alterfin is already achieving great environmental results.

Before defining the strategy, we conducted extensive research, both internal and external, to understand the environmental impact of our activities. We worked closely with consultants and experts in agriculture and environmental sustainability. From the outset, our goal was clear: to improve our environmental performance. However, after analyzing our portfolio, the experts asked us a question that stuck with me: “What more do you want to do? You’re already on the right track.”

That moment was truly eye-opening. We realized that we were already doing remarkable work, but the real change needed was in our way of thinking. It became clear that the farmers and organisations we support are not part of the problem but part of the solution.

From that point on, our priority was not to ask more from our partners but to protect and prepare them for the growing challenges of climate change. In short, that’s when resilience became our top priority, as it’s essential to our mission.

Improving our environmental impact is just a crucial step in this process. This approach ensures healthy ecosystems, allowing producers, partners, and communities to continue thriving sustainably.