Investment in Forests and Sustainable Land Use Phase II (IFSLU2) Programme - Component 1 and 2

The United Kingdom's Foreign, Commonwealth and Development Office ("FCDO") has awarded the Contract for delivery of Component 1 and 2 of Investments in Forests and Sustainable Land Use - Phase 2 (IFSLU2) Programme to Palladium International Ltd.

Investments in Forests and Sustainable Land Use - Phase 2 (IFSLU2) is an umbrella International Climate Finance (ICF) programme consisting of 5 components. IFSLU2 is managed by the FCDO's Energy, Climate and Environment Directorate (ECED).

This Contract is for the IFSLU2 Programme's Component 1: Business Incubation, Pipeline Development and Business Enabling Conditions and Component 2: Enhanced Support for Smallholder Farmers.

The Supplier must undertake the management and implementation of the Component 1 and 2 of Investments in Forests and Sustainable Land Use - Phase 2 (IFSLU2) Programme. Component 1 covers the provision of Technical Assistance Facility (TAF) and Component 2 requires the Supplier to:

• (i)monitor, report and manage grant agreements (agreed by FCDO);
• (ii)source and agree additional grants to build a portfolio of grant-funded projects providing support to smallholders at scale; and
• (iii)support FCDO to identify and design potential future activities to scale smallholder support.

The start date of the Contract is 1st February 2025, the Contract value is up to £129,744,000, with an option to increase its total value and duration based on continued need. The Contract value is exclusive of UK VAT but inclusive of all applicable local taxes.

The end of the Contract is 31st January 2030. The Contract has an Extension Option for up to a further 60 months and an increase in additional value of up to a maximum of £239 million. There is a Scale up Option (value extension only) up to an additional £100 million over the life of the Contract (including the Extension Period).

Therefore, the Contract value may be increased to an overall total of £469 million and the Contract may run until 2035, if extended.

Additional information:

The Supplier must undertake the management and implementation of the Component 1 and 2 of Investments in Forests and Sustainable Land Use - Phase 2 (IFSLU2) Programme.

The intended behavioural Intermediate Outcomes from the FSLU2 C1 and C2 Contract's interventions are:

• Supply-side: Producers including businesses, social enterprises, community organisations, smallholders, and landholders adopt sustainable practices as part of profitable, inclusive and replicable business models and bankable investment opportunities;

• Demand-side: Governments, companies and value chain actors adopt mandatory or voluntary sustainable and equitable sourcing practices that incentivise sustainable practices; and aggregate and empower smallholders; and

• Enabling Conditions: Governments, companies and other actors foster positive enabling environments, reforms, standards, accessible market infrastructure and governance arrangements conducive for crowding-in investment, addressing smallholder development needs.

Over the longer-term and through interactions with other IFSLU2 Components, the Intermediate Outcomes will lead to the following systemic Outcomes:

• forest landscapes transformed into forest positive and climate-resilient systems that meet local development needs;

• increased private investment in sustainable forestry and land use;

• increased support and share of sustainable investment reaching smallholders;

• increased global market for deforestation-free agricultural commodities; and

• complementary policy actions implemented by consumer and producer countries.

These systemic Outcomes will lead to the following Impacts:

• forests and ecosystems protected and restored in forest landscapes and across relevant industries and value chains;

• finance mobilised in support of the Sustainable Development Goals (SDGs) and forest country Nationally-Determined Contribution (NDC) and National Adaptation Plan (NAP) implementation;

• jobs created, incomes increased, capacity strengthened and enhanced ability to adapt to the impacts of climate change (both rapid shocks and slow onset stressors) in rural economies of supported countries; and

• transformational change, aligning the land use sector with the SDGs and the Paris Agreement Targets.

The final list of countries, where the Contract will be implemented (place of performance) will be agreed by FCDO and the Supplier during Contract Inception Phase based on the Supplier's analysis of opportunities to deliver impact (across countries, regions and value chains) and ODA/development impact considerations. However, the following regions must be prioritised: East Africa, West Africa, Central Africa, Southeast Asia and Latin America. The Supplier must establish programme offices in each of these regions to deliver the programme.