Mirova, the sustainable investment arm of asset management firm Natixis Investment Managers, on Thursday invested $30 million in carbon removal project developer Varaha.
The investment is a mix of project financing and offtake agreement, which means Varaha will use the money to expand the Kheti soil project by 10X to 337,000 smallholder farmers across states of Haryana and Punjab in the next four years. The firm currently works with 25,000 farmers.
Mirova will invest the up front capital in order to support this expansion and in return Varaha will provide the firm with carbon credits which they can use and then retire in order to make the environmental claims they want to make, said Ikarus Janzen, the Chief Commercial Officer at Varaha in an interaction with YourStory.
The firm's Kheti project aims to support adoption of regenerative practices such as direct seeding of rice, crop residue managements, and reduce tillage-practices that are expected to generate carbon credits with a revenue sharing mechanism that ensures that these farmers are also benefitted form the sale of credits under the Vera VM0042 methodology.
Verra is a non-profit organisation that sets standards for climate action and sustainable development. Its VM0042 methodology is a framework used to quantify the greenhouse gas (GHG) emission reductions and carbon dioxide removals resulting from the adoption of sustainable agricultural practices.
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Carbon credit companies often adhere to Verra's standards as the credibility is essential for commercial viability and is a hallmark of integrity of their projects and the carbon credits they generate.
Janzen told YourStory that the company partners with NGOs, farmer producer organisations (FPOs), and co-operatives that are already working with small farmers to establish a link on the ground to help them understand the benefits of regenerative farming methods.
"These practices are not something that Varaha invented. It is something that is already there where there is scientific consensus that these practices can, in certain contexts, increase yield, decrease fertiliser costs. Across the different practices we see an already adoption of maybe one to five percent or so."
Varaha is also one of the few companies in the climate-tech space to have achieved profitability, reaching this milestone in FY25. "This gives us a huge boost as a company in order to not be reliant on equity fundraising," Janzen said.
Since its establishment, Mirova has mobilised more than $300 million from corporate partners to support nature-based carbon projects.
The company also partners with corporates and inserts within their value chain to decarbonise its supply chain. Janzen added that the company is looking to sign more deals with corporates.
Edited by Megha Reddy