By Han Kar Kay
At a side meeting on Sustainable Finance as a driver for FSC Solutions held on Thursday, 13 October, a panel of four speakers spoke about carbon market investments and how positive climate and forest narratives can attract more investors.
Leveraging climate finance
The session kicked off with a brief introduction on FSC’s ambition as a leader in sustainable finance
“The market for sustainable finance is growing, both in public and private sectors, but there is a lack of trust from impact investors, and they are unsure of where to invest their funds and which projects will produce legitimate emissions-reductions and social and environmental benefits of investments.” - Pina Gervassi, FSC International Climate and Restoration Director.
“FSC is a credible partner to support climate finance in nature-based solutions,” said Gervassi.
Carbon market investment gaining importance
Ria Mariamah, Senior Business Development Manager, Southeast Asia and Pacific, Nature-Based Solutions of South Pole said there has been a significant increase in investments in carbon markets, and approximately 50 percent of investments came from nature-based solutions.
Ben Vickers, Land Use, Forests and Ecosystems Sector Senior Specialist, Green Climate Fund (GCF) said, "Back in 2010, developed countries committed $100 billion USD per year in additional finance to address climate change, a pledge which was recommitted in 2015 as part of the Paris Agreement. The Green Climate Fund is currently investing $1.5 to $2 billion of public funds per year, about a quarter of which is channeled towards the forest and land use sector. Significant efforts are needed to ensure that these funds leverage the additional investment required to meet the Paris Agreement goals."
The role of FSC in carbon markets
Citing projects at South Pole as an example, Mariamah said they provide funds for viable projects. “We have to go beyond carbon emissions. When providing funding, we also look at our partners – whether they can conduct due diligence and have appropriate governance in place, to ensure these projects have a lasting impact for the long-term, especially for social aspect.”
“We need to have robust auditing, better data and better disclosure from partners so they will have a system in place. It also requires collaboration between people from different sectors. Therefore, FSC plays an important role as it has already done a lot of work on the ground.”
More positive climate and forest narrative to attract investments
When asked about how traditional forest industry could better promote the integration of Ecosystem Services into existing business models, Stephanie Bishop from New Forests said success stories within the geographic region play a vital role in attracting investors.
“People perceive higher levels of risks in developing markets. When investors are looking for new investments, they look at success stories in that area. That’s why traditional forest industry is important to attract the investment.”
“The risk in developing countries can be circumvented by positive forest stories. It is important to showcase positive stories. For FSC and other parties, it is necessary to look at things regionally and you need the continent context and different approaches,” added Bishop.
Mariamah concurred that carbon market is also narrative driven. “Investors care about positive stories, what communities do and how they conserve biodiversity. It is an integrated approach. The positive narrative can bring more value for these projects.”
Allpabambú: Success story and its challenges
During the side event, Nelly Arroyo, General Manager of Allpabambú also shared the success story of Allpabambú gaining certification against the FSC Ecosystem Services Procedure.
“The major challenge for Allpabambú is finding sponsors for ecosystem services. Allpabambú is also looking to expand to other ecosystem services because bamboo plantations can deliver all the five ecosystem services benefits.”
FSC as a facilitator of co-created forest-based innovative solutions for Climate Change
FSC’s Global Strategy 2021-2026 outlines three approaches that are translated into three closely interlinked strategies, each with a set of four goals setting the direction for FSC. Among the goals are expanding the reach of FSC and its relevance in the fight against climate change and loss of biodiversity, and to leverage sustainable finance/investment for forest stewardship.
Read the full strategy with intended outcomes here.