20 September 2012. The private sector can play an important role in implementing Reducing Emissions from Deforestation and Forest Degradation in developing countries, including the role of conservation, sustainable management of forests and enhancement of forest carbon stocks (REDD+) projects. In order to open up a dialogue on private sector finance for REDD+, the UN Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD), the Ateneo School of Government and the UN Environment Programme Finance Initiative (UNEP FI) co-hosted a Workshop on REDD+ Finance on Friday 7 September, in Bangkok, Thailand. The event took place immediately after the REDD+ Partnership meeting, providing a good opportunity to bring together the key target audience of REDD+ negotiators and the members of the private sector.
The workshop started with contributions from the UNEP FI, Terra Global Capital, and Bank of America Merrill Lynch. UNEP FI set the scene for the discussion by elaborating on the difference between the source and types of financial flows involved in REDD+. Terra Global Capital delivered some thoughts on REDD+ from the perspective of a private sector investor and developer. Bank of America Merrill Lynch touched on how demand might be scaled up over time and what the key policy signals might be for the private sector.
The ensuing discussion in the question and answer period revolved around four main themes: the role of the private sector in REDD+; the potential financial contribution of the private sector; the risks of private sector engagement; and the signals the private sector needs to scale up investment.
The dual roles of the private sector in REDD+, as potential sources of finance but also as a driver of deforestation and degradation through corporate activity, was a topic that was discussed during the first theme. The conversation later moved onto the potential ways the private sector could be involved in REDD+ during Phases 1 and 2.
The second theme touched on the very large volume of investments held by the private sector. One estimate from 2010 put the total global assets under management by the private sector at around US$ 126 trillion. Government policy will be key in redirecting a portion of this capital towards green investments. Even if 1 per cent was redirected, it would represent a significant contribution to the sums required for long term climate finance.
The discussion on risks involved debate over how risks for investors and risks for forest communities can be managed. This strand evolved into the differences between permanence and reversal, and also the management of risks over difference time horizons.
The concept of "advance market commitments" was raised during discussions on signals, with the success of GAVI (a public-private global partnership committed to children’s health) being used as an example. This wide-ranging discussion also touched on the role of standards and certification, compliance markets and disclosure initiatives.
For further information please contact UN-REDD@UN-REDD.org or visit: http://www.un-redd.org/Newsletter32/Partners_Dialogue_Private_Sector/tabid/106595/Default.aspx.