Tim Christophersen: Are REDD+ Safeguards key to Financing Sustainable Landscapes?

Safeguards are central to the success of REDD+. Yet, progress has been slow in most countries, with some notable exceptions. In the current debate, it is often overlooked that sound REDD+ safeguards could benefit developing countries beyond climate mitigation by boosting investor confidence and attracting private and public investments into sustainable land-use.

By Tim Christophersen, United Nations Environment Programme (UNEP)

To obtain payments for results from REDD+, countries need to address and respect seven ‘Cancun’ safeguards, under the United Nations Framework Convention on Climate Change (UNFCCC). But before such payments can be made, sizable investments are required to implement REDD+ actions at scale. Such investments include the costs for the implementation of policies and measures, and for changing land-use and forest management practices on the ground. Is there a link between REDD+ payments and securing the financing to achieve the required transformation of forestry and other land use sectors? What sort of enabling environment is needed to encourage the large-scale finance required to achieve sustainable productive landscapes commensurate with the level of ambition of the New York Declaration on Forests, as well as significantly contribute to the proposed Sustainable Development Goals?

Many potential REDD+ actions and related investment opportunities constitute complex sets of economic, social and environmental trade-offs. Ensuring a robust enabling environment is in place to remove, mitigate and manage risk will be of paramount importance. REDD+ safeguards can provide this assurance. By mitigating and managing risk, REDD+ safeguards could encourage the flow of private investments, including foreign direct investments, into improved land-use and forest management practices and for forest restoration.

There is growing private and public sector interest in investments into sustainable forest and land management. At a meeting in June 2015 in London, UNEP, CIFOR and other partners will convene a special Global Landscapes Forum event on the ‘Investment Case’ for forests and REDD+. Over 100 global funds, international organizations and key investors are lining up to discuss and learn about ‘bankable’ projects for investments into sustainable landscapes. The main problem is not the lack of funds but rather the lack of sizable, low- or medium-risk investment opportunities with reasonable rates of return. A favorite model that is emerging seems to be investments into sustainable landscape management that aims to combine several objectives, with climate change mitigation being only one of them. Demonstrating that a country applies strong REDD+ safeguards could enhance investor confidence for investments into such relatively complex projects.

In particular, two essential ingredients go to creating this enabling environment to incentivize investment in sustainable land use practices. Conducive policies, laws and regulations are required to attract commercial private financing and realize the potential of REDD+ at scale. The right mix of regulatory incentives and disincentives are required to reduce the investment risks and transaction costs for private sector to transition from business-as-usual to more sustainable production. Strong institutions – the right regulatory environment on paper will amount to nothing if the responsible institutions do not have adequate mandates, procedures and capacities to implement sustainable agriculture and forestry polices.

In adopting a country approach to safeguards (as the UN-REDD Programme has), the existing governance arrangements of a country – its policies, laws and regulations, together with institutions and institutional capacities – are deployed and strengthened to meet international REDD+ safeguard commitments. A country approach to safeguards commences with assessments of environmental and social risks and benefits of candidate REDD+ activities that will go to make up the national REDD+ strategy. Such assessments can then inform identification of relevant policies, as well as the institutional responsibilities and capacities to implement and enforce them, which will be needed to minimize the risks and maximize the multiple benefits of REDD+. This sends a positive signal to potential investors.

Up until now, the country approach to safeguards – and the identification of risks, benefits, policies
and institutions – has been entirely framed by the need to meet UNFCCC requirements to obtain payments for emissions reductions. The existing policies, laws and regulations demonstrate how the UNFCCC safeguards are being addressed on paper; the institutional capacity to implement these policies shows how these Cancun safeguards are being respected in practice. But before a country can obtain results-based payments, someone needs to make the investment in the REDD+ actions that will lead to REDD+ results. We have an opportunity to view the design and application of safeguards also in the context of private sector finance and investment requirements.

REDD+ countries are starting to look at the private sector as a possible source of finance for results-based actions. However, the private sector has in most REDD+ countries only been marginally engaged in REDD+ until now. The UN-REDD Programme has started to change this by offering a range of Targeted Support activities to countries to enhance private sector engagement, for example in Costa Rica, Indonesia, Panama and Peru.

Generally speaking, three inter-related conditions are required to unlock private capital at scale: (i) activities that deliver competitive risk-adjusted returns, (ii) access to finance, and (iii) enabling conditions that create a conducive investment environment and reinforce political commitment to the target sectors or activities. Safeguards arguably contribute to all three categories yet we rarely acknowledge this nor frame them as such. There is potential to vastly improve our communication of these attributes. We must also do so in a language that resonates with the actors we are trying to appeal to, if we want to channel future private finance into more sustainable land-use activities.

If the ambitions of REDD+ under the UNFCCC and the outcomes of the New York declaration on Forests – which pledges to end natural forest loss by 2030 – are to be achieved, governments will need to strengthen policy frameworks (address safeguards) and their implementation (respect safeguards), setting higher standards for businesses to operate by. Safeguards need no longer been seen as a burdensome hurdle to the internal climate change agreement, but as a means to improve the investment profile of land use opportunities and, therefore, a strategic means to tap the necessary private capital that will be required to nurture sustainable development in productive landscapes. The UN-REDD Programme is offering partner countries technical expertise and a knowledge platform to explore these linkages and learn from each other on the journey towards REDD+, and ultimately towards a green, low carbon and socially inclusive economy.

About the author:
Tim Christophersen coordinates the activities of the United Nations Environment Programme (UNEP) on forests and climate change and he is a member of the UN-REDD Programme Management Group. As a partner organization of the UN-REDD Programme, UNEP focuses on providing support to developing countries on identification and analysis of costs of REDD+ Policies and Measures (PAMs); identification and analysis of non-carbon benefits; innovative finance; private sector engagement and development of environmental safeguards and Safeguards Information Systems (SIS).

REDD+ Safeguards: Key to Financing Sustainable Landscapes?
Safeguards are central to the success of REDD+. Yet, progress has been slow in most countries, with some notable exceptions. In the current debate, it is often overlooked that sound REDD+ safeguards could benefit developing countries beyond climate mitigation by boosting investor confidence and attracting private and public investments into sustainable land-use.
By Tim Christophersen, United Nations Environment Programme (UNEP)
To obtain payments for results from REDD+, countries need to address and respect seven ‘Cancun’ safeguards, under the United Nations Framework Convention on Climate Change (UNFCCC). But before such payments can be made, sizable investments are required to implement REDD+ actions at scale. Such investments include the costs for the implementation of policies and measures, and for changing land-use and forest management practices on the ground. Is there a link between REDD+ payments and securing the financing to achieve the required transformation of forestry and other land use sectors? What sort of enabling environment is needed to encourage the large-scale finance required to achieve sustainable productive landscapes commensurate with the level of ambition of the New York Declaration on Forests, as well as significantly contribute to the proposed Sustainable Development Goals?
Many potential REDD+ actions and related investment opportunities constitute complex sets of economic, social and environmental trade-offs. Ensuring a robust enabling environment is in place to remove, mitigate and manage risk will be of paramount importance. REDD+ safeguards can provide this assurance. By mitigating and managing risk, REDD+ safeguards could encourage the flow of private investments, including foreign direct investments, into improved land-use and forest management practices and for forest restoration.
There is growing private and public sector interest in investments into sustainable forest and land management. At a meeting in June 2015 in London, UNEP, CIFOR and other partners will convene a special Global Landscapes Forum event on the ‘Investment Case’ for forests and REDD+. Over 100 global funds, international organizations and key investors are lining up to discuss and learn about ‘bankable’ projects for investments into sustainable landscapes. The main problem is not the lack of funds but rather the lack of sizable, low- or medium-risk investment opportunities with reasonable rates of return. A favourite model that is emerging seems to be investments into sustainable landscape management that aims to combine several objectives, with climate change mitigation being only one of them. Demonstrating that a country applies strong REDD+ safeguards could enhance investor confidence for investments into such relatively complex projects.
In particular, two essential ingredients go to creating this enabling environment to incentivise investment in sustainable land use practices. Conducive policies, laws and regulations are required to attract commercial private financing and realise the potential of REDD+ at scale. The right mix of regulatory incentives and disincentives are required to reduce the investment risks and transaction costs for private sector to transition from business-as-usual to more sustainable production. Strong institutions – the right regulatory environment on paper will amount to nothing if the responsible institutions do not have adequate mandates, procedures and capacities to implement sustainable agriculture and forestry polices.
In adopting a country approach to safeguards (as the UN-REDD Programme has), the existing governance arrangements of a country – its policies, laws and regulations, together with institutions and institutional capacities – are deployed and strengthened to meet international REDD+ safeguard commitments. A country approach to safeguards commences with assessments of environmental and social risks and benefits of candidate REDD+ activities that will go to make up the national REDD+ strategy. Such assessments can then inform identification of relevant policies, as well as the institutional responsibilities and capacities to implement and enforce them, which will be needed to minimise the risks and maximise the multiple benefits of REDD+. This sends a positive signal to potential investors.
Up until now, the country approach to safeguards – and the identification of risks, benefits, policies and institutions – has been entirely framed by the need to meet UNFCCC requirements to obtain payments for emissions reductions. The existing policies, laws and regulations demonstrate how the UNFCCC safeguards are being addressed on paper; the institutional capacity to implement these policies shows how these Cancun safeguards are being respected in practice. But before a country can obtain results-based payments, someone needs to make the investment in the REDD+ actions that will lead to REDD+ results. We have an opportunity to view the design and application of safeguards also in the context of private sector finance and investment requirements.
REDD+ countries are starting to look at the private sector as a possible source of finance for results-based actions. However, the private sector has in most REDD+ countries only been marginally engaged in REDD+ until now. The UN-REDD Programme has started to change this by offering a range of Targeted Support activities to countries to enhance private sector engagement, for example in Costa Rica, Indonesia, Panama and Peru.
Generally speaking, three inter-related conditions are required to unlock private capital at scale: (i) activities that deliver competitive risk-adjusted returns, (ii) access to finance, and (iii) enabling conditions that create a conducive investment environment and reinforce political commitment to the target sectors or activities. Safeguards arguably contribute to all three categories yet we rarely acknowledge this nor frame them as such. There is potential to vastly improve our communication of these attributes. We must also do so in a language that resonates with the actors we are trying to appeal to, if we want to channel future private finance into more sustainable land-use activities.
If the ambitions of REDD+ under the UNFCCC and the outcomes of the New York declaration on Forests – which pledges to end natural forest loss by 2030 – are to be achieved, governments will need to strengthen policy frameworks (address safeguards) and their implementation (respect safeguards), setting higher standards for businesses to operate by. Safeguards need no longer been seen as a burdensome hurdle to the internal climate change agreement, but as a means to improve the investment profile of land use opportunities and, therefore, a strategic means to tap the necessary private capital that will be required to nurture sustainable development in productive landscapes. The UN-REDD Programme is offering partner countries technical expertise and a knowledge platform to explore these linkages and learn from each other on the journey towards REDD+, and ultimately towards a green, low carbon and socially inclusive economy.
About the author:
Tim Christophersen coordinates the activities of the United Nations Environment Programme (UNEP) on forests and climate change and he is a member of the UN-REDD Programme Management Group. As a partner organization of the UN-REDD Programme, UNEP focuses on providing support to developing countries on identification and analysis of costs of REDD+ Policies and Measures (PAMs); identification and analysis of non-carbon benefits; innovative finance; private sector engagement and development of environmental safeguards and Safeguards Information Systems (SIS).
www.un-redd.org