Major shifts in private finance, trade and land rights to protect world’s forests

World Leaders Summit Action on Forests and Land-use Event highlights action on three critical shifts – in private finance; in sustainable trade of forest and agricultural commodities; and in empowering Indigenous Peoples and local communities.

From:

Department for Environment, Food & Rural Affairs, Foreign, Commonwealth & Development Office, Department for Business, Energy & Industrial Strategy, Cabinet Office, and The Rt Hon Lord Goldsmith

Governments, investors, businesses, civil society, and philanthropists will today (2 November) make unprecedented commitments to tackle deforestation. Together, these will lead to three systemic shifts – in private finance, in the trade in agricultural commodities and in the rights of Indigenous Peoples and local communities.

These shifts will support the commitment made by over 100 world leaders, representing countries containing more than 85% of the world’s forests, to halt and reverse deforestation and land degradation by 2030.

Private Finance

The global transition to a sustainable food and land use system could provide £4.5 trillion a year

of new business opportunities by 2030. However, in the last decade roughly 40 times more finance flowed into destructive land-use practices rather than forest protection, conservation and sustainable agriculture.

Today’s commitment – signed by more than 30 financial institutions covering over $8.7 trillion of global assets under management, including Schroders, Axa, Legal & General Investment Management and Aviva – seeks to change that. It aims to move away from portfolios that invest in high deforestation-risk agricultural commodity supply chains and towards sustainable production.

In addition, three major initiatives will be launched to support the scaling up of private sector investment in forests and nature, unlocking billions of dollars and creating new mechanisms to scale investment in natural capital:

• The Innovative Finance for the Amazon, Cerrado and Chacho (“IFACC”) will announce $3 billion to accelerate deforestation and conversion-free soy and cattle production in South America.
• The Sustainable Markets Initiative’s Natural Capital Investment Alliance (“NCIA”), an organisation founded by HRH the Prince of Wales to boost private investment in natural capital, will announce 12 new members and plans to mobilise $10 billion in private capital by the end of 2022.
• The United States Government will announce a new Forest Investor Club, providing a platform to build a pipeline for forest-positive investment at scale and broker partnerships between global investors.

These investments and transitions will be supported by a joint statement from nine multilateral development banks – including the World Bank – that commits them to mainstream nature in their investments and in policy dialogue with countries. The Task Force for Climate-Related Disclosures will also strengthen guidance around reporting on emissions from agriculture, forestry and land use sector.

An initial $1 billion of public and private funds will be secured through the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition. This will provide funding to countries that successfully reduce emissions from deforestation, provided those reductions have been independently verified and confirmed. Finance will only be provided by companies already committed to emissions cuts in their own supply chains.

UK International Environment Minister, Lord Zac Goldsmith said:

The high level pledge by governments to stop deforestation, combined with unprecedented finance commitments, is hugely important. But success also hinges on the private sector and the international financial institutions, and that’s why we have been working around the clock to persuade businesses, the big financial institutions and the multilateral development banks, like the World Bank and Inter-American Development Bank, to commit to reconciling their investments and portfolios with nature. Our future depends on them doing so.

Trade

The expansion of agricultural commodities – including the production of soy, cocoa, beef and palm – currently drives more than 70% of tropical deforestation.

The new Forest, Agriculture and Commodity Trade (FACT) Roadmap for Action, and its Joint Statement, launched by Prime Minister Boris Johnson of the UK and President Jokowi of Indonesia, is a new partnership between governments of major producer and consumer countries to break that link between deforestation and agricultural commodities.

Agreed by 28 producer and consumer countries including Indonesia, Colombia, Brazil and Ghana alongside the EU, UK and USA, responsible for 76% ($350 billion) of the world’s soy, palm, cocoa, beef and leather, timber, paper and pulp exports, it will accelerate actions that incentivise sustainability in the supply chain, support smallholder farmers to participate in markets, improve transparency of supply chains, and drive new technology and innovation.

Alongside this, ten companies – including Cargill, Wilmar and Olam – managing over half of global trade in key commodities will commit to enhanced collaboration and the development of their own roadmap, delivered by COP27, to accelerate action on eliminating commodity-driven deforestation consistent with a 1.5°C pathway.

Sunny Verghese, co-founder and group CEO of Olam International, said:

Now more than ever, it is vital to take action to protect our natural environment, people and communities. Sustainable development and economic growth is not a binary choice. Addressing climate change, deforestation and conserving natural resources cannot be dissociated from improving farmer livelihoods, strengthening health, water and sanitation, education and prosperity in rural communities.

Coming together to take collective action will enable us to build on our progress to protect forests and landscapes, and advance traceability in supply chains, in order to strengthen and accelerate action to combat the largest global environmental challenges we face.

People

This is the first time that a COP Presidency has convened a significant number of representatives of Indigenous Peoples and local communities with state leaders to discuss ambitious proposals to advance their land rights and forest guardianship.

Over 1.6 billion people worldwide rely on forests for their livelihoods, and indigenous peoples are the custodians of at least 36% of the world’s large, intact forests. Evidence shows that when local people are empowered to manage forests they are better protected and managed.

Today, 14 leading philanthropies and donor countries have committed to work with communities in a renewed collective effort to recognise and advance the forest and nature stewardship role of Indigenous Peoples and local communities, with a particular focus on strengthening land tenure systems and rights.

These efforts will be supported by an initial pledge of at least $1.7 billion of financial support.

Tuntiak Katan, Coordinator of the Global Alliance of Territorial Communities, representing communities from the rain forests of Africa, Latin America and Indonesia, said:

We welcome the announcement at COP of the Joint Statement on Advancing Support for Indigenous Peoples and local communities that has raised to an unprecedented level their visibility as a climate solution.

At the same time, we will be looking for concrete evidence of a transformation in the way funds are invested. If 80 percent of what is proposed is directed to supporting land rights and the proposals of Indigenous and local communities, we will see a dramatic reversal in the current trend that is destroying our natural resources.