GLF Luxembourg Donor and Partner Report

The Global Landscapes Forum’s fourth Investment Case symposium, GLF Luxembourg 2019, contributed to the ongoing discussion on sustainable finance and moved the conversation forward with practical suggestions and next steps. The event took place back-to-back with the U.N. Environment Programme Finance Initiative (UNEP FI) Regional Roundtable at the European Convention Centre in Luxembourg, which is rapidly establishing itself
as the continent’s sustainable finance hub. The conference highlighted the variety and conviction of environmentally-conscious entrepreneurship and the breadth of the coalition – governments, non-profits, banks and other enterprises – that has assembled to support it.

GLF Accra Donor and Partner Report

The Global Landscapes Forum Accra 2019 conference, “Restoring Africa’s Landscapes: Uniting actions from above and below” represents the latest expression of long-term cooperation between GLF, its partners, Charter Members and supporters all participating alongside a host of new organisations drawn by the enthusiasm and aspirations of the GLF movement. The keystone of the GLF Accra event was the very particular role of Africa and all its people in connecting landscape restoration with human development.

International Climate Finance Accelerator Luxembourg – White paper

The International Climate Finance Accelerator (ICFA) Luxembourg is a public-private partnership created in May 2018 by the Luxembourg Ministry of Finance and Ministry of the Environment, Climate and Sustainable Development, together with the following private sector partners:

Arendt & Medernach, Elvinger Hoss Prussen, Innpact S.à r.l., Investing for Development SICAV, the Luxembourg Finance Labelling Agency (LuxFlag), Ernst & Young Luxembourg, Deloitte and Consulting, KPMG Luxembourg and PriceWaterhouseCoopers and 4 Climate Sàrl.

The ICFA is supported by the European Investment Bank. The ICFA program and day-to-day operations are coordinated and managed by Innpact. The ICFA is part of the climate finance strategy of the Luxembourg government and represents the innovation pillar. The mission of the ICFA is to contribute to a more sustainable world by fostering Climate Finance.

This White Paper was produced by The International Climate Finance Accelerator (ICFA) for the session at the GLF Investment Case 2019 in Luxembourg.

Financial Perspectives on Sustainable Land Use – White paper

Natural capital is key to halting the loss of biodiversity, and adapting to climate change. It will require significantly increased investment in the years to come. Whilst a number of innovative financing solutions have been developed, a disconnect remains: many project developers struggle to access mainstream finance to scale their business.

At the same time, mainstream investors struggle to find attractive sustainable land use models. During the session, innovative fund managers will offer insights into what it takes for businesses to attract investment that fits their needs. Hosted by the European Investment Bank (EIB) at the GLF Luxembourg 2019 Conference, the session will facilitate a discussion on possible ways to overcome the most important barriers for landscape and conservation finance.

This White Paper was produced by European Investment Bank (EIB) for the session at the GLF Investment Case 2019 in Luxembourg.

Barriers to Mainstreaming – White paper

Commodity production is one of the main drivers of deforestation. To date, much of the focus has been on commitments by many private sector companies to remove deforestation from their supply chains. Forest Trends has identified 484 companies that have sustainable commodity commitments; of these, 72 have committed to zero or zeronet deforestation for at least one forest risk commodity, while the other 412 have a commitment short of a zero-deforestation supply chain (Rothrock et al. 2019). In spite of these efforts, the uptake of sustainable production models remains limited. There has been a proliferation of pilot projects, yet measurable impacts on deforestation and forest degradation remain hard to demonstrate at scale. Only 21 of the 72 companies with zero or zero-net deforestation commitments have provided a quantitative report of their progress (Supply Change 2019).

Scaling up these projects beyond single actors, single supply chains or single locations remains challenging. With large shifts predicted in the future suitability of key cultivation areas (Leemans & Solomon 1993; Elliott et al. 2013, Smith and Gregory 2013), it is critical that producers adopt production models that can increase resilience against climate change and provide better economic certainty to producers, while at the same time delivering environmental and social benefits that, to date, have not received appropriate levels of consideration. Sustainable models for commodity production that can generate positive risk return ratios compared to business-as-usual projects do exist (UNEP no year).

However, across the globe rates of adoption remain low (Tey et al. 2012, Mutyasira et al. 2018, Van Thanh & Yapwattanaphun 2015). In recent years, UNEP has undertaken analysis on the relationship between soft commodities and deforestation, including analysis into the business case for production models that promise both environmental and economic benefits in Vietnam and Costa Rica. Yet, in spite of both countries adopting policies promoting the adoption of sustainable agricultural practices that can improve livelihoods and reduce environmental degradation 1 , levels of uptake have remained limited.

There are significant barriers preventing widespread investment into, and adoption of, novel and sustainable agricultural practices. This paper identifies some of the barriers preventing the transition to new paradigm of commodity production.

This White Paper was produced by UN Environment for the session at the GLF Investment Case 2019 in Luxembourg.

Carbon Financing, Offsetting and Corporate Mitigation Strategies – White paper

The Intergovernmental Panel on Climate Change’s (IPCC) Special Report on Global Warming of 1.5°C last year painted a stark picture of the planetary crisis. To avoid the most dangerous climate impacts, aggressive reductions in greenhouse gas (GHG) emissions and significant carbon removal are needed to achieve the goals of the Paris Agreement to limit warming to well below 2˚C, with efforts to limit warming to 1.5˚C. In less than 11 years, emissions need to be 45% below 2010 levels if warming is to be limited to 1.5 °C (IPCC 2018). Translated into absolute figures, the world should cut 29-32 Gt of CO2 emission by 2030.

There are various approaches to carbon removal from the atmosphere: from land management approaches to technological options, including carbon management in agricultural soils, forests, and agroforestry; bioenergy with carbon capture and storage (BECCS); direct air capture and storage (DACS), etc. (Minx et al. 2018; see Fig 1).

This White Paper was produced by UNREDD Programme, a partnership between the UN Food and Agriculture Organization (FAO), the UN Development Programme (UNDP) and the UN Environment Programme (UNEP) for the session at the GLF Investment Case 2019 in Luxembourg.

Innovating Finance to Overcome Current Barriers Towards Sustainable Landscapes – White paper

Agriculture and forestry are central to the implementation of the sustainable development goals (SDGs). Smallholders play an important role in this: nearly 60% of food production is produced by smallholders (<20 ha) many of whom are vulnerable to climate change. Small and Medium Enterprises (SMEs) have an important role to play in making smallholder agriculture and forestry economically viable. Smallholders and SMEs are, therefore, essential actors in any strategy that aims at sustainability and climate resilience in landscapes. They need finance to be able to shift towards more sustainable practices. At the same time, less than 3% of climate and conservation finance is assigned to agriculture and forestry and only a small proportion of ODA and climate finance reaches smallholders and SMEs.

Sustainable and inclusive landscapes are landscapes in which all stakeholders are engaged in the design and implementation of, and learning from, actions that increase the sustainability of that landscape. Finance flowing into such landscapes currently addresses mainly the needs for prime materials of large vertically integrated companies, including infrastructure for transport and processing plants. A growing proportion of these investments considers its social or environmental impacts on the landscape and people living in those landscapes, but in spite of that, the reduction in deforestation and forest degradation rates, as well as in poverty, hunger and inequity lag behind. Partially this is due to no or insufficient or only partial application of sustainability criteria in investment selection, partially and also to a lack of consideration of smallholder, SME and community (SSC) initiatives. New ways have been developed to unlock funds towards investments that efficiently and effectively contribute to sustainability and inclusiveness – innovative finance. Examples are blended finance and green bonds.

In spite of creating opportunities for reaching SSC initiatives, these new forms of finance still struggle with the same barriers as more conventional finance. Investors find few investible SSC projects, while SSC initiatives find it hard to access finance. In order to help narrow this financing gap, and mainstream inclusiveness and sustainability criteria in financial decision making, two of the partners of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), Tropenbos International and CIFOR, started a dialogue to identify the main barriers and seek examples of initiatives that overcame them.

This dialogue started with a set of interviews with key informants along the international flow of finance towards landscapes in low- and middle income countries. The results of these interviews were discussed in a digital summit with an investment manager, a representative of the forest governance and economics group of the FAO and an Ugandan NGO. During these interviews and discussions, a number of barriers, possible ways to overcome them and promising initiatives were described. A literature review complemented this information and resulted into a document which is currently being discussed by members of a community of practice set up for this purpose on the GLFx platform. In the panel discussion that FTA organizes at GLF Luxemburg (30 November 2019) we will build on this dialogue and propose some concrete steps that financial institutions, fund managers, NGOs and Civil Society Organizations can take in the short term to help to bridge the gap between SSC initiatives and available climate and SDG-related finance.

How to Measure the Positive Impact on Biodiversity of an Investment? – White paper

Biodiversity loss and land degradation are two sides of the same coin and need to be addressed simultaneously. One of the root problems in degraded lands is the loss of biological diversity. Biodiversity is often threatened by competing land uses, one of the key themes that the Landscape Approach seeks to address. Investing in sustainable landscapes is often the solution to increase biodiversity and vice versa.

To increase investments in both sustainable landscapes and biodiversity, incorporating those concepts into the financial sector are necessary. Starting with methods to measure the impact of investments on those issues. By gaining insight into the often negative (indirect) impact that finance has on biodiversity, the basis is created to reverse this trend.

Definitions and tools need to be developed and agreed upon before financiers can incorporate biodiversity concerns into their daily decision making, serving as a first key step to familiarize the sector with the issues at stake. Recently, the report on ‘Positive Impacts in the Biodiversity Footprint Financial Institutions’ was published. The project leading up to this report was financed by the Dutch Ministry of Agriculture, Nature and Food Quality and carried out by CREM and Pré Sustainability. This rapport discusses, among others, the Biodiversity Footprint Financial Institutions (BFFI) method. The BFFI, applied by the ASN Bank, can measure the positive as well as the negative impacts of an investment portfolio on biodiversity. BFFI uses data from the Exiobase database to assess the environmental pressures resulting from economic activities that financiers invest in. Using pressure-impact models, these pressures are then translated into the impact on biodiversity.

The BFFI is not the only method available. Related initiatives include ‘STAR’, developed by IUCN, the Business & Biodiversity Offsets Program (BBOP), ‘IRIS+’ of the Global Impact Investing Network (GIIN), ‘ENCORE’ by the NCFA or initiatives such as the Platform Carbon Accounting Financials (PCAF) and Green Bonds. In short, a number of tools and impact assessment methodologies are already available.

This White Paper was produced by the Ministry of Agriculture, Nature and Food Quality of the Netherlands and CREM for the session at the GLF Investment Case 2019 in Luxembourg.

Mobilising Private Capital for Land and Restoration Ecosystem – White paper

There are currently many ambitious international initiatives supporting sustainable land use and ecosystem restoration, with various development agendas, declarations, and country commitments. These include the Sustainable Development Goal (SDG) 15 Life on Land — particularly SDG target 15.3 on Land Degradation Neutrality (LDN) and the associated LDN country targets, the UN Decade on Ecosystem Restoration and the Bonn Challenge.

This is due to a growing recognition that sustainable land management and land restoration can offer multiple economic, environmental and social returns. The costs of fighting land degradation through restoration and sustainable land management practices versus the much higher cost of inaction repeatedly highlights the strong economic incentive for immediate action. Still, despite the promising economic returns of ecosystem restoration (in addition to environmental and social benefits), there is a considerable gap between supply and demand for appropriate financing, estimated to be $2.5 trillion per year (UNCTAD). Closing this gap will require collaborative action from a wide range of actors, including the private sector.

However, the involvement of private investors in scaling proven sustainable land management practices remains limited to date. To move forward, it is necessary to understand: i. what private institutional investors are looking for in their investment strategies, and; ii. how sustainable land use activities can offer suitable investment opportunities, while providing environmental and social benefits Ahead of the Global Landscapes Forum Luxembourg, this White Paper looks at recent trends in private investment in SDGs, and business cases for investment in sustainable land use and restoration. During the Forum, the panellists will share experiences on how commercial elements can be incorporated in land restoration projects, to enable private sector involvement in unlocking finance and scaling up.

Powering the Indonesian Archipelago – White paper

Primary energy demand in Indonesia is growing rapidly due to urbanisation, economic growth and population increase. Through the National Energy Policy (Kebijakan Energi Nasional), the Government of Indonesia (GoI) is committed to supplying energy to its entire population. Policies highlight the importance of diversification of energy supply, environmental sustainability and enhanced deployment of domestic energy resources.

The contribution of New and Renewable Energy (NRE) to the national energy mix is mandated to reach 23% by 2025. Indonesia’s Nationally Determined Contributions (NDC) stresses five sectors in which greenhouse gas (GHG) emissions are to be reduced with forestry and energy being of highest priority. The country’s NDC implementation strategy clearly identifies restoration of degraded land for renewable energy as key activity, that allows engaging a wide range of stakeholders including government agencies, private sector and local communities. Vast areas of degraded and underutilised land are available for restoration and biomass energy in the country, providing an opportunity to engage local communities in restoring degraded land and improving rural livelihoods, while supporting the achievement of climate and development goals, including the Sustainable Development Goals (SDG).

This White Paper was produced by Clean Power Indonesia and Center for International Forestry Research (CIFOR) for the session at the GLF Investment Case 2019 in Luxembourg.