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It had been hoped that incentives for REDD+ (Reduced Emissions from Deforestation and forest Degradation) activities would help tip the balance and make sustainable resource use the financially sound thing to do.
The incentives would, with appropriate and robust safeguards, use the finances and skills of the private sector to help tackle deforestation the world over. All of this is essential given the public sector alone will not be able to provide the billions of USD per year needed to tackle global forest loss.
Unfortunately these incentives have not materialised at the scale or speed needed to make this happen. Engaging the private sector has continued to be a challenge, not least because of the challenging global economic climate. The role of developing economies, and private sector engagement is worth focusing in on when we consider how and why we value the benefits of REDD+.
Emerging market and developing economies grew by 5.1% in 2012. However this has often been at the expense of the planet’s forests. This link needs to broken, but as PwC’s Low Carbon Economy Index last year showed, it has been hard for many countries to break. Our analysis reveals a number of interesting relationships between economic activity and forest emissions over time. Brazil managed to reduce its annual emissions from deforestation (albeit from a high baseline) while increasing GDP and Russia also appears to have started to decouple economic growth from forest emissions. However, Indonesia’s increase in GDP has been accompanied by a steep increase in forest carbon emissions.
The UN-REDD Programme’s latest policy brief outlines some ways in which the challenge of engaging the private sector could be overcome. It highlights the need for a combination of public sector, demand and supply side interventions as well the important role of financial intermediaries in overcoming shortages of financial capital for sustainable activities.
A basket of actions is necessary to achieve the objectives of REDD+. However, in order to get policies, programmes and financing working in sync, the public and private sector need to have aligned objectives and indicators with which to measure success. Currently most public and private sector organisations focus on a narrow view of value and growth (with countries using GDP, and the private sector focusing on profit or share price). They have few metrics to record the growth (or loss) of the multiple non-market values of forest resources and the impacts of these losses on forest dependent communities.
However, we think that this is about to change.
Within the public sector, there have been movements to shift growth accounting away from the narrow view of GDP towards methods such as Wealth Accounting and Valuation of Ecosystem Services (WAVES), GDP+ and the System of Environmental-Economic Accounts. These developments are looking to provide a broader view, taking into account the creation/depletion of the social and environmental capital needed to generate that GDP.
This approach also lies at the heart of ‘Green Growth’ economic planning process which many countries are embarking on. Green Growth brings together a consistent way to value the three pillars of sustainable development – economic, environment, and social – into a single policy planning framework. Encouragingly a significant number of countries (such as Indonesia, Colombia and Kenya) are already starting to think in these broader terms which will value the multiple benefits REDD+ can bring.
On the private sector side, PwC is working with leading organisations to develop a more balanced approach to measuring corporate value called Total Impact Measurement and Management (TIMM). This new decision-making model is driven by an organisation’s social, environmental, tax and economic impacts.
Puma are one of the pioneers of this approach and in 2011 published an Environmental Profit and Loss account for their operations. The results showed that land use change accounted for 25% of their total environmental impact (valued at $37 million), with the majority of this occurring due to raw material sourcing (conversion of forest to pasture for cattle and rubber plantations). These findings have inspired a commitment to reduce the impact of their products and the development of lower impact products such as the recycled ‘Re-Suede’ line of trainers. In addition, Puma’s parent company Kering (previously PPR) purchased REDD+ VCS credits from Wildlife Works as well as taking a 5% stake in the REDD+ in the project development company.
At PwC we highlighted how these public and private sector initiatives work together in a paper submitted to the UN High Level Panel on the Post-2015 Development Agenda. Armed with broader information, governments are able to apply sustainability principles to the decisions they make at a policy and project level, whilst the private sector will make better business decisions driven by an understanding how they create and destroy economic, social and environmental value.
The old adage, “what gets measured gets done” is often quoted. In the case of REDD these developments in reporting and measurement are important. Measuring the broader dimensions of growth will put greater value on sustainable use and protection of forests; hopefully a key step to finally breaking the link between unsustainable resource use and economic growth.
Christopher Webb is an Assistant Director at PwC and leads much of the firms work on climate finance and policy, in particular as it relates to sustainable landscapes.
Adam Gibbon is a Manager at PwC and focuses on REDD+ and climate smart agriculture with both private sector and government clients. He previously worked as Technical Manager of Rainforest Alliance’s Climate Programme.
‘I know it when I see it’, declared Supreme Court Justice Potter Stewart in 1964 when he struggled to construct a concise, legal definition in a court case. Movie buffs might also recall James Bond using the phrase when he was asked what he knew about gold in the 1964 film Goldfinger. To many working in or around REDD+, questions on the exact nature and role of the private sector might elicit a similar response.
The UN-REDD Programme released a Policy Brief today that offers some answers to several questions on the prickly topic of the private sector, the ‘who, what, why and how’? Interviews held while writing the brief revealed a wide range of views and emotions on the subject. At the narrow end of the spectrum, there are those who apply the term only to those involved in the world of carbon credits, or verified emissions reductions. At the broader end of the spectrum, there are those who view the term as encompassing all those involved in the drivers of deforestation and degradation. This tends to bring agriculture into the REDD+ dialogue, and the nexus between the two is an increasingly popular topic of discussion in REDD+ circles which is increasingly reflected in the international conference arena.
The Role of the Private Sector in REDD+: the Case for Engagement and Options for Intervention argues that the private sector, using the broader of the definitions above, will have to play a key role in trying to slow, halt and reverse deforestation and forest degradation. As the largest terrestrial land users in the world, they will be heavily involved in activities on the ground that are integral to REDD+. They will play fundamental roles as designers, developers, operators and enablers of ‘forest-friendly’ initiatives at a variety of scales.
The private sector is often cast as the villain in the REDD+ world, and there is certainly evidence from around the world to support this argument. However, it would be a mistake to think that REDD+ can function as an effective tool without the private sector in the future. They bring many positive attributes that will be critical to REDD+ including innovation, investment and the implementation of activities. As with a three legged stool, remove any one of these attributes and it is challenging to see how REDD+ can succeed at scale.
The UN-REDD Programme offers a neutral platform for forest countries to engage with the private sector and from which to support existing in-country initiatives. The sheer complexity of the issues being addressed mean that there is no policy ‘silver bullet’ and a range of tools to change behaviour are discussed. These tend to be most effective when used in combination and can include incentives, risk mitigation instruments, the setting of minimum standards and enabling conditions.
This brief is the start of a larger body of work on the private sector by the UN-REDD Programme. We would welcome any comments, thoughts or ideas in the comments section below.
Bio: Iain Henderson joined the United Nations Environment Programme Finance Initiative (UNEP FI) in Geneva in 2012 to work on REDD+ and Sustainable Land Use. Prior to this, he spent two years in Hong Kong, where he grew up, with WWF’s Forest & Climate Initiative working on finance-related issues. For the first 12 years of his working life, Iain worked in investment banks in London in the Fixed Income, Currencies and Commodities divisions of UBS and Deutsche Bank.
In order to be effective, the programme needs to be able to communicate effectively with a broad range of stakeholders both within and outside of the government and internationally. The same applies to other programmes developing REDD+ readiness in Cambodia supported by multinational and bilateral development partners, NGOs and others. Effective and efficient REDD+ readiness requires open communication of all information related to the process. All of thse initiatives are contributing to implementation of the Cambodian REDD+ readiness roadmap.
Therefore, in May 2013, a website of the Cambodia REDD+ National Programme was established and launched. With support from the UN-REDD Programme, the website was designed to incorporate key content and functions to ensure easy access to information on the REDD+ National Programme. It is an essential tool to help communicate progress on REDD+ readiness with stakeholders, inform them of events and upcoming developments, and to gain feedback on specific issues. The website constitutes an important tool for the Royal Government of Cambodia in its efforts to get ready for REDD+.
The website is one of tools to raise awareness of the REDD+ National Programme. As the programme is prepared and implemented, the website looks to fully share relevant information and documents of line ministries, donors, NGOs partners, networks, and related stakeholder groups. This approach marks the programme out as one of the most highly integrated national REDD+ programmes globally.
Mr. Timothy Boyle, Regional Coordinator to UN-REDD Programme said, “This website provides a one-step site to access all information about REDD+ in Cambodia. It does not supplant the web-sites of different partners, but rather serves to strengthen information flow for all partners. Few if any countries have established such a comprehensive national REDD+ web-site.”
Please follow our website link here: www.cambodia-redd.org