The BioCF Initiative for Sustainable Forest Landscapes recognizes the important role that the private sector plays in encouraging smarter land use and reducing deforestation and degradation – and that the private sector can have a pivotal role in scaling-up sustainable practices in emerging markets. The initiative is being designed to maximize private sector engagement and financial leverage. Its objective is to partner with private firms to help “forest-proof” the sourcing of commodities and redirect market forces towards more sustainable land management practices.
Many private firms with diverse footprints in size and location are paying increasing attention to issues of sustainability. Many firms are increasing valuing sustainable supply chains. The reasons are varied including appealing to their customer base, responding to investor awareness and improving the security and resilience of their supply chains. Firms are finding that more sustainable practices help act as a channel for clear communication on sustainability and investment between themselves and governments as well as in the local communities of operation.
POTENTIAL ROLES OF PRIVATE SECTOR
The BioCarbon Fund initiative will seek to incentivize the wide range of private actors in the landscape, from multi-national corporates, to large national actors, to emerging small and medium enterprises and smallholders.The initiative will focus on improving enabling environments for the private sector, results-based finance for emission reductions will reduce initial barriers for private sector investment, and attract further capital and expertise from the private sector, in a highly targeted approach.
The initiative is in its early stage of design; however a few tangible pathways of partnership have been identified. The possible roles include:
- Off takers: Advanced commitments to purchase declared volumes or values of sustainably sourced project outputs
- Partners: Collaboration on existing investment/support for sustainable value chains
- Operators/Proponents: Private sector makes proposal for land management program that aligns with their own current activities or intentions and is linked to incentive payments from local government pool of capital
- Financiers: Private sector provides capital, in form of debt or equity, to operators/proponents for upfront project costs. Carbon credits payments cover roll-out of new financial products and increased risk profile of approach, i.e. short-term anticipated losses