19 Jan 2017, in Palm Oil - IDH is incorporating a large Fund to work with investors, companies and local authorities on deforestation-free jurisdictions, and responsibly produced commodities like palm oil, pulp & paper, beef, soy and cocoa.
This new Fund was announced in Davos by the Norwegian Prime Minister Erna Solberg, Paul Polman, CEO Unilever and co-chair of the Sustainability Committee of the Consumer Good Forum, and Naoko Ishii, CEO and chairperson of the Global Environment Facility. In partnership with tropical forest countries and UNEP and supported by major food companies and NGOs, the Fund aims to trigger private investments in deforestation-free agriculture. The Fund aims to protect over 5 million hectares of tropical forests and peatlands by 2020.
Erna Solberg, Prime Minister of Norway, announced the launch of the Fund in Davos: “The future of the planet depends on our common ability to both protect and restore forests at unprecedented scale, while simultaneously increasing agricultural production to meet growing global needs. Through this Fund, we will work with forest governments, the private sector, and civil society to make this happen in innovative ways.”
This tropical forests and agriculture focused fund, which IDH is expected to have fully operational mid this year, aims to trigger private sector investment into agricultural productivity that also protects forests, peatlands and biodiversity. The Fund will provide an incentive for tropical forest governments by catalyzing investments in countries and jurisdictions that implement strategies to protect forests and reduce related greenhouse gas emissions.
The Fund will thus bundle complementary political, commercial, and financial efforts to deliver maximum impact on forest and peatland protection and rural socioeconomic development through production. The Fund is an example of the implementation partnerships that are developing under Tropical Forest Alliance 2020, a global public-private partnership to drive action towards deforestation-free supply chains, hosted at the World Economic Forum.
The fund will be launched with an initial commitment of up to $100 million from the Norwegian government, based on a capitalization goal of $400 million by 2020, to be drawn from other bilateral and multilateral donors as well as private sector partners. With that capital the Fund will become a multi-donor, multi-investor fund, and will trigger large scale, private sector investments – at a minimum leverage ratio of one to four – into commercial land use, for example helping to increase the productivity of smallholder farmers in ways that also protect and restore forests and peatland.
“We applaud the Fund as we are a strong believer in governments and companies working together to protect the environment, whilst feeding the world’, said Everton Lucero, Brazilian Secretary of Climate Change and Environmental Quality, Ministry of Environment. Apex-Brazil ambassador Roberto Jaguaribe adds: “As part of the Paris climate agreement our country has committed to 12 million ha of forest restoration and 20 million ha of sustainable intensification of agriculture. This Fund will help us to develop scalable models to achieve that.“
The fund is being developed in close partnership with UN Environment and the Global Environment Facility: “Eliminating deforestation from the supply chain of major global commodities is a goal whose time has come. Enhancing agriculture production can no longer take place at the expense of the global commons“, commented Naoko Ishii, head of the Global Environment Facility. Erik Solheim, head of UN Environment said: Erik Solheim, head of UN Environment said: “It’s extremely important that we join forces to protect forests and peatlands and therefore our climate. We’re delighted to have this coalition in place, and it’s especially important that we also have the private sector on board.”
Major members of the global consumer goods industry such as Carrefour, Marks & Spencer, Mars, Metro, Nestlé, and Unilever have expressed their support for the Fund, as has the Consumer Goods Forum and other industry associations. Unilever is the first corporate investor in the Fund, investing US$25 million over a five year period. Paul Polman, CEO Unilever and co-chair of the Sustainability Committee of the Consumer Good Forum said: “The Fund is at the heart of the Sustainable Development Goal and Climate nexus. This unparalleled public-private partnership will leverage the commitment of Consumer Goods Forum companies to meet our shared goal to eliminate deforestation, while supporting enhanced livelihoods for farmers in our supply chain”.
Collaboration with committed civil society organizations will be instrumental in ensuring proper monitoring of progress and/or providing technical assistance. WWF, World Resources Institute, and The Nature Conservancy have welcomed the launch of the Fund and are looking forward to collaborating with the Fund to make deforestation-free tropical agriculture a reality. Andrew Steer from the World Resource Instituted said: “The most successful actions to protect the forests will also be good for the economy. This Fund is a smart, modern way of demonstrating this proposition. By drawing upon the best private and public actors, and new understanding of business opportunities in tropical landscapes, its impact on climate, biodiversity, and economic opportunity, could be truly transformational.” Jason Clay, Senior Vice President, Food & Markets of WWF US noted: “WWF applauds this Fund wholeheartedly. Agriculture is the main driver of deforestation. Commodity markets and financial institutions together hold the key to scalable solutions for deforestation free agriculture. It’s time financial- and commodity markets start protecting High Conservation Value Areas at risk”
The Fund aims to protect over 5 million hectares of forests and peatlands directly through projects secured by 2020, in addition to incentivizing a much broader environmental agenda in the jurisdictions where it invests. By doing so the Fund and its investors will positively contribute to a number of Sustainable Development Goals such as poverty reduction (1), zero hunger (2), decent work and economic growth (8), climate action (13), sustainable water management (15) and halting land degradation, and biodiversity loss (16).
The Fund will be formally set up and incorporated by IDH as an independent legal entity later this year.”The financial world, together with businesses, can make forest friendly land use commercially attractive for tropical commodity farmers,” noted IDH CEO Joost Oorthuizen. “Combining investments in land use intensification, jurisdictional forest protection strategies and an international commodity market that rewards responsible sourcing areas, is key. We believe the Fund can provide the right incentives to trigger commercial investments in deforestation free souring areas. As IDH, we will build a strong and innovative program portfolio to that end.”
Agriculture is one of the biggest drivers of deforestation. Between 2000 and 2012, 2.3 million square kilometers of forest was cut down. However, to date, investments into increasing agricultural production to feed the growing world population remain tilted towards expanding into tropical forests rather than intensifying agricultural production on existing arable land.
More info in the Fund Brochure