proposals from the private sector for...

Proposals from the Private Sector

for Engagement at Scale in REDD+

Working Report of the Financing Sustainable

Land Use project

This document was prepared for the World Economic Forum Financing Sustainable Land Use project to support the Industry Partnership Programme. Industry Partners are select member companies of the World Economic Forum that are actively involved in the Forum’s mission at the industry level. Partnerships bring visibility and insight to strategic decision-making on the most important industry and cross-industry related issues and the opportunity to engage in actions of global corporate citizenship.

The views expressed herein represent a collation of various viewpoints emerging from a series of discussions among the participants in the Financing Sustainable Land Use Project. They do not necessarily reflect the individual institutional viewpoints of The Terrestrial Carbon Group, PwC or any of the other companies or institutions who took part, or of the World Economic Forum. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

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A Working Report prepared by The Terrestrial Carbon Group with PwC for the World Economic Forum updated after the Cancún Dialogue on ‘REDD+ and Sustainable Land Use’ at the UNFCCC COP 16 in Cancún, Mexico for discussion at the World Economic Forum Annual Meeting 2011

Contents

Foreword 04 - 05

Executive Summary 06 - 08

Introduction 09

1. The Challenge, State of Play, and Opportunities 10 - 13

2. Specific Proposals from the Private Sector 14

Proposal 1 15

Proposal 2 16

Proposal 3 17

Proposal 4 18

Proposal 5 19

3. Addressing Overarching Barriers to Action at Scale 20

4. Outcome from Cancún 21

Appendix 1 23 - 24

Appendix 2 25 - 26

Appendix 3 27 - 30

Appendix 4 31 - 32

3

The important role that sustainable land use can play in mitigating greenhouse gas emissions, in particular reduced emissions from deforestation and forest degradation (REDD+) has become clear over the past few years. Progress on the issue, both from within the official negotiation process and as a result of national, NGO and expert coalitions, is often cited as one of the key areas of continued progress within the climate agenda. The topic was one issue that gained clear momentum from the UN Climate talks in Copenhagen in December 2009.

During 2009, the World Economic Forum Low-Carbon Prosperity Task Force (formed at the request of the then Chair of the G20 to develop practical public-private ideas on how to build the low-carbon economy from the bottom up), had identified the need to create a step change in private sector engagement, in order to scale up and finance sustainable land use activities. The Task Force working group on Avoided Deforestation and Land Use Change identified two areas of activity as important to develop in this regard: firstly, the need to catalyze on-the-ground public-private action, and secondly to develop and implement the national enabling frameworks and broader market drivers that would attract private sector financing for sustainable land use at scale.

A number of land use discussions at the World Economic Forum Annual Meeting in Davos, January 2010 explored these recommendations further. A mandate was given, in particular from those in the agricultural and extractive industries, to explore the issues in more depth. Specifically, there was interest to identify some clear models for scalable private sector engagement in the sustainable land use and REDD+ agenda, using some actual country contexts.

The Financing Sustainable Land Use project was created as a result. During 2010 it explored these issues with a particular focus on Latin America (specifically Brazil and Columbia) and East Africa (specifically Tanzania) as country contexts, leveraging the fact that the Forum’s Latin America and Africa regional meetings for 2010 were held in Columbia and Tanzania respectively. Sessions for the initiative were held at each of these regional summits early in 2010. Further regional workshops were held in Manaus, Brazil and Dar es Salaam in the autumn of 2010, as results from project investigations started to emerge. Over 100 regional representatives from the public, private and NGO community took part in these various discussions.

Building on the outcomes of these regional workshops, the findings from the work were also presented and discussed with REDD+ country officials at the World Bank Forest Carbon Partnership Facility meeting in November 2010. Further, at the Annual Meeting in January 2010, the Mexican government asked the Forum to deepen the public private dialogue on land use and other key “building block” issues during 2010 in preparation for COP-16. The resulting ‘Cancún Dialogue’ also saw the Forum co-host with the Mexican Ministry of Foreign Affairs and the Ministry of Economy a public-private discussion on the draft findings of the sustainable land use project at the time of the United National climate talks in Cancún, December 2010.

As a result of these various multi-stakeholder and regionally anchored processes, we are extremely pleased that the public-private models and ideas on financing and scaling up sustainable land presented in this report reflect very much the practical, “bottom up” thinking of a strong sample of land use and REDD+ practitioners drawn from across specific regional business, government, development agency and NGO communities. They contain both current workable models and suggestions for wider uptake.

Foreword

4

5

I am extremely grateful to our Project Board Industry Partners for their foresight and determination in asking the Forum to seek out workable models in this space. I would also like to thank our expert adviser the Terrestrial Carbon Group, particularly Ralph Ashton and his team, and our project adviser PricewaterhouseCoopers, particularly Richard Gledhill and his team, for their strong input to this work. The project has benefited from the expertise of various international and regional staff of the World Wildlife Fund and the Sustainable Amazon Foundation. Special thanks are due to Professor Virgilio Viana, chief executive of the Sustainable Amazon Foundation, Professor Pius Yanda from the University of Dar es Salaam and Professor Jacques Marcovitch from the University of Sao Paolo for their help in delivering very successful regional workshops for the project. Thanks are also due to the Ministry of Foreign Affairs in Mexico, for their help in co-hosting the discussion at the time of the Cancún COP. Finally, I would also like to specifically thank the Forum project team past and present of Lieske van Santen, Jennie Oldham, Helena Leurent and Shruti Mehrotra for their central role in delivering the work.

This report and its findings conclude the first stage of the Forum’s Financing Sustainable Land Use project. We trust that this work and its specific examples will help advance discussions on the role of the private sector in the sustainable land use agenda. This in terms of climate change mitigation and REDD+, but also within a potentially wider context of agriculture and economic development (potentially linked to the Forum’s New Vision for Agriculture Initiative) and other issues of integrated land management and investment strategies within the broader green growth paradigm.

Dominic Waughray Senior Director Head of Environmental Initiatives World Economic Forum

The Project

In response to requests by senior representatives of leading companies, this project of the World Economic Forum aims to identify opportunities for greater engagement and investment in REDD+ activities for the private sector across the value chain, including by addressing drivers of deforestation. The project examines how to:

• Useprivatesectorresourcesandcapabilitiesacross the value chain to quickly build an effective REDD+ mechanism and implement ongoing REDD+ action at scale

• Raiseprivatesectorfinancetodoso,including but not limited to carbon fi nance and carbon markets

• Increasetheimpactofpublicsectorfaststartfunding through private sector engagement

During 2010, the project drew on leaders from the private and public sectors and from the NGO and expert communities to explore important considerations and make concrete proposals for private sector action at scale. This paper summarises the fi ndings and proposals.

Key Messages

• Awiderangeofprivatesectoractorsislinkedtoland use and land use change through value chains that revolve around the production and consumption of commodities produced on land

• ThepublicandprivatesectorsandtheexpertandNGO communities acknowledge the critical role of the private sector in delivering REDD+, but the range of roles the private sector can play is little understood, as is how to achieve private sector engagement at scale

• Astheprivatesectorisalsocriticaltogoalsofeconomic development, engaging the private sector in REDD+ is a potential “win-win” to advance multiple agendas simultaneously

• Whiletheprivatesectoriswillingtoplayitspart,its engagement has been limited, largely restricted to buying carbon credits and investing directly in carbon projects (almost exclusively through partnerships with NGOs in the context of voluntary carbon markets)

• Thisactivityhaslargelybeendrivenbytheneedto secure a social licence, corporate social responsibility, or a desire to gain experience ahead of expected demand for REDD+ credits in compliance carbon markets

• Todramaticallybroadenandincreasethescaleof private sector engagement in REDD+, it is necessary to create a business case beyond corporate social responsibility and voluntary action

• Inaddition,earlyprivatesectoractorsacrossthevalue chain are engaging in a broad range of other sustainable land use activities motivated by a variety of commercial and corporate social responsibility reasons but rarely for carbon payments

• AlthoughnotundertheauspicesofREDD,theseactivities can and do contribute to REDD+ goals - it is now well-accepted that addressing drivers of deforestation, especially agricultural expansion, is an essential component of any successful REDD+ strategy.

• Overall,creatinganenablingpolicyandregulatoryframework, internationally and nationally, is a fundamental precursor, but is currently insuffi cient to stimulate action at scale

• Formaximumimpact,awidevarietyofprivatesector actors must be more substantively involved in the design of policy and implementation of on-the-ground action

• Catalyticpublicfinanceisrequiredtoenablethetransition to more sustainable land use practices

6

Executive Summary

7

Recommendations

• Overarching: The private sector is not suffi ciently engaged in international and national policymaking on REDD+, land use, and carbon markets. Platforms should be built for the inclusion of the private sector to engage more substantively and effectively in policymaking. In particular, this would facilitate the development and implementation of the proposals from the private sector set out in this paper. At the international level, such a platform could come under the auspices of initiatives such as the Forest Carbon Partnership Facility, the UN-REDD Program, or the Interim REDD+ Partnership.

• For International and National REDD+ Policy Makers: Uncertainty is very damaging. The private sector is used to dealing with risks, but the majority of private sector actors are unlikely to take on risks they cannot estimate or mitigate. Positive policy signals are needed to secure, scale and sustain private sector action. This includes the prospect of long-term compliance demand for carbon mitigation, the opening of compliance markets to REDD+ credits, clear frameworks with established legal rights, and trade rules that support the development of sustainably produced commodities.

• For Bilateral and Multilateral Supporters: Limited public funds including the REDD+ fast start funds pledged can be leveraged to deliver effective, scalable solutions by supporting and enabling private sector operations and networks across the value chain and across sectors.

• For the Private Sector: A multitude of business opportunities are opening up through the development and early implementation of REDD+ strategies, internationally, nationally and sub-nationally. Simulatenously, new demands for sustainability are being imposed by governments and consumers that affect existing operations. Now is the time to engage in substantive discussions through industry groups, across value chains and unilaterally to determine how best to engage in these opportunities, and with governments and other policy makers to shape the policy framework.

• For NGOs: NGOs are often leading the way in developing connections between the private sector, regulators, and local land users to change practices on the ground. To scale and replicate activities and achievements more widely, strategic partnerships are needed with the private sector. The private sector also requires NGO assistance with technical issues and networking.

Private Sector Proposals

Five specifi c opportunities were identifi ed by the private sector through this project. These are neither exhaustive nor complete, but display the range of intervention points to engage a variety of private sector actors across the value chain and along a trajectory of change.

Proposals from the Private Sector mapped on a “Trajectory of Change”

Readiness

ReframeMarkets

Donor Funding to Pump Prime the

REDD+ Carbon Market

Multi-Sector Task Forces for REDD+

Policy Development

De-Risking Across the Value Chain

Scale UpVoluntary

Action

Cross-SectorSustainability

Partnerships at the Local Level

Embed in the

Business Case

Private Sector as Aggregator

Next Steps

The recognition of REDD+ in the Cancún Agreement at the 16th Conference of the Parties (COP16) to the United Nations Framework Convention on Climate Change (UNFCCC) is an important political statement and signal of commitment by governments to REDD+. Recognition of and the request for a working group to look into drivers of deforestation and forest degradation is also an important step. These advances should give fresh impetus to existing action and the ongoing process to determine how REDD+ can and should operate.

As agreed with the Government of Mexico, the World Economic Forum was asked to present the findings of this project at a private meeting on 6 December 2010 in Cancún, attended by public and private sector and civil society representatives. This meeting confirmed the need for concrete examples and proposals for more substantive and extensive private sector engagement in REDD+, including in tackling the drivers of deforestation. Specifically, proposals which detail what is needed, by whom, at what cost, from which funding sources, and to what intended impact.

Avenues identified as necessary to take this work forward include to:

1. Work with governments on the implementation of specific proposals that have emerged, and make them part of a national development strategy. Such a platform for national action could come under the auspices of initiatives such as the Forest Carbon Partnership Facility (FCPF), the UN-REDD Program, or the Interim REDD+ Partnership.

2. Analyse the estimated costs and impacts of the proposals presented here and identify the steps and parties needed to transform them into action and results. This includes exploring ways for effective use of fast start funds.

3. Build on results at COP 16 and develop an interim solution for a future compliance market for terrestrial carbon. A dialogue could be initiated on steps required to transform markets and identify opportune areas for demonstration. Platforms and initiatives to take this dialogue forward could for example include a joint effort of the FCPF, the Governors Climate and Forests Taskforce, IETA, and CMIA.

To sustain momentum and build on the proposals that have emerged, the World Economic Forum will continue to support these public-private dialogues and help to translate the recommendations and proposals into action.

In particular, we will continue to explore the various offers and avenues for engagement arising in and after the Cancún meeting, and enable continued dialogue between senior policy makers, company executives, and experts during the World Economic Forum Annual Meeting in Davos in January 2011, and at World Economic Forum Regional Summits in Brazil, Indonesia and South Africa throughout 2011.

Through these fora we hope to stimulate groups of champions to take charge of transforming the proposals into action and action into results.

8

Introduction

In response to requests by senior representatives of leading companies, this project aims to identify opportunities for greater private sector engagement and investment in REDD+1 activities. Specifically, the project examines how to:

• Useprivatesectorresourcesandcapabilitiesacrossthe value chain to quickly build an effective REDD+ mechanism and implement ongoing REDD+ action at scale, including by addressing drivers of deforestation such as agricultural expansion and mining activities

• Raiseprivatesectorfinancetodoso,includingbutnot limited to carbon finance and carbon markets

• Increasetheimpactofpublicsectorfaststart funding through private sector engagement

During 2010, the project drew on leaders from the private and public sectors and from the NGO and expert communities to explore important considerations and make concrete proposals for private sector action at scale.

This paper summarises the findings of the project. It will feed into discussions at the World Economic Forum Annual Meeting in Davos in January 2011.

9

Building on the 2009 Low Carbon Task Force of the World Economic Forum

In 2009, the Low Carbon Task Force of the World Economic Forum concluded that sustainable land use is critical to achieving low-carbon growth for many developing economies and that reducing emissions from land-based activities is an essential climate change abatement strategy. Given the scale of associated emissions it found that addressing deforestation is important as well as agriculture as a major driver of deforestation.

The Task Force highlighted that the private sector has a key role to play in sustainable land use, but that a step change in private sector engagement in both policy development and implementation was required to create impact at the scale and speed required.

In response to the Task Force conclusions and the outcomes of the UNFCCC COP 15 in Copenhagen in 2009, discussions on REDD+ and sustainable land use were held at the World Economic Forum Annual Meeting in Davos in January 2010. A request came from senior executives of leading companies to identify specific, practical and scalable options for catalysing a step change in private sector engagement and investment in REDD+ and sustainable land use activities. In response to this request, the World Economic Forum conceived a cross-industry project on Financing Sustainable Land Use.

This project forms part of a wider suite of low-carbon growth activities supported by the World Economic Forum during 2010, designed to complement and support the multilateral UNFCCC-hosted negotiations. Other projects within this suite are looking at infrastructure finance, energy efficiency and the demonstration of some key technologies. Findings from all of these projects have been presented during UNFCCC COP 16 in Cancún.

An underlying premise of this World Economic Forum activity is the need to create vehicles for more substantive public-private interaction, to help both unlock new flows of private sector finance and to develop practical arrangements through “learn-by-doing” collaborations in project and program implementation. The focus has been to anchor discussion around the identification of significant first mover “marquee” projects and programs in each building block area that can create the step change required, supported by a practical investigation as to how best to make it happen.

1 REDD+ is defined as “reducing emissions from deforestation and forest degradation in developing countries, and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries”.

The Challenge

Land use is a fundamental part of the climate change solution: reducing emissions and increasing sequestration of carbon in land could provide one third of the mitigation required in 2030 to reach a 400ppm pathway. Forestry accounts for approximately two-thirds of this2.

Realising this potential requires a radical change to current land management practices. This is a significant challenge given the multiple economic, social and environmental demands on land from a variety of actors from individual households to industry to national governments3.

Meeting this challenge requires a new approach to how we think about land use, the policies we enact to regulate it, and the infrastructure and finance we devote to implementing and scaling the necessary changes. It requires agreement and partnerships across the public sector, private sector and civil society at local, national and international levels.

Substantial sums of money are required:

1. For one-off set up costs, including for capacity building. An estimated US$4 billion is required for capacity building for REDD+ in 40 countries over five years4. Costs for measurement, monitoring, capacity building, infrastructure, and carbon-credit monetisation for the agriculture sector have been estimated to be 3.8 billion5 (approx US$5 billion).

2. For ongoing costs over and above current operating costs. Estimates for reducing deforestation based on opportunity cost and carbon market price analysis are in the range of $10-$30 billion6. This wide range reflects the varying approaches to estimating incremental costs. Carbon price and opportunity cost measures often do not account for (i) alternative methods for achieving mitigation, such as agricultural subsidies, moratoria on road construction, and increased capacity to enforce land use and zoning laws, or (ii) the fact that existing operational investments made by the public and private sector may simply need to be redirected.

The private sector is a key constituent, not least because of its direct and indirect land footprint, but also because of its financial resources, the range of its expertise, its relationships with other stakeholders, and its ability to implement and scale operations at relative speed7.

Engaging the private sector at scale in REDD+ will require:

• Anenablingpolicyframeworktocreatethe business case

• Accesstocatalyticfinancetoenablethetransition

• Understandingthetheextentofandlimitations to private sector action to date

• Involvingtheprivatesectoracrossitsfull value chain

• Innovationsthatbuildonexistingpublic-privatepartnerships and private sector initiatives

The remainder of this section summarises the state of play in policy, finance, and private sector action. It also describes the private sector value chain. Section 2 provides five concrete proposals from the private sector to address specific barriers to action at scale. Section 3 sets out overarching issues that must be addressed to enable the private sector to contribute to REDD+ comprehensively over the long run. Section 4 reports back from the Cancún Dialogue on REDD+ and Sustainable Land Use. Key messages and recommendations for specific actors are provided in the Executive Summary.

10

1. The Challenge, State of Play, and Opportunities

2 As estimated by McKinsey when assessing technical abatement opportunities costing less than 80 euro per tonne. ‘Impact of the Economic Crisis on Carbon Economics: v2.1 of the Global Greenhouse Gas Abatement Cost Curve. McKinsey & Company, 2010.

3 These include, but are not limited to, concerns over food security, energy security, livelihoods, economic growth, and biodiversity protection.4 Climate Change: Financing Global Forests’, Eliasch Review, Office of Climate Change, UK Government, 2008.5 ‘“Climate-Smart” Agriculture: Policies, Practices and Financing for Food Security, Adaptation and Mitigation’. A report from the FAO for the Hague Conference on Agriculture,

Food Security and Climate Change, November 2010.6 ‘The Little Climate Finance Book: A Guide to Financing Options for Forests and Climate Change’. Global Canopy Programme, December 2009.7 For this reason, a number of initiatives are have or are currently focussed on engaging the private sector in REDD+, climate change mitigation through land and sustainable land use

more broadly. These include, but are not limited to, the Prince’s Rainforests Project initiative ‘REDD+ and Agriculture: Proposed Solutions from the Private Sector’, see www.rainforestsos.org

11

Policy: State of Play

The foundations for the effective inclusion of land-based mitigation in national and international responses to climate change are slowly but surely being built. At the international level, land use is gaining greater traction in the ongoing climate change negotiations under the UNFCCC. In summary8:

• Forestry.TheKyotoProtocol’sCleanDevelopmentMechanism (CDM) has failed to effect large-scale climate change mitigation through its afforestation and reforestation windows9. A new incentives mechanism for REDD+ is well defined and broadly accepted in principle.

• Agriculture.Theroleofagriculturalexpansionasadriver of deforestation is well accepted in discussions of REDD+10. Cancún brought forward explicit recognition of a request for a specific working group to look into drivers of deforestation, such as agriculture. In the meantime, a number of global and sub-global fora are addressing climate smart agriculture, including its role in the REDD+ solution. A recent example is The Global Conference on Agriculture, Food Security and Climate Change held in The Hague in November 2010.

In advance of formal agreements under the UNFCCC, a number of multilateral initiatives have been established to support ongoing capacity building, pilot programmes and policy development. Examples include the UN-REDD Programme and the World Bank’s Forest Carbon Partnership Facility, Carbon Fund and Bio- Carbon Fund11. In addition, an Interim REDD+ Partnership was officially launched by countries in May 2010, with the aim of raising and disbursing the “fast start” funds that are needed for readiness and early action activities12.

Further, various significant sub-national, national and bilateral arrangements are emerging. Many countries and states are engaged in developing low emission development strategies, in which land-based activities and mitigation play an important part. Some have

undertaken specific land use emission targets, often supported by donor countries such as Norway. For example, Brazil has committed to reduce net deforestation by 80% by 2020 and Indonesia aims to reverse its forest emissions by 2020.

Finance: State of Play

As climate change has moved up the policy agenda, finance mechanisms and funds have multiplied. As a consequence of the Copenhagen Accord, developed countries need to pledge US$30 billion of fast start finance into developing countries in the period between 2010-2012. Analysis by the World Resources Institute shows that by October 2010 pledges publicly announced by developed countries total US$28.34 billion13. Specifically in relation to REDD+, fast start finance of US$4.5 billion was pledged as part of the Copenhagen Accord.

However, donors are making clear that the scale of required finance dictates a transition away from the public purse. As noted by the United Nations Secretary General’s High Level Advisory Group on Climate Change Financing in 2010, “International private investment flows are essential for the transition to a low-carbon, climate-resilient future. These investments can be stimulated through the targeted application of concessional and non-concessional public financing. Careful and wise use of public funds in combination with private funds can generate truly transformational investments. Further work is recommended on finding the most efficient use of grant funding for climate actions14.” The Advisory Group estimates that for every $10bn in additional resources, multilateral development banks could deliver $30-40bn in gross capital flows and significantly more by fostering private flows.

The creation of large scale demand in the private sector for carbon credits is seen as one viable way to generate revenue from carbon mitigation projects, thus creating a business case that enables project developers to access private sector investment finance.

1. The Challenge, State of Play, and Opportunities

8 A ‘State of Play’ Assessment of Land Use in the International Policy Response to Climate Change’, Terrestrial Carbon Group, November 2010. (www.terrestrialcarbon.org)9 ‘A System to Deliver Terrestrial Carbon Mitigation (REDD+ to AFOLU): Functions, Institutions and Transition Pathways’, Terrestrial Carbon Group, December 2009.

(www.terrestrialcarbon.org)10 Agriculture is also an important mitigation activity in its own right for many countries. Of the 43 non-Annex I Parties submitting National Appropriate Mitigation Actions (NAMAs)

as part of the Copenhagen Accord, 29 make specific reference to forestry related actions. Of these 29, 18 also mention agriculture related actions.11 For information on the international funding initiatives designed to help developing countries address the challenges of climate change see www.climatefundsupdate.org/12 For more information, see www.reddpluspartnership.org13 ‘WRI’s preliminary analysis on countries’ immediate “fast start” climate finance pledges announced thus far is available at

http://www.wri.org/publication/summary-of-developed-country-fast-start-climate-finance-pledges14 ‘Report of the Secretary-General’s High-Level Advisory Group on Climate Change Financing’, November 2010. It is worth noting that the AGF calculations are based on the

assumption that the carbon price will be of $20-25 per ton of CO2 equivalent in 2020.

Private Sector Engagement to Date

Investment and action in land-based mitigation by the private sector is currently very limited. Globally, there are only 37 publicly reported REDD+ projects operating or in the pipeline that are being financed, at least in part, through voluntary carbon markets15,

whilst activity in the compliance markets is negligible.

Various market failures (in pricing, in information, in credit) mean that it is often difficult to make a solid business case, and frequently it is more lucrative and straightforward to maintain existing land use practices.

Where the private sector has engaged, it has rarely been motivated purely by prospective carbon mitigation considerations, not least because potential carbon revenues are currently inadequate or uncertain. Examples of broader sustainable land use activities (including those related to REDD+) in the agricultural and mining sectors that were discussed during this project, were mainly motivated by corporate social responsibility (CSR), the need for a social licence, or an imperilled supply chain.

This voluntary and self-regulated action is increasing and can be effective. Examples include the moratoria on the expansion of soy production into the Amazon forest in Brazil, the sustainable commodity roundtables, and increasing unilateral commitments by companies. However, the likelihood of such voluntary activity reaching the scale required at the speed needed has been questioned. Additional solutions are needed.

There is growing interest in forest projects from actors in the carbon markets. However a combination of low prices in voluntary markets, policy delays and uncertainties in compliance markets, and overall project development risks are holding back investment. Investors do not have sufficient confidence in the future value of forest-based emission reductions to commit scarce capital at this stage.

A recent example illustrates this point. BNP Paribas entered into a framework financing facility for investment of up to US$50 million to support Wildlife Works Carbon in developing a portfolio of large-scale REDD+ projects in Africa. As part of the agreement, the bank has purchased an option to buy up to 1.25 million tonnes of carbon credits from the Kasigau Corridor project over the next 5 years. However, the exercise of the option is contingent on the development of a compliance market for forest carbon or other financing mechanisms for REDD+.

Opportunities: Looking Across the Value Chain

A wide range of private sector actors are linked to land use through value chains that revolve around the production and consumption of commodities produced on land. These can be “standard” commodities such as food, fibre, fuel, metals and minerals, or ecosystem services such as carbon mitigation, watershed protection and biodiversity conservation.

15 PwC 2010.

12

Schematic of the Private Sector Value Chain

Primary Production

ProcessingDistribution and Trading

Consumptionand Disposal

Investment

Service Provision

Regulation / Policy Framework

The “private sector”, therefore, is a wide-ranging group across specialisms, scales and locations. It stretches from land-based actors to upstream consumers both domestically and abroad, and ranges from small-holder farmers to multinational supermarkets, from local REDD+ project developers to carbon-regulated industrial companies, from miners to power station owners, from local lending banks to specialist international investment banks.

Participants in this project repeatedly pointed to the fact that value can only be created if the risk-reward incentives for each actor in the value chain are sufficiently attractive. In the words of one participant, “the value chain is only as strong as its weakest link”.

It is therefore in the commercial interests of each actor in the value chain to remove as many barriers as possible regardless of where they arise along the value chain. These linkages and interdependencies between private sector actors open up the possibility of one actor providing the solution to another actor’s barrier.

Further, some actors along the value chain can have a multiplying effect because they hold a particular ability to influence or enable changed behaviour either (i) across a wide portion of the value chain (eg, financial institutions that lend to actors across the value chain), or (ii) among a large group of actors at a specific point in the value chain (eg, commodity traders that buy from thousands of farmers).

Against the background of this section, there is a clear need for concrete proposals to engage the private sector to meet the twin challenges of speed and scale.

13

14

The following fi ve proposals from the private sector represent specifi c opportunities to use private sector resources and capabilities to quickly build an effective REDD+ mechanism and implement ongoing REDD+ action at scale (including by addressing the drivers of deforestation), to raise private sector fi nance to do so, and to increase the impact of public sector fast start funding through private sector engagement. These proposals have broader applications as indicated.

The proposals are not exhaustive, and do not answer all the needs identifi ed. They are presented here as an illustration of possible avenues to stimulate further discussion. More detailed information is available on request.

These proposals are intended to provide ideas of how limited public funds (eg, the REDD+ fast start funds pledged in Copenhagen) can be deployed to leverage the signifi cant fi nancial resources and capabilities of the private sector across the value chain for effective, scalable solutions.

Useful next steps on these proposals would include:

• Assessingscalabilityandreplicability

• Calculatingcostsofimplementation

• Quantifyingpotentialimpactinhectaresortonnesof carbon

• Developingmetricstoassessvalueformoney

• Quantifyingthepotentialforleveraginglimitedpublic fi nance to catalyse private sector fi nance and action

In addition, a platform should be built for the private sector to more substantively and effectively engage in international policymaking on REDD+, land use, and carbon markets. In particular, this would facilitate the development and implementation of the proposals from the private sector set out in this section. Such a platform could come under the auspices of initiatives such as the Forest Carbon Partnership Facility, the UN-REDD Program, or the Interim REDD+ Partnership.

Groups of champions will then need to take charge of transforming the proposals into action, and action into results.

Readiness

ReframeMarkets


REDD+ Carbon Market


Policy Development


Scale UpVoluntary

Action

Cross-SectorSustainability

Partnerships at the Local Level

Embed in the

Business Case

Private Sector as Aggregator

Proposals from the Private Sector mapped on a “Trajectory of Change”

2. Specifi c Proposals from the Private Sector

Multi-Sector Task Forces for REDD+ Policy Development

Broader application

Discussions repeatedly highlighted a lack of understanding within the public and private sectors and civil society at both international and national levels about the variety of potential roles the private sector could play in delivering REDD+ in country. It was agreed that there is a need for a more substantive role, but not ‘how’ to achieve this. It was considered that these taskforces would be the first step to understanding this, and therefore enabling a full realisation of the full spectrum of resources and capabilities across a variety of private sector actors across the value chain.

The task forces should be made ‘fit to suit the purpose’: possibly convened by sector, by value chain, by role or be a cross cutting group, depending on its remit and objective. In the course of our discussions in Tanzania and Brazil, the following potential taskforces were suggested:

• Anationalminingandextractivesindustrytaskforce,addressingrehabilitationoflanddegradedbymining activities, and the potential uses of the full land holdings of this industry.

• Anationalagriculturalindustrytaskforceaddressinghowproductivityandfoodsecuritycanbeachieved without further deforestation.

15

Proposal 1


Policy Development

Example project in progress

The Agricultural Growth Corridors Initiative in Tanzania seeks to attain a “green revolution” through public - private partnership, where gains in agricultural productivity among smallholder farms are matched by increased investments in infrastructure and agribusiness.

It provides a useful example of a large scale initiative shaped and driven by public and private sectors working in partnership. In parallel to this approach, a Climate Compatible Agricultural Growth initiative is underway that aims to integrate climate compatible growth into the current Tanzanian agricultural growth strategy. For further information see www.africacorridors.com/sagcot/

The idea

Governments invite key domestic and international companies to form a REDD+ taskforce, with

representation from NGOs and other experts.

These taskforces are charged with developing specific proposals for governments regarding how their sector/ industry/ value chain can engage more

fully in REDD+.

This kickstarts a process of ongoing engagement between these taskforces and the government to

develop and implement these proposals.

The value proposition

Public sector: Enable the full utilisation of private sector resources and skills to enable faster and more effective implementation of REDD+.

Private sector: Opportunity for greater strategic engagement to shape the future regulatory landscape. Also an opportunity to open up new business streams in REDD+.

What needs to happen next

National and or sub-national governments invite key domestic

and international companies with a footprint in their countries, as well as experts and civil

society representatives for a dialogue on REDD+ policy implementation and development.

2. Specific Proposals from the Private Sector

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Cross-Sector Sustainability Partnerships at the Local Level

Broader application

This proposal is at its heart a broad endeavour to bring together locally based multi-stakeholder partnerships to deliver sustainable solutions in an economic, social and environmental perspective.

The example above arises from the extractive sector, but participation in cross sector-sustainability partnerships could be embedded in operating standards for larger companies across a variety of sectors.

Proposal 2


Policy Development


The Sustainability Juruti Project in Brazil is a multi-institutional partnership whereby Alcoa works with local social and public organisations on a sustainable development agenda in the vicinity of their bauxite mine.

Its components include: 1) The Sustainable Juruti Council, 2) Sustainability Indicators, and 3) The Sustainable Juruti Fund: to mobilise resources

and finance activities prioritized by the Council.

The idea

Large private sector actors with large landholdings and / or who engage directly in land use change

activities (for example in the extractives sector) develop local partnerships with public sector, civil society and community representatives to develop a sustainability agenda for the local area, which addresses economic

and social factors alongside environmental factors.


Public sector: Enable the full utilisation of private sector resources and skills to enable faster and more effective implementation of REDD+.

Private sector: Ensure social licence to operate and opportunity for greater strategic engagement to shape community level regulatory landscape.


The potential for replicating existing sustainability partnerships is tested with local governments.

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Private Sector as an Aggregator

Broader application

That private sector actors with access to multiple stakeholders can use their position in the value chain to enable / encourage changed downstream behaviour is not a new idea. However, many government officials drew attention to the difficulty they have in getting REDD+ policy effectively understood and implemented at the local level: ie, how to get to the farmer or land user.

This model of the private sector as a facilitator and ‘aggregator’ has clear potential to build support and scale up on the ground action on REDD+. It is particularly relevant in agribusiness both because agriculture is the biggest driver of deforestation, and also because agriculture is a key development strategy for many countries, who are looking to move small-holder subsistence farmers into commercial activities.

Parallel proposal

WWF, IPAM, Forest Trends, Solidaridad, the Roundtable on Sustainable Palm Oil, the Roundtable on Responsible Soya, the Better Sugarcane Initiative, and partners are advancing an initiative to use the networks and infrastructure of the sustainable commodity roundtables to enable producers to deliver carbon mitigation and access REDD+ funds.

Proposal 3

Private Sector as an

Aggregator


In Brazil, through its Nucoffee model, Syngenta groups and trains farmers and acts as the link between growers, co-operatives and roasters to bring its suppliers into compliance with environmentally sound practices. Cargill has worked with the Nature Conservancy to bring its soy suppliers into compliance with the Forest Code, including restoring and maintaining minimum forested areas.

Archer Daniels Midland is working with Aliança da Terra to roll out best management practices to cattle ranchers.

The idea

Agribusiness acts as an aggregator of communicating and distributing important policy developments such as in the field of REDD+ and

finance, through their existing networks. This information is valuable and relevant to farmers in

its supply chain who deliver certified mitigation in compliance with all the required standards.


Public sector: Agribusiness networks connect hundreds of thousands of stakeholder land users. They can therefore provide a missing link in the architecture from national and sub-national policy and resources (including funds) for effective on the ground implementation. The utilisation of existing and operating networks should be relatively efficient.

Private sector: Opportunity to strengthen relationships and broaden the service portfolio to suppliers and customers, opening up new revenue streams.


The opening up of avenues for engagement between agribusiness representatives and governments, perhaps via intemediaries such as

sustainable roundtables or other industry fora.

Wider partnership development between civil society and agribusiness (as civil

society are key partners in these agribusiness outreach activities).

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Broader application

Managing risks across the supply chain is key to enabling wide-scale implementation of sustainable land use practices, including land based carbon mitigation and REDD+. Risk management tools can alter risks and returns to an acceptable level.

This proposal emerged from project discussions in Brazil and was placed in the context of the ranching sector. The idea is to provide the risking products to enable cattle ranchers to shift to intensified cattle ranching practices thereby decreasing the impact on forested land. Other examples might include insurance to support proper water management to guard against pollution, to improve yields, insuring animal waste treatment, storage and disposal, insuring smallholders as they transition to new sustainable practices, designing pooling mechanisms to spread risks.

These proposals largely involve de-risking components of the value chain from a ‘modular’ perspective. Modular de-risking solutions can be applied specific to an individual value or supply chain or region, and can be applied in many combinations to achieve a best fit for the circumstances applicable to the project opportunity and need to achieve the greatest economic and environmental sustainability. In other words, the unique de-risking solutions could be used in a mix and match fashion.

Potential impacts are high if products are mainstreamed and available enough to lower farmer risks at affordable costs. Therefore, public and private investment in the development of such products may have significant leverage potential.

Proposal 4

De-Risking Across the Value

Chain


Regarding sustainable palm oil, Sime Darby are currently developing a partnership of public- private- and civil society actors to accelerate the development of 20,000 smallholders within their supply chain in Indonesia and Liberia to double the average yield profile in 3-5 years. Zurich Financial Services is a key partner in that initiative looking at risk mitigation options to enable the transition of smallholders to more efficient methods.

The idea

The transition to sustainable land use practices is often not possible for smaller scale operators as

the risks of transition deter change, even with the prospect of long term financial gains.

The idea is that specialist insurance providers would work with farmers and smallholders to provide

derisking products to enable the transition to practices that result in avoided deforestation.


Public sector: Transitioning land users to sustainable practices is key to an effective and sustainable REDD+ programme.

Farmers: Enables access to increased economic potential over long run, and/ or long run viability as consumers increasingly demand for environmentally friendly produced products.

Insurance providers: New business opportunities.


Insurance providers partner with land users, perhaps through trade associations or

commodity roundtables, to identify and tailor insurance products to those industries

or commodities.

Alongside, governments to consider whether these insurance premiums for small scale farmers

need to be subsidised to broaden reach.

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Donor Funding to Pump Prime the REDD+ Carbon Market

Broader application

REDD+ projects often deliver a wide range of other ‘co-benefits’, for example biodiversity conservation, improving the livelihoods of local communities or ensuring future water availability. There are, however, very few significant markets that provide a financial incentive for project developers to deliver these co-benefits. The private sector could therefore also be rewarded with support from the public sector in the form of a payment-for-performance mechanism to finance activities that deliver these co-benefits.

Proposal 5


REDD+ Market


The World Bank Forest Carbon Partnership Facility (FCPF) plans to launch a US$200 million Carbon Fund which will remunerate projects in selected countries in accordance with negotiated contracts for verifiably reducing emissions more than in the reference scenario.

Public sector participants have committed funding of some US$50 million. The FCPF hopes to secure private sector particpation in the Fund. The US government also recently announced plans to fund ‘pay for performance programs’ as part of its US$1 billion fast start funding commitments.

The idea

Public/ donor (including fast start) funds are used to provide performance based payments for carbon

emission reductions to pump prime the future market - either through emissions reduction

purchase agreements, price guarantees, options and/ or subsidies.


Donors: Attracts private investor finance for project level capacity building, reducing the ‘financing gap’ that exists between current public funding commitments ($4.5bn), and the amounts required to significantly reduce deforestation (estimated at $17bn - $33bn)1.

Private sector investors and project developers: ‘Guaranteed’ carbon revenue streams make projects financially viable – thereby opening up new business streams for commercial investors and project developers who can also “learn by doing”.

All: Creates the incentive for donors to open up compliance markets or create some other means of generating significant demand for REDD+ credits.


Further formal engagement between donor governments and the private

sector to develop risk mitigation options. This will encourage private sector finance investment

in REDD+, whilst ensuring value for money for the public sector.

This is likely to involve the scaling up of funds committed for REDD+ performance based

payments, and ensuring that they are providing market oriented incentives.

The five concrete proposals from the private sector in Section 2 address specific barriers to action at scale. However, they do not pretend to meet the full challenge.

Private sector participants in this project repeatedly highlighted overarching issues at the international and national levels that must be addressed to enable the private sector to contribute to REDD+ comprehensively over the long run.

In the absence of a strong response from policymakers or other actors in the value chain to these overarching issues, private sector funds and capabilities are unlikely to be deployed at the scale and in the time required.

In addition to the issues presented below, one key concern is uncertainty about the role of REDD+ in future compliance carbon markets. These concerns have been articulated in a joint statement by IEMA and CIMA, which is included in Appendix 1.

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3. Addressing Overarching Barriers to Action at Scale

“We will not take on risks we have no abilityto mitigate. These include the regulatory risks due to uncertainties over future compliance regulations and the value of carbon credits”

“In this period of uncertainty, we particularly need to feel that governments

have skin in the game - one option is public-private finance mechanisms

to share risk”

“Addressing the drivers of deforestation is key to the

effectiveness of REDD+ - capacity building funds and resources should be allocated to this”

“Transition risks and costs are often what hold us back - despite seeing long term economic gains”

“A clear rights framework is essential - rights to land and

rights to carbon”

“Asymmetries in trade regulations are inhibiting the development of the

sustainable commodity industry”

“We need to know the rules of the game - including what is allowable and rewardable,

when and how”

COP 16: what it delivered for REDD+

In a nutshell, the Cancún Agreements indicate progress on two fronts:

• RecognitionforREDD+intheCancúnAgreements

• Recognitionofandrequestforaspecificworkinggroup to look into drivers of deforestation and forest degradation

These top level signals:

• StatecommitmenttoasystemofincentivesforREDD+ activities and a possibility to broaden the agenda to also include major drivers of deforestation

• Provideconfidencetocontinueandincrease unilateral, bilateral and multilateral initiatives

• Willgivefreshimpetusintotheongoingprocess of ‘working out the details’ for how REDD+ should operate (how to set and evaluate reference

emission levels, how to link national and sub -national efforts, how and whether markets

can and should be utilised)

• Shouldprovideimpetusfordonorstocomplywithfast start funding pledges

WEF Cancún Dialogue on REDD+ and Sustainable Land Use: key outcomes from meeting

The meeting brought together a broad spectrum of stakeholders active in the REDD+ and Sustainable Land Use space, representing governments, various private sectors, civil society and academic institutions (for a complete list of participants, see Appendix 4).

Some key observations from the session:

• ‘ The how question remains key’: there is a strong recognition from all parties, public and private, of the need for private sector engagement in order to come to sustainable solutions. Project activity in 2010 undertaken by platforms such as the World Economic Forum and the Prince’s Rainforest Project16 attempt to illustrate this ‘how’ for key sectors such as agriculture, mining and investment. To move forward with the existing proposals, private sector parties were urged to work out the specifics of what is required for implementation, and collaborate with the public sector to tackle this ‘request list’

• Proposals for private sector engagement ask for tailor made implementation effort and partnerships: some proposals for enhanced private sector engagement rely for scale on a carbon market, others require smart investment at critical moments in the timeline of implementation as these concern sustainable land use activities that are not driven by or dependent on carbon finance.

• There is strong interest from governments and multilateral institutions to draw the private sector in at an early stage of developing new financing and governance structures for REDD+ in key forested nations, and where applicable, to make the private sector eligible for fast start funding. To support the case, proposals would need to be specified to quantify cost of implementation and potential impact ie asses the value for money aspect.

Way forward: multiple avenues to take the next steps

Cancún proved that the international climate process is still functioning. Important steps forward have been taken, and the Cancún Agreements provide a basis to keep momentum and continue the negotiations in an attempt to forge a new climate deal. At the same time it is clear that this will take time, and that much work still needs to be done. As the interest in the Cancún Dialogues illustrate, the need to follow up on the potential for concrete “bottom-up” initiatives and major public-private coalitions on core areas such as REDD+ is paramount. When positioned within the broader context of national or regional green growth strategies, the request for such ‘action in the interim’ remains and has become even more valid.

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3. Addressing Overarching Barriers to Action at Scale 4. Outcome from Cancún

16 For more information, read the full paper on “REDD+ and Agriculture: proposed solutions from the Private Sector” at http://www.rainforestsos.org/about-us/resources/reports/

Avenues identified as necessary to take this work forward include to:

1. Work with governments on the implementation of specific proposals that have emerged, and make them part of a national development strategy. Such a platform for national action could come under the auspices of initiatives such as the Forest Carbon Partnership Facility (FCPF), the UN-REDD Program, or the Interim REDD+ Partnership.

2. Analyse the estimated costs and impacts of the proposals presented here and identify the steps and parties needed to transform them into action and results. This includes exploring ways for effective use of fast start funds.

3. Build on results at COP 16 and develop an interim solution for a future compliance market for terrestrial carbon. A dialogue could be initiated on steps required to transform markets and identify opportune areas for demonstration. Platforms and initiatives to take this dialogue forward could for example include a joint effort of the FCPF, the Governors Climate and Forests Taskforce, IETA, and CMIA.

To sustain this momentum and build on the proposals that have emerged, various offers and avenues for engagement have emerged in and after the meeting that will be explored in more detail.

We hope to build on this public-private dialogue, to help translate the recommendations and proposals into action, through continued dialogue between senior policy makers, company executives, and experts during the World Economic Forum Annual Meeting in Davos in January 2011, and at World Economic Forum Regional Summits in Brazil, Indonesia and South Africa throughout 2011. Through these fora we hope to stimulate groups of champions to take charge of transforming the proposals into action and action into results.

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23

Appendix 1

Joint statement on REDD+ by the Board and Advisers to the World Economic Forum Project on “Proposals from the Private Sector for Engagement at Scale in REDD+”, the International Emissions Trading Association and the Carbon Markets & Investors Association

This statement has been developed jointly by the Board and Advisers to the World Economic Forum Project on “Proposals from the Private Sector for Engagement at Scale in REDD+”, the International Emissions Trading Association and the Carbon Markets & Investors Association, for discussion with policymakers at COP16 in Cancún. The contributors hope to develop and enhance the statement through this dialogue and to secure support for it from other private sector organisations that are actively engaged in REDD+.

The International Emissions Trading Association represents 160+ member companies from around the world and across the carbon market and advocates for market-based solutions to the problem of climate change in the UNFCCC and with domestic governments worldwide www.ieta.org

The Carbon Markets & Investors Association is an international trade association representing firms without emissions obligations who finance, invest in, develop projects and provide enabling support to activities that reduce emissions www.cmia.net

1 CO2 emissions from forest loss and destruction of forest peat lands: GR van der Werf, DC Morton, RS DeFries, JGJ Olivier, PS Kasibhatla, RB Jackson, GJ Collatz and JT Randerson. (2009) 2 Eliasch, Johan (2008) Climate change: financing global forests: the Eliasch review, Earthscan, London; Meridian Institute (2009) Reducing Emissions from Deforestation and Forest

Degradation (REDD): An Options Assessment Report; Boucher, D. (2008) What REDD can do: The economics and development of reducing emissions from deforestation and forest degradation. Washington: Union of Concerned Scientists; Busch et al (2009). Comparing climate and cost impacts of reference levels for reducing emissions from deforestation. Environmental research letters.

Why we need private sector finance for REDD+

• Deforestationaccountsforabout15%ofglobalcarbonemissions1 and efforts to reduce it must therefore form part of the solution to mitigating climate change.

• SourcesestimatetheannualcostofreducingemissionsfromtheforestrysectortoliebetweenUSD$12-35billion per year2. Anecdotal evidence from demonstration activities by a wide range of both profit and non-profit project-developers suggest that the funding needed almost certainly lies at the higher range of those estimates.

• CurrentlevelsofpublicfundingforREDD+committedandproposedbydonorsthroughvariousmultilateralandbilateral processes are critical but are unlikely to reach the level of significant and sustained financing necessary. Success lies in creating the architecture to harness a variety of funding sources and deployment models from both the public and private sector.

• Withtherightpolicytoolsthecurrentfaststartfinancecandrivepublic–privatepartnerships(toleveragethemaximum private sector investment from public expenditure) and ultimately underpin the design of a REDD+ mechanism involving both long term public finance and private sector investment at scale.

Why carbon markets are an efficient and effective way to encourage private sector investment at scale

• Appropriatelydesignedcarbonmarketshavethepotentialtodriveprivatesectorinvestmentatscaleand should play a central role in the policy framework for REDD+. There is now the technical capacity and possible design elements available to address past concerns regarding permanence, leakage and the measurement of changes in carbon stocks.

• PrivatesectorinvestmentwillactasacatalystforactionacrosstheREDD+agenda,supportingcapacity building and ensuring transparency and accountability in the process.

• ThereisaclearroleforintegratingbilateralormultilateralfundstargetedatREDD+withacarbonmarketso as to ensure that developing countries with more challenging investment environments are not left behind.

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Compliance demand for REDD+ credits from developed countries is needed to incentivise REDD+ private sector investment at scale

• ThevoluntarycarbonmarketshavehelpedtofinanceanumberofearlyREDD+projectsandhavecontributedto capacity building, knowledge and experience in this sector. However, the voluntary market has not provided a framework conducive for engaging with developing country government actors in order to drive solutions at a national or regional scale. Additionally the demand and price levels in the voluntary market are not sufficient to drive private sector investment at scale .

• DemandforREDD+creditsfromthedevelopedcountrycompliancemarketsiskeytoenablingthefinancialcapital of those developed countries to underpin the implementation of developing country REDD+ strategies.

• Appropriatedesignelementscanbeincludedindevelopedcountrycompliancemarketstoensuretheinclusionof carbon credits from REDD+ activities does not undermine appropriate domestic action.

To this end, national and international frameworks for REDD+ should provide for a nested approach to crediting, with recognition for early action at a project level as well as at the state/provincial and national level

• Thenestedapproachprovidesasolutionfortheenvironmentallyrobustaccountingofprojectswithinanationalemissions accounting framework.

• Addressingtheunderlyingdriversofdeforestationwillrequireimplementationofbottomupactivitiesinan effective and equitable manner. This will require deployment of innovative and agile solutions which the private sector would be best placed to demonstrate through project level activities that transition into a nested approach as national capacity develops.

• Rewardingearlyactionisnecessarytoencourageinvestmentindemonstrationprojects,whichwillhelpfurtherdevelop skills, experience and data, as well as capacity and confidence in different methodologies. This is of particular importance for technical aspects of REDD+ such as base-line setting, and monitoring, reporting and verification.

Crediting rules and project design must also provide appropriate environmental and social safeguards

• Environmentalandsocialsafeguardsareneededtoprotectagainstundueexploitationofbiologicalresourcesand to protect the rights of indigenous peoples and other forest dwelling communities. These should be aligned with the “Aichi Target” adopted during the Convention on Biological Diversity COP10 meeting in Nagoya.

• EnvironmentalandsocialsafeguardshavebeenincludedinthedraftREDD+textunderdiscussion;however,mechanisms for their enforcement have not yet been agreed. These should include: monitoring and enforcement frameworks for the equitable sharing of benefits amongst indigenous peoples, local communities and other stakeholders reliant on forest services; the protection of biological diversity; and avoidance of the conversion of natural forests to plantations.

In the meantime, public funding should be used to build capacity for a future market, and governments should clarify their intention to create and engage the private sector in a future REDD+ market

• UntilbusinessreceivesclearsignalsaboutafutureREDD+market,theriskandreturnprofileassociatedwithREDD+ is not sufficient to drive private investment at scale. Risks need to be shared. The party who is best placed to manage a particular risk should take responsibility for it. The private sector has little or no influence over climate policy or regulatory risk which remains a key obstacle in the investment decision process. The public sector therefore needs to engage with the private sector to explore regulatory risk mitigation solutions whilst REDD+ credits remain ineligible in developed country compliance markets.

• Pricesignalsmustbeaccompaniedbypublicallyfundedactionsatnationalandinternationallevels,including the development of robust MRV systems and land tenure reforms, to create enabling conditions for on the ground private sector engagement. The earlier this readiness is created, the faster private finance can be deployed to take over the burden from the public sector.

3 In 2009, total trading volume on the voluntary market was only 93.7 MtCO2e, with a total value of just USD 387 million; trading volume in compliance markets totalled 8,700 MtCO2e, with a value of USD 140 billion. The average REDD+ credit price in the voluntary market was USD 2.9; the average CER price in the compliance market was USD 18.7.

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Project Board and Advisors

Project Board Members

Shannon Herzfeld Vice-President, Government Relations Archer Daniels Midland

Simon Baker Director, Energy and Government Affairs Alcoa

Samantha Hoe-Richardson Head, Sustainable Development and Energy Anglo American

Christian del Valle Environmental Markets and Forestry, BNP Paribas Corporate and Investment Banking

Antonio ValleNeto Manager, Bunge Emissions Group Bunge

Ruth Rawling Vice-President, Corporate Affairs, Europe, Cargill Middle East and Africa

Peter Zaman Partner Clifford Chance

Roberta Bowman Senior Vice-President and Duke Energy Chief Sustainability Officer

Richard Gledhill Global Leader, Climate Change and PricewaterhouseCoopers Carbon Market Services

Adam Whitmore Head, Strategic Climate Change Projects Rio Tinto

Graeme Sweeney Executive Vice-President, Renewables, Shell Hydrogen & CO2

Robert Berendes Head of Business Development Syngenta

Ralph Ashton Convenor and Chair Terrestrial Carbon Group

Anna Creed Economic Policy Advisor Terrestrial Carbon Group

Miguel Pestana Vice-President, Global External Affairs Unilever

Don Kanak Member of WWF National Council, WWF chairman of WWF Forest Carbon Initiative

Sean de Cleene Vice-President, Global Business Development Yara and Public Affairs

Lindene Patton Chief Climate Product Officer Zurich Financial services

Expert Advisors

Abyd Karmali Managing Director and Global Head of Bank of America Merrill Lynch Carbon Emissions

Pius Yanda Research Professor and Director, Government of Tanzania / Institute of Resource Assesment University of Dar es Salaam

Virgilio Viana Chief Executive Officer Sustainable Amazon Foundation

Jacques Marcovitch Professor, Universidade de São Paulo University of Sao Paolo

Pavan Sukhdev Study Leader, TEEB, and Special Adviser WCMC – UNEP and Head, Green Economy Initiative

Simon Zadek Senior Advisor Sustainability World Economic Forum

Appendix 2

26

Demand Side Task Force

Martin Berg Vice President, Carbon Markets Origination BAML

Christian del Valle Environmental Markets and Forestry, BNP Paribas Corporate and Investment Banking

Zubair Zakir Manager, Carbon Sourcing The Carbon Neutral Company

Miles Austin Director CMIA

Leila Pouraskin Policy Advisor DECC

Gillian Tong REDD and Private Sector Engagement Department for International Adviser, Forestry Team Development, United Kingdom

Nick Godfrey Economic Advisor, Climate and Department for International Environment Department Development, United Kingdom

Jon Grayson Director Enviromarket

Simon Petley Director Enviromarket

Phil Cottle Managing Director ForestRe

Andreas Dahl- Jorgensen Advisor, Ministry of the Environment Government of Norway

Henry Derwent President and CEO IETA

Kim Carnahan Policy Leader, Flexible Mechanisms IETA

David Lunsford Policy Leader, Emissions Trading IETA

Amy Merrill Managing Associate, Environment and Linklaters Climate Change Practice

Andrew Hedges Partner, Climate Change and Clean Energy Norton Rose

David Edwards Assistant Director PRP

Sachin Kapila Manager, Environmental Footprint Innovation Shell

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Workshop Participants

Rio Negro, Brazil, 15-17 October 2010

Fabio Abdala Sustainability Manager, Alcoa Latin America Brazil Latin America and Caribbean

Anthony Anderson Specialist, Forest and Climate WWF - World Wide Brazil Fund for Nature - Brasil

Ralph Ashton Convenor and Chair Terrestrial Carbon Group Australia

Michelle Braga Managing Partner Green Markets Brazil

Ricardo Camargo Gerente Corporativo de Melo AngloAmerican Brazil Ambiente, Minério de Ferro

Cristianne Close Head of Food Security Agenda, Syngenta Argentina Latin America

Helmut Eger Director Deutsche Gesellschaft für Brazil Technische Zusammenarbeit (GTZ) GmbH

Kailil Farran Sustainability Manager Camargo Correa Company Brazil

Rodrigo Freire Head of Forests and Ecosystem Secretary of State of Environment Brazil Services Department, CECLIMA and Sustainable Development (State Centre on Climate Change) of Amazonas

Richard Gledhill Global Leader, Climate Chang PricewaterhouseCoopers United Kingdom and Carbon Market Services

Carlos Klink Country Manager IFC Brazil

Sendi de Amor Lee Administrator, Environment Ministry of Development, Brazil Operations Department Industry and Foreign Trade of Brazil

Alberto Lourenço Undersecretary, Sustainable Office of the President Brazil Development of the Secretariat of Brazil of Strategic Issues

Jacques Marcovitch Professor Universidade de São Paulo Brazil

Aloisio L.P. de Melo Director, Agricultural Policy Ministry of Finance Brazil

Luis Meneses Consultant for Acre State REDD Governors Climate and Forests Brazil Program, Governors Climate and Task Force Forests Task Force

Jeffery T. More Principal The Accord Group USA

Ronaldo Seroa da Motta Coordinator Institute of Applied Economic Brazil Research (IPEA)

Marcio Nappo Manager, Environmental Archer Daniels Midland, Brazil Social Responsibility South America

Nemercio Nogueira Director, Corporate Affairs Alcoa Aluminio SA Brazil

Appendix 3

28

Mariana Nogueira Coordinator, Climate Change Institute for Conservation Brazil Pavan and Environmental Services and Sustainable Development Programme of Amazonas (IDESAM)

Manuel F. Olivera Director, Clinton Climate Initiative, William J. Clinton Foundation USA City of Bogotá

Claudio B. Padua Co-Founder and Executive Director Instituto de Pesquisas Brazil Ecológicas (IPE)

Lindene Patton Chief Climate Product Officer Zurich Financial Services Switzerland

Christine Pendzich Climate Change and Clean United States Agency for USA Energy Advisor International Development

Carlos Costa Posada Director, ex-Minister for the Green Investments Colombia Environment, Housing and Territorial Development of Colombia

Benjamin Sicsu Vice-President, New Businesses, Samsung Electronica da Brazil Latin America Amazonia Ltda

João Tezza Technical-Scientific Director Fundação Amazonas Brazil Sustentável

Natalie Unterstell Director CECLIMA (State center Secretary of State of Brazil on Climate Change) Environment and Sustainable Development of Amazonas

Luciano Vacari Superintendent Acrimat Brazil

Judson Ferreira Agronomist, Tropical Pastures Ministry of Agriculture, Brazil Valentim and Forages Livestock and Food Supply of Brazil

Virgílio Maurício General Director Fundação Amazonas Brazil Viana Sustentável

Tiago de Moraes Manager, Government Relations Shell Brasil Ltda Brazil Vicente

Dominic Waughray Senior Director, World Economic Forum Switzerland Head of Environmental Initiatives

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Dar Es Salaam, Tanzania, 20 October 2010

Ralph Ashton Convenor and Chair Terrestrial Carbon Group United Kingdom

Steve Ball International Coordinator Mpingo Conservation and Tanzania Development Initiative

Janet Bitegeko Programme Officer Agricultural Council of Tanzania Tanzania

Olav Bjella Resource Director Green Resources Tanzania

Frank Brentrup Climate change and agriculture Yara International Norway specialist

Andy Chande Chairman Kioo ltd Tanzania

Sean de Cleene Vice-president, Global Business Yara International Norway Development and Public Affairs

Anna Creed Economic Policy Advisor Terrestrial Carbon Group United Kingdom

Wayne Forbes Managing Director Yara Tanzania Tanzania

Lorcan Fullam Ambassador Embassy of Ireland Tanzania

Nick Godfrey Economic Advisor, Climate and Department for International United Kingdom Environment Department Development

Dan Hamza-Goodacre Assistant Director, Sustainability PricewaterhouseCoopers United Kingdom and Climate Change

John Hobbs Trade and Investment Advisor WWF Tanzania Tanzania

Hubert Hourizene Project Manager Investment Climate Facility Tanzania for Africa

Chris Isaac Director, Business Development AgDevCo United Kingdom

George R. Kafumu Principal Forest Officer Division of Environment Tanzania in the Vice President’s Office

Gerald J. Kamwenda Principal Forest Officer at Forestry Ministry of Natural Resources Tanzania and Beekeeping Division, and Tourism REDD Taskforce

Willy Magehema Senior Business Tanzania National Tanzania Environment Officer Business Council

Jasper Makala National Coordinator Mpingo Conservation and Tanzania Development Initiative

Kanizio F.K. Manyika interim Chairperson Division of Environment Tanzania REDD Taskforce, in the Vice President’s Office Senior Environmental Officer

Anne Mbaabu Director of Market Alliance for a Green Revolution Kenya Access Program in Africa (AGRA)

Juliet Mboneko Environmental Manager Tanzania Portland Tanzania Tibaijuka Cement Co. Ltd

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Enginner Mwihava Deputy Permanent Secretary Vice Presidents Office Tanzania for the Environment

Simon Milledge Progamme Officer Embassy of Norway Tanzania

George Mlingwa Chairman Tanzania Sugercane Tanzania Growers Association

Someni Mteleka Carbon Enterprise Coordinator Tanzania Forest Consevation Tanzania Group (TFCG)

Michael Mwakilasa Managing Director Mafuta Sasa Biodiesel Ltd Tanzania

Aloys Mwamanga President Tanzania Chamber of Tanzania Commerce, Industry and Agriculture

Juma Mwatima Country Programme Officer International Fund for Tanzania for Tanzania Agricultural Development

E.M.Nashanda Senior Forest and Schedule Officer Ministry of Natural Resources Tanzania at Forestry and Beekeeping Division, and Tourism REDD Taskforce

Moses Ngegba Carbon Manager Tanzania Green Resources Tanzania

Umesh Pujari Company Sales Manager Raffia Bags Tanzania

Ralph Roothaert Agriculture Scale Up Manager Oxfam Tanzania Tanzania

Abdalla Said Shah Head of Office IUCN ESARO IUCN (International Union Tanzania Tanzania Office for the Conservation of Nature)

Lieske van Santen Project Associate, World Economic Forum Switzerland Environment Initiatives

Dirk Schroeder Senior Africa Agronomist Yara International Norway

Salum Shamte Managing Director, and Chairman Katani ltd Tanzania of Agricultural Council of Tanzania

Maurice Shines Private Sector Specialist US Agency for International Tanzania Development (USAID)

Carol Sorensen Coordinator Tanzania Natural Tanzania Resource Forum

Andy Watt Head of East Africa Syngenta Kenya

Dominic Waughray Head Environment Initiatives World Economic Forum Switzerland

Pius Z. Yanda Director of the Institute of University of Dar es Salaam Tanzania Resource Assessment, chair REDD Taskforce

31

Participants in the Cancún Dialogue on REDD+ and Sustainable Land Use

Cancún, Mexico, 6 December 2010

Ralph Ashton Convenor and Chair Terrestrial Carbon Group United Kingdom

Sam Bickersteth Climate Change and Department for United Kingdom Agriculture Adviser International Development

Laura Reyes Bonilla Corporate Affairs Manager Unilever de Mexico Mexico

Benoit Bosquet Lead Carbon Finance Specialist Forest Carbon Partnership Washington DC and Coordinator Facility, World Bank

Alejandra Camara Regional Manager Bunge Emissions Group, Argentina Bunge Argentina

James Cameron Vice-Chairman Climate Change Capital United Kingdom

Chris Canavan Director, Global Policy Development Soros Fund Management USA

Jos Cozijnsen Consulting Attorney Emissions Trading The Netherlands

Anna Creed Economic Policy Advisor Terrestrial Carbon Group United Kingdom

Juan Jose Daboub Founding Chief Executive Officer Global Adaptation Institute USA

Angela Garcia Head of Sustainability JBS Brazil

Richard Gledhill Global Leader Climate Change and Carbon United Kingdom Market Services, PwC

Andreanne Grimard The Prince’s Charities’ Prince’s Rainforest Project United Kingdom International Sustainability Unit

Jan Ernst de Groot Managing Director and KLM Royal Dutch Airlines The Netherlands member of the Board

Andrew Hedges Partner Global Climate Change and United Kingdom Carbon Finance Team, Norton Rose

Thomas C. Heller Executive Director Climate Policy Initiative (CPI) USA

Celine Herweijer Director Sustainability and Climate United Kingdom Change, PwC

Tracy Johns Secretariat Forum on Readiness for REDD Brazil and Amazon Environmental Research Institute

Sachin Kapila Manager, Environmental Royal Dutch Shell The Netherlands Footprint Innovation

Melinda Kimble Senior Vice President United Nations Foundation USA

Michael Lopez Corporate Affairs Manager Alcoa USA

Stewart Maginnis Head, Forest Conservation International Union for Switzerland Programme Conservation of Nature (IUCN)

Appendix 4

32

Bryan Martel Managing Director Environmental Capital Group USA

Jonathan Maxwell Co-founder and Chief Executive Sustainable Development United Kingdom Capital

Andrei Marcu Senior Vice-President, Head of Mercuria Energy Group Switzerland Regulatory and Policy Affairs

Ricardo Melendez Ortiz Chief Executive International Centre for Trade Switzerland and Sustainable Development

Aloisio L. P. de Melo Director Agricultural Policy Ministry of Finance Brazil

Daniel Nepstad Chief Program Officer Environmental Gordon and Betty USA Conservation Programs Moore Foundation

Nemercio Nogueira Director Corporate Affairs Alcoa Aluminio Brazil

Maura O’Neill Senior Counselor to the US Agency for International USA Administrator and Chief Development Innovation Officer

Lindene Patton Chief Climate Product Officer Zurich Financial Services Switzerland

Tom Picken Campaign Leader Forests Global Witness United Kingdom

Marcos Otavio Director Ministry of Development Brazil Bezerra Prates Industry and Foreign Trade

Jake Schmidt International Climate Natural Resources USA Policy Director Defense Council

Ethel Sennhauser Sector Manager Agriculture Latin America and Caribbean USA and Rural Development Region, World Bank

Agustin Silvani Ecosystems Finance Division Conservation International USA

Gerald Steinlegger Policy Director Forest WWF International Austria Carbon Initiative

Julie Teel Senior Research Fellow, University of Colorado, USA Executive Secretary Governors Climate and Forests Taskforce

Christian del Valle Environmental Markets and BNP Paribas United Kingdom Forestry, Corporate and Investment Banking

Virgílio Maurício Viana General Director Fundação Amazonas Brazil Sustentável

Fokko Wientjes Manager, DSM Royal DSM The Netherlands Sustainable Development

Matthew Wyatt Head of Climate and Environment Department for United Kingdom International Development

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