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Climate Action 2014-2015


DEFORESTATION AND REDD+ that perform well in achieving social and biodiversity goals. Among the limitations of jurisdictional REDD+ is that, despite involving various sectors, it does not resolve the competing interests between them. Furthermore, it requires a large and durable source of funding – which usually exceeds state fiscal resources – and importantly, it is vulnerable to electoral politics, as a change in governorship can stall REDD+ progress. One example is Acre’s State System of Incentives for Environmental Services (SISA) in Brazil, widely seen as a global model of jurisdictional REDD+ and a leader in bottom-up innovation for lowemissions rural development. Unique for having piloted VCS in a jurisdictional REDD+ framework, SISA has strongly influenced other Amazonian states. An on-going challenge for SISA is its search for funding alternatives to its heavy reliance on international donations, as it is not yet able to rely on the marketing of forest carbon offsets. Another example is the Governors’ Climate and Forest Task Force (GCF), a global network of 26 member states across 7 countries (www.gcftaskforce. org). The GCF is a pioneer of jurisdictional REDD+ and provides a forum for communication and coordination among its members. The Rio Branco Declaration of August 2014 commits GCF member states and provinces to an 80 per cent reduction in deforestation by 2020, with support from the international community in the form of performance-based funding. The Declaration also commits the governors to allocate a substantial share of the stream of economic benefits to forest-dependent communities and indigenous peoples. PRIVATE CORPORATE SECTOR COMMITMENTS Private sector corporations are making moves to remove deforestation from commodity value chains. Globalised trade and investment in agricultural commodities such as palm oil, beef, soya, pulp and paper, and rubber have "Financing has always been one of the most controversial issues in UNFCCC negotiations." grown significantly over the past two decades, resulting in continued high rates of deforestation in many developing countries. At the same time, consumer countries have become increasingly aware of the impacts of imported food, non-food commodities and manufactured goods on tropical deforestation. One commodity in particular – palm oil – has been subject to heavy criticism by advocacy NGOs over the past decade because of links to deforestation. Persistent pressure and social media coverage by organisations such as Greenpeace, WWF and the Forest Peoples Programme have been instrumental in shaping growing consumer demand for sustainably produced commodities. After initial pledges by a small number of companies (notably Nestlé, Golden Agri-Resources, Wilmar, Hersheys and Unilever) during 2011–2013, 2014 has witnessed a surge in corporate commitments to zero deforestation in palm oil supply chains, and increasingly with regard to other commodities. For example, Cargill has extended its initial commitment to a ‘No Deforestation, No Peat and No Exploitation’ policy in palm oil production and sourcing to all commodities with effect from 24 September 2014. This groundswell of corporate engagement is manifest in the number of signatories (40) to the recent New York Declaration on Forests Action Statements and Action Plans. Global and regional scrutiny of corporate practice in agri-business contributed to the establishment of the Roundtable on Sustainable Palm Oil in 2004 (other multi-stakeholder platforms have followed with regard to soy and biofuels, among others), the Norwegian Sovereign Wealth Fund decision to divest from 23 palm oil companies in 2013, a suspension in 2012 of lending to the palm oil sector by the International Finance Corporation, and changes in lending practices by both banks and investors. FINANCING SUSTAINABLE LANDSCAPES Financing – particularly transfers of funds and technology from developed to developing countries – has always been one of the most controversial issues in UNFCCC negotiations. The unofficial consensus is that developed countries must mobilise US$100 billion in climate finance each year by 2020. The anticipated recipient of these funds is the Green Climate Fund, which seeks to secure between US$10 billion and 15 billion by the end of 2014. By comparison, domestic and international subsidies for fossil fuels totalled more than US$500 billion globally in 2011, and remain a key obstacle to investing in low-carbon and climate-resilient economies. To date, climate change mitigation efforts (including REDD+) have received the bulk of the funding – an estimated US$350 billion (both public and private sector finance) compared with just US$14 billion for adaptation. As a result of this imbalance, adaptation has become more prominent in UNFCCC negotiations over the new climate agreement. Furthermore, a recent global analysis of 115 REDD+ demonstration projects reveals a concentration of finance in large emerging and resource-rich countries. For example, 19 of the 30 projects in Asia – covering a total area of almost 10.5 million hectares – are in Indonesia, one of eight countries targeted in the region. 130

DEFORESTATION AND REDD+ Meeting the target of US$100 billion a year will require a transformation in the scale and pace of public and private sector financing for both mitigation and adaptation, as well as broader, more complex transitions to low-carbon economies. New ways of packaging and delivering finance are necessary if the funds are to reach the rural and urban poor. The OECD, for example, specifies the need “to use limited public finance to target areas where private funding will not be available or sufficient, e.g. adaptation and REDD+”. REDD+ financing delivered through the creation of a new asset class has yet to materialise, however. The promise of performance-based funding plays a positive role in achieving REDD+ when it is applied in countries that lead the process themselves and have strong national ownership. Where the sense of ownership is low – where donors are leading the process – the promise of performance-based foreign financial funds appears to be irrelevant. The private sector is expected to fill the gap in climate change financing. Other benefits of engaging the private sector lie in the potential to harness its technical capacity for achieving climate change mitigation and adaptation and to mobilise larger investments in sustainable landscapes. However, the current global financial system is not designed to service rural economies in developing countries. Rural producers face major agricultural risks in the form of natural disasters (extreme weather events and disease) and in production, technology, financing, laws and policy, and price volatility (inputs and outputs). These risks potentially decrease producers’ income through their negative impacts on yield, price, assets and livelihoods, thus increasing the probability of default. The compound problems of insecure land rights and a lack of collateral make agricultural, agroforestry and forestry loans in developing countries high-risk investments. CONCLUSION REDD+ has the potential to play a significant role in achieving sustainable development and climate change mitigation and adaptation. However, its success depends on first achieving transformational change, namely major shifts in discourses, power relations and economic incentives for the value of standing forests. Resolving these issues requires coordination and policy integration across multiple sectors and scales. REDD+ proponents’ perception of tenure as their priority challenge should be taken seriously, as should the need for REDD+ proponents to understand the landscape in which they are operating, as REDD+ activities take place within a context of broader development objectives. As countries move towards implementation, the emergence of jurisdictional REDD+ initiatives is encouraging, given the associated advantages of coordination among branches of government, across sectors and across scales. Countries could benefit greatly from the finding that REDD+ processes will move towards transformational change more rapidly when relevant policy pathways and legal frameworks are already in place. The "Recent commitments from the private sector represent an important first step along the long and winding road to sustainability." multitude of international initiatives and the continued development of the REDD+ effort appear to be paying off in commitments and actions on a range of levels. Nevertheless, financing remains problematic. Governments, donors and non-governmental and research organisations still have much to learn about working with corporate actors (including institutional investors), and about identifying ways to encourage private investments in what are still often perceived as ‘high-risk and low-income’ emerging markets. Recent commitments from the private sector represent an important first step along the long and winding road to sustainability. The governance contexts in each country where such commodities are produced and/or sourced will significantly influence the extent to which companies can translate their pledges into tangible actions. Furthermore, it remains unclear how much – and how quickly – corporate actors will be able to instigate changes in their production systems and supply chains, and ultimately be in a position to provide credible and independent evidence of progress. Reaching that stage includes mediating unresolved land conflicts between companies and communities. Peter Holmgren became CIFOR’s Director General on September 10, 2012. Prior to CIFOR, Holmgren led the Climate, Energy and Tenure division at the Food and Agriculture Organization (FAO) of the United Nations, developing the profile and coordination of FAO’s climate change work and contributions of FAO to the UNFCCC process. He also took the lead in setting up the UN-REDD programme and coordinated FAO’s preparations for Rio+20. The Center for International Forestry Research (CIFOR) is a non-profit, scientific facility that conducts research on the most pressing challenges of forest and landscapes management around the world. Headquartered in Bogor, Indonesia CIFOR has offices in 8 countries across Asia, Latin America and Africa, and works in more than 30 countries. 131