Investing for People and Nature
The turning point has come and gone: as global citizens, we're now playing catch up to protect and restore nature. Though there are countless multilateral, public and civil society organizations whose mission is to do just this, it is not enough. To invest in protection and restoration activities at the scale required, the big guns of private finance are needed.
This is beginning to happen. We're getting a handle on the investment side, and in putting a monetary value on the goods and service nature provides - at least in terms of traditional ecosystem commodities such as food and wood products, and the easily quantifiable service of carbon storage. But there's a long way to go. We need a massive shift in economic thinking, which also values less tangible ecosystem services and supports the sustainable development of those who act as nature's stewards.
This transition toward a genuine bioeconomy can be seen the evolution of WWF's New Generation Plantations (NGP). For the past 12 years, NGP has existed to support sustainable forest plantations through convening a network of forest industry practitioners and leaders, the scientific community, NGOs, communities and investors through study tours and dialogue events aiming to share knowledge and scale up sustainable forest plantations in line with the NGP principles: maintaining ecosystem integrity, protecting and enhancing high conservation values, ensuring effective stakeholder involvement, and contributing to economic growth and employment.
Throughout this time, it has built a solid network of local practitioners on the ground and organically conceptualized various forest landscape restoration projects that address social, environmental, climatic and economic aspects. NGP has gone on to develop the organizational infrastructure, fundraise (successfully) and get boots on the ground as a project developer and implementer across South America, Sub-Saharan Africa and Southeast Asia.
As the demand for these projects increases, it's important to step back and think strategically about how to scale the impact of this unique model. The first part of the journey has been to define the investment case for NGP's project development approach. So where have we got to?
THE INVESTMENT GAP
Current funding approaches to forest landscape restoration tend to fall within one of two categories:
- Commercially focused investment has a viable business case, but returns-driven companies lack the resources to solve wider landscape challenges beyond their operational scope.
- Philanthropic funding addresses social and/or environmental challenges, but tends to be small scale and not sustainable in the long-term, and can generate donor dependency.
For forest landscape restoration to become truly resilient and sustainable over the long term, a different approach to financing is required - one that combines the strengths of business (large scale, efficient, aiming for long-term self-sustaining viability) with the strengths of the donor model (able to address environmental and social needs without compromising impact objectives). This is NGP's model.
NGP's unique approach combines the scale, efficiency and long-term viability of traditional investment with the environmental and social impact needs of the landscape, with stakeholder involvement at its core.
THE NGP INVESTMENT STRATEGY
NGP develops projects where there is opportunity to deliver significant impact aligned to the NGP principles, but that fall into the gap between traditional funding approaches - projects that require long-term engagement on a path to self-reliance, but that may not deliver the traditional commercial returns that mainstream investors are looking for. It invests into projects across South America, Sub-Saharan Africa and Southeast Asia where it has a strong network of implementing agencies and experience. Rather than supporting siloed projects, NGP takes a landscape approach: the projects it develops are multi-faceted, multi-stakeholder driven, and address multiple challenges affecting forest landscape resilience.
To operationalize this strategy, NGP has set up of two new organizations: NGPTA, which delivers technical assistance to projects, and iNovaland, which deals with finances and contract management.
In defining the NGP investment case, we identified two distinct models:
1. The commercial-community bridge
In these projects, there is a mutual benefit and reliance between a forest company and the communities in the landscape where it operates. NGP engages to provide extra resources to support community engagement in landscape and livelihood improvement activities and to reduce overall risk. This amplifies the positive environmental and social impacts, while strengthening long-term sustainability.
2. Community-to-commercial evolution
In these projects, communities that are already engaged in developing resilient landscapes get support from NGP to organize and professionalize their activities. This brings them better access to markets, investors and a network of stakeholders.
No matter the model, the projects all deliver on three focal elements:
- Improved biodiversity and forest landscape resilience through natural forest restoration and conservation
- Sustainable wood supply and economic development through productive forest plantations and woodlots
- Food security and livelihood improvement through improved agriculture and agroforestry.
Though each project will lean more heavily to one element or another, depending on the context, one aspect that is common across all projects is stakeholder engagement. This goes beyond free, prior and informed consent: each project has a multi-stakeholder platform that drives how the project will be set up, the activities it will carry out, the roles and responsibilities, and how the benefits will be shared. Stakeholders range from the small-hold farmer to the community council, forest companies and investors, research organizations and government.
THE INVESTOR LANDSCAPE - INVESTING FOR IMPACT
Investors in NGP projects are impact driven. Their mission is aligned with the NGP principles, and the need to fill the forest landscape restoration funding gap. This requires both a commercial and philanthropic mindset, though the investment itself is not commercial.
Returns that NGP investors care about are not financial, and they go beyond the number of trees planted and number of jobs created. Instead, it's about long-term outcomes: improved livelihoods, income and revenues, capacity and self-sufficiency of local people; carbon stocks, biodiversity and productivity in forest landscapes. These outcomes cannot be created in a short-term donor project, but require time and commitment from the investor and NGP's implementing agencies.
Though the investment case for nature and people is clear, several questions remain.
- How do we leverage NGP's ecosystem of collaborators and learning platform from its study tours to accelerate its impact?
- How do we attract high-quality projects that align with the NGP investment case?
- How can we develop the "balance sheet for impact", or monitoring, reporting and verification system to demonstrate impact returns?
- How do we best communicate this impact and reach the investor profile described?
- What sort of funding mechanism could support the long-term project engagement that is required, scale up existing projects and bring on new projects?
It is these questions that NGP is working to answer in the next phase of its strategy development, to make the NGP investment case for nature and people even stronger.
The XV World Forestry Congress in Korea is devoting a day to the topic of sustainable investments in forests for people, profit and nature. NGP is honoured to be participating with a panel on Screening in: Advancing people-centred, pro-nature, profitable & inclusive forest projects - Lessons Learned. The session will draw on a number of the cases that have fed into the development of the NGP investment case.
Shauna Matkovich is founding director of bioeconomy consultancy The ForestLink
Source: New Generation Plantations