Public policy makers from all around the world, regardless of their level, have the opportunity to take leadership as Forest and Landscape Restoration (FLR) financing champions. Even without controlling private capital, they can provide resourceful evolution in a number of ways.
Institutional investors have access to the largely untapped traditional capital markets, but to get them on board, sustainable finance must mature, providing proven track records and creating recognizable patterns so investors can better understand and price risk.
Public-funded grants play a crucial role in increasing investors’ willingness to write invest. Firstly, by funding accelerators that finance the setup and costs of raising capital to get to the first close. Secondly, by funding technical assistance facilities to improve investment readiness; and lastly, by providing financial guarantees with public capital that is willing to share the risks and take first loss. Other ways for companies to overcome investor hesitation is through self-financing or usage of hybrid models where investment capital is merged with charities, but both strategies limit the ability to scale the investment.
The Global Partnership for Forest and Landscape Restoration defines FLR as an active process that brings people together to identify, negotiate and implement practices that restore an agreed optimal balance of the ecological, social and economic benefits of forests and trees within a broader pattern of land uses.
Governments acknowledge the nexus between climate change, land degradation, decreased agricultural production, conflicts and migration, and have started to implement FLR which is reflected in a sharp increase of the forest and landscape portfolio from $1.8 billion in 2016 to $2.5 billion in 2018. Eventually, if the ambitious goals of the Sustainable Development Goals are to be met, all capital must be engaged, whether it’s private, public, or charitability.
