Challenges and opportunities for the forest sector’s engagement in ecosystem restoration

Research shows that some two billion hectares of world’s deforested and degraded landscapes offer potential for restoration. Led by the Food and Agriculture Organization and the United Nations Environment Programme, the UN Decade on Ecosystem Restoration runs from 2021 – 2030. Complementing that initiative, the 2020-2030 ACSFI Strategic Framework identifies the UN Decade on Ecosystem Restoration as a topic of strategic importance.

This webinar sought to understand the relevance, opportunities and risks for the forest-based industries sector to engage in ecosystem restoration activities. It opened with a message from the FAO Forestry Division Director, Ms Mette Wilkie, who highlighted that “the private sector is critical to the long-term restoration, conservation and sustainable use of the world’s forests”.

These messages were followed by a presentation by Mr Ludwig Liagre, FAO consultant, who provided the first results of an ACSFI background paper focused on the engagement of the private forest sector in ecosystem restoration. Mr Liagre highlighted that many forest-based companies already significantly contribute to ecosystem restoration, both operationally and financially, but with little publicity around it. It was also recognized that while many forest companies are engaged in ecosystem restoration, there may still be a gap between pioneers and many other forest-based industry stakeholders lacking capacities and knowledge to engage adequately.

Following Mr Liagre’s were four case study presentations:

• Mr Francisco Razzolini, Executive Director, Klabin, Brazil
• Mr Tomo Kumahira, Vice President, Corporate Finance & Strategy, Komaza, Kenya
• Ms Radha Kuppalli, Managing Director, Investor Services, New Forests Pty Ltd, Australia
• Mr Martin Berg, Head of Natural Capital Impact Strategy, HSBC Pollination Climate Asset Management, UK

The panellists showcased a diversity of financing instruments being developed by the forest-based industries to support ecosystem restoration. Green bonds for example are already well used by companies like Klabin and Suzano, among others. Mr Francisco Razzolini, Klabin, explained how sustainability embedded in Klabin’s business model make the company more easily eligible to benefit from sustainable finance opportunities. Other companies like New Forests and Arauco have set up blended finance vehicles that support investments in ecosystem conservation and restoration, in order to capture forest values beyond wood. New Forests’ Tropical Asia Forest Fund (TAFF) was described during the webinar. Interestingly, early-stage funding support initiatives such as the Restoration Seed Capital Financing Facility are currently being developed which can help the emergence of such blended finance vehicles, as pointed out by Tim Christophersen, UNEP, in his closing remarks.

Nature-Climate Solutions and carbon finance has also been recognized as a driving force to boost forest-based industries engagement in ecosystem restoration, at the condition that more clarity and certainty is built in for investors and companies. Ms Radha Kuppalli, New Forests, emphasized that a “a critical mass of investors, companies, NGOs and governments must coalesce around standards for forestry and land use carbon projects that will support higher levels of pricing particularly for biodiversity conservation and restoration”. In that sense, HSBC Pollination Climate Asset Management (CAM) is also committed to support the emergence of new asset classes building on carbon markets as well as biodiversity markets. This was detailed by Martin Berg, CAM, who showcased an ecosystem restoration project example seizing biodiversity offset opportunities in the United Kingdom.

Disclosure of climate and biodiversity impacts seems key to unleash the potential of investments to do no-harm and proactively support pro-nature business models. Important initiatives such as the Task Force on Climate-related Financial Disclosures (TCFD) and the Task Force on Nature-related Financial Disclosures (TNFD) could make a difference if adequately embedded in a majority of companies and investors. These may be opportunities for organizations like FAO to work with countries to promote regulation and disclosure frameworks at the asset and company-level.

Supporting integration of good practices for ecosystem services valuation and valorization, taking stock of the most recent developments on the Economics of Ecosystem Restoration (TEER), the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), etc was also mentioned as an important way forward that could help forest-based industries to better assess opportunities linked with ecosystem restoration.

Beyond environmental benefits, ecosystem restoration catalyzed by forest companies could lead to multiple social benefits. New business models engaging with smallholders are required, such as the Komaza example which detailed how Komaza aims to help restoring degraded lands while generating jobs and additional local revenues as well as addressing the large wood supply gap in Africa.

Panelists recognized that increased partnerships between international organizations such as FAO and the forest-based industries are needed to move forward on successful operational and financial ecosystem restoration practices. Mainstreaming good practices within industry stakeholders to foster adoption of relevant operational and financial restoration options could be supported through some of the existing partnerships like the Forest Solutions Group of the World Business Council for Sustainable Development (WBCSD) and/or the WWF-New Generation Plantation platform (among others). The relevance of the creation of a new forest-based industries working group on sustainable finance for ecosystem restoration and restoration-friendly forest products was also pointed out as a potential opportunity for FAO to progress.

Remarks also focused on the importance of the circular bioeconomy agenda in connection with ecosystem restoration, from the perspectives of forest-based industries. Indeed the forest sector can contribute to this transition through the wealth of forest products – both goods and services, they provide. Many of these products are or can be integrated in management strategies related to forest and land landscape restoration and can provide financial incentives to maintain and restore forest and tree-based ecosystems.

According to panellists, the role of FAO and other international organizations to further enhance the engagement of forest-based industries in ecosystem restoration could include:

• Developing guidelines on good practices for ecosystem restoration financing involving forest-based industries;
• Opening Technical Task Forces of the Decade on Ecosystem Restoration to forest-based industries stakeholders;
• Supporting developing countries in considering nature-based solutions, including climate finance, leading to green growth and encouraging sustainable landscapes and community development—also in view helping investors understand suitable investment approaches;
• Building a framework for identifying national and global restoration priorities and for leading regional co-operation efforts, promoting integrated results-based management for restoration interventions including forest-based industries.

The conclusions of the webinar will be taken up by ACSFI’s work and the background paper being prepared on the topic. If you would like to be notified when the ACSFI’s Background Study on the status, challenges and opportunities of forest-based industry sector commitments for ecosystem restoration is completed, please email [email protected]. With this work, the ACSFI aims at contributing to the goals of the Decade on Ecosystem Restoration. As stated by Sven Walter, FAO Senior Forestry Officer and Secretary of the ACSFI, “we need to upscale the successful business models implemented by the forest-based industries that integrate restoration to ensure the success of the UN Decade on Ecosystem Restoration”.