The transition to sustainable land use can only be achieved with a dramatic increase and shift of finance – from high-deforestation to more sustainable approaches our assessment shows that across sources, “green” finance that is aligned with Goal 8 – roughly USD 16 billion – is dwarfed by the much larger flows of “grey” finance to the land use sector – roughly USD 777 billion – that have a potential for negative impacts on forests.
Support for the development and implementation of strategies to reduce forest emissions remains insufficient, and does not reflect the mitigation potential of the forest sector. Between 2010 and 2015, cumulative international public finance that clearly falls into the scope of green finance amounted to USD 2.3 billion. This is dwarfed by USD 167 billion in mitigation finance for other sectors.
Especially in the case of upper-middle-income countries, domestic investments in REDD+ programs has the potential to exceed international support. However, governments also invest heavily in subsidies for key agricultural commodities, often without measures in place to avoid deforestation and harm to ecosystems.
Traditional private investment in the agriculture and forestry sector in deforestation countries – without explicit sustainability or forest protection objectives – is estimated to be over 50 times greater than international support (public and private) that clearly falls in the scope of Goal 8. Given the role that these sectors play in driving deforestation, there is important potential for aligining such finance with forest and climate goals.
While a number of banks have published policies to increase sustainability and identify and manage deforestation risks, few are mandatory. In most cases, information is unavailable regarding the extent to which clients actually apply these policies.
Collaborative approaches and blended finance mechanisms between the public and private sectors can catalyze new private investment in sustainable activities in forest-relevant sectors. More significantly, the public sector has a range of tools at its disposal that can assist in developing an attractive sustainable investment environment into which private sector actors can shift existing grey finance.
The Forest Declaration Platform and the Forest Declaration Assessment are supported by The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) of Germany.
Other current and previous supporters of these initiatives include the Climate and Land Use Alliance, the Good Energies Foundation, and the International Climate Initiative (IKI) of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), which has supported this initiative on the basis of a decision adopted by the German Bundestag.
This project is supported by the Climate and Land Use Alliance and the Good Energies Foundation. Research that contributed to this project is part of the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) supports this initiative on the basis of a decision adopted by the German Bundestag.