The REDD(+) elephant comes to Paris – a COP21 fable

December 2, 2015

By Christian Del Valle- founder and managing partner

Nearly two centuries before Paris hosted COP 21, the City of Lights played host to a giraffe. Zarafa, a female Nubian giraffe, was presented as a gift from the sultan of Egypt to King Charles X in 1827, and made a home for herself in the Jardin des Plantes. Standing nearly 14 feet high, Zarafa’s arrival in Paris created a buzz both far and wide.Over 100,000 people came to see her, approximately an eighth of the population of Paris at the time. She even touched and inspired the likes of Balzac, Flaubert, and the artist Brascassat.

There is nary a giraffe in sight at COP 21 (giraffes never did like a circus) but there is a very large REDD(+) elephant sat squarely in the middle of Le Bourget. This ‘elephant’ might not have yet captured the public imagination in the same way that Zarafa did all those years ago, but she’s by now a mainstay on the UNFCCC circuit, and each year since her birth in Montreal in 2006, she’s waved her adorable little trunk about, and trumpeted to her parents the same simple question: "Who is picking up the bill for me?" One only has to find Sir David Attenborough in the halls of the Blue Zone to confirm that, in the wild, elephants are remarkably good parents: elephant mums and dads will stop at nothing to defend their calves, chasing off would-be predators and stopping at nothing to make sure they have all the resources they need to grow. Sadly, our UNFCCC-sired REDD+ elephant isn’t so fortunate, and could be forgiven for thinking her parents hadn’t given much thought to her future.

Why is that, you ask? Well, given that there is still no sizeable (compliance) market for forest carbon credits, no clear, tangible linkages for forests and supply chains – and for that matter no real market signal to drive sustainable commodities – we must acknowledge that, despite the rhetoric, the business case viewed at scale for REDD+ is still vague. Rather than the cost of forests’ upkeep being imbedded into the local, regional and international economies that are dependent upon them, the ‘price’ is still ‘paid’ by the rural people living in and around the forest, not to mention the wild species (including forest elephants!) that find their homes shrinking year after year. Apart from some exciting emerging examples, hard work remains to be done to deploy transformative land use solutions at the scale needed.

But the good news is that, unlike on some other fronts in the fight against climate change, solutions for financing REDD+ in an economically sustainable way don’t require any new science or R&D.

For instance, there is a large handful REDD+ finance, totalling in the billions of dollars, already pledged by governments and multilaterals, such as the GCF and World Bank, available pre-2020 which could be used efficiently so that it leverages private sector investment.

Public–private cooperation is needed, and more cooperation between the various stakeholders. Public finance is very adept at taking certain risks, whilst private investors and corporates are good at others. Both sectors need to work together to ensure that the risk management, opportunity and impact mutually enhanced. (This is where one pauses to consider the potential power that price risk guarantees, underwriting and forest bond coupon protection structures could have in driving leverage and scale from the private sector.)

Also, hot off the press today is the pledge whereby Consumer Goods Forum companies like Unilever and M&S are committing to source their supply chains in priority from areas that have jurisdictional REDD+ programmes. That is a good start (maybe even the first time that supply chain companies publicly and officially recognise and aim to link their initiatives with REDD+) but possibly won’t be enough on its own, as it doesn’t provide a workable solution for participation of jurisdictions without donor-supported results based finance. This means that successful incentive-based approaches to engage private sector support and finance must at the same time address finance related risks (above) and the acknowledge that more often than not, private sector finance is deployed at the project level. Linking and recognising (or nesting, as the REDD elephants like to call it) investments that generate sustainable outcomes for forests into jurisdictional programmes in a way that maintains and builds incentives is crucial. In practice, this means ensuring that the REDD+ incentives (results based payments) can be accessed by activities on the ground that perform against the base line.

It cannot be restated enough that these challenges are an open invitation for public-private collaboration. Companies could capture public finance through PPPs and public funding could help to underwrite and de-risk their investments, much like we see in the renewable energy space (e.g. feed-in tariffs). Public donors would reinforce their early investments in REDD+, avoiding letting them go to waste due to lack of scalable finance. For this to happen, companies, private investors and governments must come out of their silos and work more closely together, taking a fresh look at the issues and how best to tackle it upfront. The private sector, governments, investors, multi-lateral banks, NGOs, community organisations and research institutions all have a role to play in saving forests for people, nature and climate.

Here’s hoping that the REDD+ elephant is about to bask in the same fuss and public affection that Zarafa had on her debut in Paris all those years ago!

Althelia Funds