cop26 Archives - EU REDD Facility

On the second day of the UN Climate Change Conference (COP26) in Glasgow, world leaders announced a pledge to save and restore our planet’s forests. With that deal came a long list of commitments from public and private sector actors to combat deforestation.

These included ambitious financial commitments to support forest protection and zero-deforestation commodities – including $7.2bn from the private sector – as well as commitments to align investments to sustainable land-use objectives. For instance, CEOs from more than 30 financial institutions, with over $8.7 trillion of global assets, have committed to eliminate investments in activities linked to agricultural commodity-driven deforestation. These commitments add up to almost a decade of announcements aimed at mobilizing private finance to support forests.

Despite this global recognition of the importance of unlocking private finance at scale to address deforestation, there is still very limited information available on the volume of capital flows into land use. These financial flows are not tracked or reported consistently. Monitoring of private finance is challenging across any sector, yet tracking flows related to land-use change in tropical forest countries is particularly challenging for many reasons. These include the issue of defining what constitutes sustainable land-use; the difficulties in accessing disaggregated data on private flows due to confidentiality and market regulations; and the very nature of land-use activities which are embedded into often largely informal rural economies.

Building robust approaches to track private flows in land-use is essential to increase the transparency of investments impacting forests and ecosystems, hold actors accountable to their commitments, and measure progress.

On 8 November, the EU REDD Facility hosted a COP26 side event to explore tracking private finance in tropical forest countries. The virtual event provided a public platform for practitioners who are paving the way towards building approaches that shed light on the private sector’s role in financing nature-based solutions and sustainable land-use.

Three presenters spoke to this topic from different angles:

The Forest Stewardship Council’s Chief Climate and Ecosystems Officer Asger Olesen discussed the diversity of angles through which private land-use investments can be approached, and made practical recommendations on how to implement tracking studies.
Gabriela Coser from Climate Policy Initiative shared a country perspective, namely Brazil’s experience in identifying private investments into land-use, and lessons learnt from that comprehensive exercise. The study demonstrated that supporting tropical forest countries in understanding their financial landscapes and the leverage effect of their public policies is key to enhancing domestic resource mobilisation efforts.
Ivo Mulder, head of UNEP’s climate finance unit, presented results of UNEP’s efforts in quantifying global investments into nature-based solutions, and described concrete steps for action to deliver on the ambitious pledges coming out of COP26.

Their remarks were followed by a question and answer session. We invite you to watch the event recording.

At the COP26 Indonesia Pavilion on 8 November, European Forest Institute (EFI) expert Thomas Sembres presented ideas on promoting sustainable trade through transparency and traceability in forest, agriculture commodities and trade. Speaking at the Indonesian Pavilion, Sembres made the case for raising the visibility of sustainability, and for creating more differentiation in global markets between what is sustainable and what is not. This needs to be done at scale for mainstream markets, he said, “not just for the niche markets of certified or premium products.”

While more robust traceability systems are needed as a support to more visibility for sustainability, they will not be enough unless accompanied by broader access to information, said Sembres. “Most traceability systems that exist nowadays are non-transparent traceability systems. This means that most market actors don’t have access to this information and cannot use it to promote sustainable production and trade.”

Thomas Sembres’ presentation at the COP26 event can be viewed in this recording. His contribution is from 4:08:00 – 4:14:00.

Bringing transparency to a traceability system is a delicate task, he said, with some actors fearing that more accessible information would be used against them. “At EFI we are working on this delicate task of helping governments use supply chain transparency to encourage progress towards sustainability.”

On the question of bridging differences between producer countries and consumer countries related to transparency and traceability systems, Sembres confirmed that more data was now available than ever before – but said that dialogue between market actors or between governments remained difficult. The key reason for this gap are the complexity of numerous data and traceability platforms, he said, along with distrust around the use of the data.

What is needed now, Sembres said, is simplicity and trust based on transparency and inclusive, structured and equitable processes on choice of data sources and data use. The experience of Terpercaya was a good example of how this could be achieved, he said.

“We need to build supply chains of understanding and trust. The Transparency Pathway is a way to bring public and private supply chain actors together to shift mainstream commodity markets towards sustainability.”