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  • Alignment is key to making partnerships work

Alignment is key to making partnerships work

Workers in a timber yard that sells wood from the Amazon, Quito, Ecuador. Timber is one of the commodities that FTA researchers focus on. Photo: Thomas Munita/CIFOR
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Photo: CIFOR
Photo: CIFOR

By Pablo Pacheco, Coordinator of Flagship 5, Global Governance, Trade and Investment, of the CGIAR Research Program on Forests, Trees and Agroforestry. See more stories on partnerships here.

For the Flagship on Global Governance, Trade and Investment, I would like to highlight how instrumental the partnership between the Center for International Forestry Research (CIFOR) and the French Agricultural Research for Development (CIRAD) has been in developing the whole theme. While CIFOR has a strong emphasis on applied policy research, CIRAD has brought to the program diverse capacities for conducting forestry, agricultural and economic research.

In general, the reason partners want to engage with us is because they recognize the factors that define our program, and see an opportunity in working in collaborative ways.

Some progress has been made with regards to integrating our work on global value chains around key commodities with research on farmer systems and livelihoods conducted by the World Agroforestry Centre (ICRAF). These two research streams ideally complement each other.

We have consolidated an effective partnership with Utrecht University in the Netherlands, with the International Development Studies (IDS) and Copernicus institute. These relationships are about developing ideas, implementing research, and supporting social learning on the impacts of large-scale investments on smallholder agriculture, and options for more inclusive business models. We are making progress in supporting some learning platforms around specific initiatives.

We also collaborate with the Center for Development Research (ZEF) at the University of Bonn, which allows us to bring in some more specialized knowledge for assessing the economic implications of key agricultural commodities and their conservation and livelihood trade-offs. Together with the International Institute for Applied Systems Analysis (IIASA) we work on analyzing the implications of oil palm development under different probable future scenarios.

Click to read seven-country study on oil palm
Click to read seven-country study on oil palm

In addition, we have established partnerships with universities in the countries on which we tend to focus our work such as the Bogor Agricultural Institute (IPB) in Indonesia, and the University of Sao Paolo (USP) in Brazil. These universities contribute with researchers quite knowledgeable of their national realities and support our efforts on policy engagement.

It is very difficult to build meaningful partnerships in situations in which there is no long-term alignment of institutional objectives and research agendas, so some partnerships are more spurious than others, which is often the case on partnerships built around specific projects.

For the new phase we therefore look for long-term alignment with some partners with which we share objectives of co-production of knowledge aimed at informing development initiatives and policy dialogues. The FP provides an interesting network of partners and people with different backgrounds and expertise working across a diverse set of key select countries.

We have initiated some new partnerships based on common topics of interest with organizations supporting development actions, such as with the SNV Netherlands Development Organization, which has a vast experience in promoting inclusive business models involving different stakeholders. Our aim is to distil some of the knowledge already available.

  Workers in a timber yard that sells wood from the Amazon, Quito, Ecuador. Timber is one of the commodities that FTA researchers focus on. Photo: Thomas Munita/CIFOR

Workers in a timber yard that sells wood from the Amazon, Quito, Ecuador. Timber is one of the commodities that FTA researchers focus on. Photo: Thomas Munita/CIFOR

The Finance Alliance for Sustainable Trade (FAST), a network of financial institutions ranging from the Dutch Rabobank to microfinance institutions in developing countries, has showed interest in contributing to our work. They are going to become a quite important partner in developing our research on finance, mainly aimed at reaching smallholder farmers.

In addition, we are increasingly looking for partnerships with business sector initiatives (e.g. TFA 2020), as well as with multi-stakeholder processes, mainly expressed in commodity roundtables and certification systems. For example, we support the Forest Stewardship Council (FSC) and the Roundtable for Sustainable Palm Oil (RSPO), as well as ISEAL Alliance that constitutes the global membership organization for sustainability standards. We want to extend these partnerships to cover other initiatives driven by the private sector in specific countries.

What we do in each country is strongly connected to the work already being undertaken by partners at different levels, including academia, to build credibility and achieve policy impacts. In every one of these countries, we collaborate with a diverse range of partners and maintain strong linkages with ministries and government agencies. It is important to build such partnerships, even though it may take long processes to consolidate them.

More on partnerships

Robert Nasi: Partnerships make forests, trees and agroforestry program work

Long-term relationships and mutual trust—partnerships and research on climate change

The best science is nothing without local voices: Partnerships and landscapes

Influence flows both ways: Partnerships are key to research on Livelihood systems

Partnership increases number of academically trained foresters in DR Congo from 6 to 160 in just ten years

Bringing in the development expertise: INBAR to join CGIAR Research Program on Forests, Trees and Agroforestry

Connecting with countries: Tropenbos International to join CGIAR Research Program on Forests, Trees and Agroforestry

 

 

 

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  • Planted forests in emerging economies: Best practices for sustainable and responsible investments

Planted forests in emerging economies: Best practices for sustainable and responsible investments

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Authors: Brotto, L.; Pettenella, D.; Cerutti, P.O.; Pirard, R.

Investments in industrial-scale planted forests have grown exponentially in recent years and are included into investment portfolios for various reasons (e.g. diversification, risk mitigation, attractive returns). The rapid growth of planted forests may incur negative social and environmental impacts. Thus, investment companies and fund managers are increasingly interested in using sustainable and responsible investment (SRI) tools (e.g. standards, guidelines, and codes of conduct). However, a classification system for SRI tools in the field of planted forests still lacks consensus.

The present study under the CGIAR Research Program on Forests, Trees and Agroforestry therefore identifies, describes and analyzes SRI tools for planted forests and suggests a framework for the evaluation of their capacity to address environmental, social and governance (ESG) issues.

Four key findings emerged:

  • More than 50 SRI tools are used to categorize investments in planted forest. The most common SRI tools used are management standards, bank investment policies and investment rating systems.
  • An ESG Reference Document allows a quality assessment of the SRI tools to be undertaken. The most important issues highlighted in SRI tools are: legality, environmental impact and third-party certification. Conversely, issues such as poverty alleviation, minimum percentage of protected areas and prevention of encroachment are not properly addressed.
  • SRI tools with the highest overall performance originate from the Forest Stewardship Council (FSC), Gold Standard, RepRisk, Certified B Corporation and FairForest and also include the WWF Responsible Investment Guide and the FTSE4Good Index Series.
  • It is important that planted forests are evaluated either through specific SRI tools, or at least with appropriate consideration in order to properly address risk factors such as improvement of livelihoods and the prevention of encroachment and conflicts.

CIFOR Occasional Paper no. 151

Published 2016 at Center for International Forestry Research (CIFOR)

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  • FTA event coverage: Concrete solutions to boost private sector investment in landscapes

FTA event coverage: Concrete solutions to boost private sector investment in landscapes

Expert discussion at Global Landscapes Forum: The Investment Case, London 6 June 2016. Photo: CIFOR
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By Leona Liu, originally posted at Forests News

Expert discussion at Global Landscapes Forum: The Investment Case, London 6 June 2016. Photo: CIFOR
Expert discussion at Global Landscapes Forum: The Investment Case, London 6 June 2016. Photo: CIFOR

In addition to addressing climate finance, one of the main topics discussed at the Global Landscapes Forum: The Investment Case was decoupling deforestation from supply chains.

“The Paris Agreement is significant because it brought forward the aspiration of staying below 2 degrees Celsius and put forests in the text,” said Marco Albani, Director of the Tropical Forest Alliance (TFA) 2020.

“But the Sustainable Development Goals (SDGs) are perhaps even more important. Among the various wedges in the current climate policy, the land use one probably has the biggest implications for all the other SDGs.”

The TFA 2020 was created in 2012 at Rio+20 after the Consumer Goods Forum (CGF) committed to zero net deforestation by 2020 for palm oil, soy, beef, and paper and pulp supply chains. The CGF partnered with the US government to create the public-private alliance with the mission of mobilizing all actors to collaborate in reducing commodity-driven tropical deforestation.

Global Landscapes Forum: The Investment Case, London, 6 June 2016. Photo: CIFOR
Global Landscapes Forum: The Investment Case, London, 6 June 2016. Photo: CIFOR

“There is a big role for the financial sector to play- particularly in terms of investment in the sustainable intensification of commodity production, which allows companies to meet their high demand for commodities, but without harming the forests,” he said.

“But it’s not easy because it involves more than the private sector. It also involves the government on all levels- national, regional and local- regarding land allocation decisions. It also involves domestic banks, state-owned banks, and trade finance that is done largely through the supply chains.”

As of today, financial institutions are not the biggest players in supply chains. Local finance institutions are generally the ones providing finance to smallholders.

“The big issue is that the majority of smallholders are independent like palm oil farmers in Indonesia, for example,” said Pablo Pacheco, Principal Scientist and Team Leader of Value Chains, Finance and Investments at CIFOR. “Smallholders have access to informal sources of finance, so companies often struggle to connect directly with them.”

“The private sector offers smallholders a secure market for their products, but they don’t necessarily pay for the costs to improve farming practices. For example, in the beef sector in Brazil, only big ranchers have enough capital to improve their farming practices. But medium scale and smallholders don’t have the capital to make these investments.”

Pacheco says new business models are urgently needed to share the costs, risks and benefits between companies and smallholders. Most of the business models that exist today transfer costs to the smallholders upstream in the supply chain, but not the benefits.
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Global Landscapes Forum: The Investment Case, London, 6 June 2016. Photo: CIFOR

Zwide Jere, Managing Director of the Malawi-based NGO Total Landcare, echoed Pacheco’s sentiment. “Today, there are very high interest rates for smallholders to access capital, especially in developing countries like my own. Interest rates are about 45 percent in Malawi. It’s sad that farmers need to accept these bad rates because they desperately need the access to finance.”

Still, progress on greening supply chains is encouraging.

“When I started working in this space, it was impossible even to know exactly how much deforestation there was, let alone where it was occurring,” said Albani. “Today, we have almost instantaneous information. We are able to trace back deforestation and allocate it to specific supply chains in a way that we’ve never been able to do before.”

Creating concrete solutions

Other key challenges tackled at the Forum included unclear tenure and government regulations, weak institutions, and the uncertain returns and unforeseen risks currently inhibiting investments at scale.

According to Holmgren, there are three key areas that require urgent attention. One is on the finance side- new tools are needed to help minimize the risks of investments and scale them up. Secondly, there is need on how financial services are done on the ground through local finance institutions. Thirdly, there is a need to better measure progress, both in terms of return on investments, but also in terms of sustainability outcomes.

Sessions at this year’s Forum ranged from diversifying financial instruments to realize REDD+, risk reduction measures for private sector investment in landscape restoration, the assessment of legal and policy frameworks for landscape investment in Africa, and how to link angel investors to land use startups.

Some of the liveliest discussions took place at a packed debate on the rise of financial system innovations like block-chains, mobile banking and the Internet of Things and how they can affect landscapes.

Digital innovations to enable and disrupt financial services, referred to as fintech, alongside mobile applications and GPS mapping software are helping to unlock the large-scale finance needed to address climate change and development challenges globally.

“About a year ago, we were looking for a solution for a low-cost way to connect smallholders to large capital,” said Christopher Botsford, CEO and co-founder of ADM Capital, an investment manager that looks to achieve long-term capital appreciation by investing in opportunities across Asia and Central and Eastern Europe.

His solution? Software.

Software like GeoTraceability, recently acquired by PriceWaterhouse Coopers, offers specialized tracking and data collection technology like GPS mapping for natural resources including cocoa, coffee, and minerals globally.

It has facilitated the mapping and data collection of over 120,000 hectares of production in 11 countries, using GPS and GIS technologies. It has also collected data from 106,000 smallholders in developing countries, giving them information to help improve their production, farming practices, and supporting their access to international supply chains.

This technology helps mitigates the risk for investors who are wary of investing in smallholders, and encourages them to scale up their commitments.

“We can then attract off-takers to give us long-dated contracts and that’s how we can convert from liaising with diverse independent smallholders into a format that is bankable on a wholesale basis. That’s our objective.”

Prior to this, it was immensely complicated given the daunting task of aggregating millions of disparate smallholders. “There are four million smallholders in Indonesia alone involved in palm oil,” said Botsford. “A lot of them don’t have land titles. Two-thirds of them are in debt. So on the face of it, it’s just not bankable as a sector.”

But financial technology has changed all that by making these investments scalable.

“For the first time, you can address millions of smallholders at once. Before this software came along, you couldn’t do that. What it’s done, is make all these people eligible for finance and to bring them into the modern world, so it’s very exciting.”

Walking the talk

Beyond just stimulating conversation, the Forum’s key objective was for its participants to walk away with seeds of viable solutions for connecting capital to smallholders.

For the first time ever, a Dragon’s Den was held to allow presenters to pitch concrete investment opportunities to a panel of investors, finance experts and land use practitioners. All pitches introduced real projects at an advanced stage.

The three pitches included: The Land Degradation Neutrality Fund, created by Mirova and the UNCCD Global Mechanism to support large-scale rehabilitation of degraded land for sustainable use with long-term private sector financing; the Sustainable Ocean Fund by Althelia Ecosphere, a new public-private partnership dedicated to making impact investments into marine and coastal projects, and the Sustainable Cocoa initiative in the Dominican Republic by NatureBank, which aims to achieve sustainability in cocoa by supporting communities that rely on cocoa for their livelihood.

These funds demonstrated the volume of sound projects that exist out there today thirsty for private sector investment.

In his remarks at the Forum’s Closing Plenary, Burrows compared the private sector’s mounting interest in sustainable landscapes investment to a cresting wave with a long period of trough. Until recently, that wave was still in formation.

“Last year, when I spoke at the launch edition of this event, I said that the wave was about to break. Well, I think it broke in Paris during the COP. My hope is that when we meet again here next year, we would have seen an enormous change in terms of attitudes from the global financing institutions to financing sustainable development.”

Paola Agostini, Global Lead Resilient Landscapes for the World Bank, has already witnessed a change. “This Forum would have been impossible ten years ago. When I was in Liberia working on forests, we were trying to do partnerships- there was the public sector and the NGOs, but the private sector was largely absent. That’s no longer the case.”

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  • New investment funds for sustainable landscapes

New investment funds for sustainable landscapes

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  • Love, reason and power needed to deliver sustainable landscapes

Love, reason and power needed to deliver sustainable landscapes

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Keynote address to the Global Landscape Forum on investment in London in June 2015 by James Cameron, Chairman of the Overseas Development Institute. Mr. Cameron is himself an investor in sustainable farming in Tanzania. In this video, he makes the case for not only arguing with facts, the element called “reason”, but using a language that resonates with people, the element of “love”. And, last but not least, one also has to make the message heard through “power”, of course.


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