On May 11th, FMO joined the Partnerships for Forests and Mobilising Finance for Forests event on investing in forestry and sustainable land use in London.
Our team joined with over 130 investors, project developers, fund managers and donors working in the forests and sustainable land use (FSLU) and nature-based solutions (NbS) sectors. The purpose of the event was to facilitate focused discussions on lessons and opportunities for public, private and blended finance for protecting and restoring the world’s tropical forests.
Destroying tropical forests is a threat to global climate stability, but protecting and restoring them is one of the most powerful tools for mitigating climate change.
In 2021, 3.75 million hectares of tree cover was lost in tropical primary rainforest – an area almost 24 times the size of Greater London – generating carbon dioxide emissions the equivalent of the annual fossil fuel emissions of India. Destroying tropical forests is a threat to global climate stability, but protecting and restoring them is one of the most powerful tools for mitigating climate change. Halting the loss and degradation of forest ecosystems and promoting their restoration could contribute more than one-third of the total climate change mitigation to meet the targets of the Paris Agreement.
A recent report by the Energy Transition Commission concludes that the cost of protecting all forests at high risk of deforestation by 2030 would exceed $130 billion annually. Current finance to protect forests in the tropics is estimated at just $2-3 billion a year – meaning we need to urgently increase this finance by fifty-fold.
FMO recognizes the unique role that DFIs can play in mobilizing finance at scale to protect the world’s forests. This is why we have committed to investing up to €1 billion in forestry and sustainable land use by 2030 as a core part of our strategy to support climate action and biodiversity. Blended finance programs will form a key part of this strategy by supporting FMO to take new risks and build up its capacity and expertise as a leading impact investor for the conservation and restoration of tropical forests. FMO’s rich experience delivering blended finance for impact will enable us to effectively de-risk FSLU investments, attracting private sector participation and catalyzing a sustainable flow of capital towards tropical forest conservation.
As part of our forestry commitment, FMO manages Mobilising Finance for Forests (MFF), a UK Government-funded blended finance investment program which aims to combat deforestation and other environmentally unsustainable land-use practices that contribute to global climate change. With a €178 million (£150 million) commitment from the UK Government, MFF aims to catalyze €1 billion of private sector investment into forestry and sustainable land use projects in Africa, Asia, and the Amazon Basin over 5 years.
Innovative and honest human partnerships will be the key to unlocking the finance needed to protect and restore our planet’s forests.
FMO alone cannot meet the financing needed to conserve tropical forests: the discussions from last week’s event highlighted how innovative and honest human partnerships will be the key to unlocking the finance and the dedication needed to protect and restore our planet’s forests.
Panelists from across the FSLU and NbS investment ecosystems emphasized the importance of collaboration in their work. One project developer working on designing and pre-financing carbon credit projects said: “it’s about people, not just trees”, highlighting the importance of forming trusting relationships with diverse teams for building an investible pipeline of high impact FSLU projects.
In another presentation, a philanthropic investor and an institutional investor talked about their organizations’ collaboration in managing a mid-sized fund for a corporate client, sharing expertise on how to manage ESG due diligence processes, measure impact and develop a bankable pipeline for the fund. Reflecting on the growth of the MFF program, FMO and the UK’s International Forests Unit (IFU) agreed that success has required a hands-on approach to collaboration between public and private sector partners.
Success also requires a willingness to share learnings across the investment ecosystems as we convene and unite around our mutual goals to protect the world’s forests.
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