UN Forum on Forests

This was largely due to the adoption of a declaration signaling a high-level commitment to forests made by the member states at the UNFF to take ‘urgent and accelerated action’. Protecting tropical forests is key to meeting climate targets, with the UNFF Secretariat Director Juliette Biao Koudénoukpo affirming that healthy forests should be recognized “as powerful nature-based solutions to most of the sustainable development challenges we face today”. With the global value of forests are estimated to be worth up to $150 trillion –nearly double the total value of global stock markets – there is a huge opportunity for DFIs and commercial investors to create partnerships to assist in financing reforestation and conservation.

‘Historic’ outcomes, but still a long way to go

Despite the positivity, the UNFF19 highlighted that the world is not on track to achieve the Global Forest Goals (GFGs) by 2030, of which include reversing the loss of forest cover worldwide through sustainable forest management (SFM), preventing forest degradation, and mobilizing new and additional financial resources at all levels. Whilst the forum acknowledged that countries have made an effort to halt and reverse deforestation through more regulations and increases in forest finance pledges, the continued increase in land degradation and persistent financial gaps is hindering global sustainable development.

Key actions and recommendations by the Economic and Social Council for the UNFF19 members within the draft declarations and the omnibus resolution documents include:

• Pursuing engagement with regional and subregional financial institutions such as development and investment banks to attract funding for forest-related activities;
• Advancing the implementation of forest conservation, including through new and additional sources of finance;
• Promoting and developing financial mechanisms to support the GFG’s, including payment for ecosystem services, blended finance, favorable incentives and sustainable financing policies, and;
• Strengthening the cross-sectoral cooperation, synergies, coherence and political engagement across all stakeholders.

Broad as they are, urgent action must be taken on these recommendations to have any hope of achieving global nature protection goals by 2030. The declarations show a high level of ambition from member states – and the implementation of these recommendations will rely on catalyzing and increasing sources of both public and private finance.

Mainstreaming innovative financial mechanisms is imperative to protecting forests

DFIs, investors, and other public and private stakeholders have a crucial role to play in achieving the GFGs and SDGs – and must work in a coordinated way to deploy capital and make the most of the returns offered by forest projects.

Blended finance from DFIs can play a strong role in supporting the UNFF19 declarations. It can help to increase both public and private finance flows, provide attractive incentives, and increase the overall quality of investments.

FMO is one body driving blended finance investments, with a mandate to catalyze more private sector investment into forestry and sustainable land use projects in Africa, Asia, and the Amazon Basin. This is demonstrated through programmes such as Mobilising Finance for Forests, 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 an initial €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. This work from FMO – and increasingly, other DFIs – is opening up new investment opportunities for more commercial investors in emerging and frontier markets.