Sustainable Finance/Green Finance and Forestry

Other asset classes are often preferred over forests, an example being renewable energy. However in recent times things like deforestation in certain places have been made aware to the world by companies such as L'Oreal and Hershey who have their own anti-deforestation campaigns. Although there is a high risk with funding for forest sustainability due to climate change, the future long-term environmental benefits can motivate us to improve our forest finance sustainability. The economic benefits of sustainable forestry include a contribution to food security, provides products such as wood and fodder for livestock, and also helps to alleviate poverty in rural regions.

It is estimated that up to USD 49 billion is required every year to achieve forest and landscape restoration. The importance of forests as carbon sinks and a vital source of biodiversity has received increased attention in recent years.

International climate change negotiations have sought to develop a mechanism for reducing emissions from deforestation and forest degradation and conserving, sustainably managing and enhancing forest carbon stocks.

However, many barriers need to be overcome in order to make the forest restoration project pipeline attractive, including better communication around bankable projects and investment risk.

Proactive countries have developed integrated financing strategies and mechanisms blending different capital sources to invest in forest restoration in both the readiness and implementation phases. For instance, the Tropical Landscapes Finance Facility supports Indonesia in aiming to mobilize international capital at scale to sustainable practices and, among others, seeks to provide long-term debt to individual projects in forest conservation and supports deforestation-free supply chains through strict lending criteria.

Source : Forestry | Green Finance Platform

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