Finance for Forests is a joint initiative of BHP, Conservation International and Baker McKenzie, working to harness private sector finance to contribute to the conservation of the world’s forests.
BHP’s climate change strategy includes a strong focus on reducing emissions from deforestation through support for REDD+, the U.N. program for reducing emissions from deforestation and forest degradation. In October 2016, the International Finance Corporation, a member of the World Bank Group, issued a first-of-its-kind US$152 million Forests Bond, developed with BHP and Conservation International, with a US$12 million price support mechanism provided by BHP. Other support for REDD+ by BHP includes the Alto Mayo REDD+ project in Peru, managed by Conservation International.
The Finance for Forests (F4F) initiative shares BHP’s experiences to help encourage replication of these investments and the exploration of other innovative private finance tools to conserve forests and further advance REDD+. F4F will serve as a hub of learning during a time of critical transition as countries, supported by businesses, follow through on Paris Agreement commitments.
F4F will focus on engagement with the oil and gas, mining, aviation and technology sectors, as well as institutional investors to:
- Increase private-sector understanding of forest conservation through REDD+;
- Share BHP’s experience to encourage others to pursue similar opportunities;
- Develop new, innovative finance tools; and
- Extend these ideas beyond forests to other ecosystems.
We invite companies within the oil and gas, mining and aviation industries, as well as institutional investors, to learn more about the opportunity that investment in forests can provide.
Ensuring that forests have value when left standing rather than being cut down is a key goal of REDD+. Already in use by several investing nations, REDD+ offers a proven path for the private sector to conserve forests and preserve the benefits they provide for people and nature alike.
The world’s forests are closely tied to mitigating climate change. Forests absorb and store carbon dioxide from the atmosphere. When cleared or degraded, they release carbon dioxide back into the atmosphere, contributing to climate change. The annual loss of forests is responsible for up to 11 percent of global emissions. Forests also provide lifesaving medicines and clean, fresh water for villages and cities. One in four people directly depend on forests for their livelihoods, including Indigenous communities that have stewarded them for millennia.
Though many governments have moved to conserve forests by establishing protected areas, this is often not enough to avoid their destruction. Currently, standing forests do not offer an immediate financial return that can compete with the alternative of cutting them down. No well-established markets yet exist for forest carbon or the broader benefits forests provide, and private sector investment in these values has been limited. Between 2006 and 2014, a total of only US$9.8 billion was invested in forests, almost 90 percent of which came from the public sector. Analyses indicate that US$17 to 33 billion is required per year to cut deforestation in half by 2030. Experts agree that the private sector must be involved.