Lucy Garrett l Palladium - Oct 14 2020
What We've Learned from 5 Years of Incubating Forest-Friendly Business Models

Photo Credit: Marcelo Camargo

Global economies, livelihoods, and well-being all rely on Nature. Yet in the past four decades, there has been a 60% decline in the populations of mammals, birds, fish, reptiles, and amphibians, mostly in the tropics.

This week, global leaders were set to gather in Kunming, China to advance global action on protecting biodiversity, and COVID-19 has pushed that dialogue out to 2021. But climate change waits for no one. Despite the delays in moving this agenda forward, those who want to protect biodiversity and fight climate change can and must act now.

Replicable examples of forest friendly business models exist, and have been incubated by Palladium’s Partnerships for Forests (P4F) program. These regenerative models promote sustainable land use and climate mitigation strategies whilst providing societal and biodiversity benefits. They are nature-based solutions to the current climate crisis.

For private sector companies, policymakers, donors, and investors looking to pilot and scale forest and biodiversity friendly business models (and plan for the 2021 conference circuit), a recent report by P4F contains recommendations for ensuring that business operations are forest friendly:

1. Partnerships matter

Formal partnerships between all actors involved in the business model are essential. Invest time in identifying the actors – including communities, companies, local authorities / government or civil society – and creating and formalising partnerships with Memorandums of Understanding that meet the needs of stakeholders from the onset. Project developers are well placed to guide parties in forming meaningful partnerships.

2. Understand the context and design forest friendly business model accordingly

Take the time to research, collect, and analyse data and local information to understand the most appropriate approach according to the forest landscape. To maximise impact, explicitly build good land-use planning and monitoring into business plans and budgets.

3. Harness local expertise

Achieving true collaboration with forest-dependent communities requires spending time to harness their local knowledge and ensure they receive an equitable share of the benefits from sustainable forest economies. Local communities and indigenous people that live in and around forests are critical forest guardians, with unrivalled knowledge and cultural ties to the landscape. International Principles such as Free Prior and Informed Consent (FPIC) provide a baseline for collaboration.

4. Clearly communicate impact to consumers

Consumers are increasingly conscious of the impact of their choices. Company impact on biodiversity and society should be communicated honestly. Biodiversity outcomes are of interest to consumers – building sustainable brands, using QR traceability and social media to tell the story of sustainable forest products such as wild honey and forest coffee are great ways to raise consumer awareness.

5. Build biodiversity value into business propositions

Look for alignment between the business and biodiversity outcomes and use metrics to quantify the value of biodiversity to the business model and as a public good. For example, in Ethiopia forest coffee benefits local communities who receive a premium price for harvesting it sustainably. In turn, this value contributes to forest protection, which preserves the wild coffee genetic resources found in the forest that are invaluable for disease resilience.

6. Managing landscapes for biodiversity outcomes is complex and public support is essential

Landscape governance approaches must foster individual action through to collective action, and engage national governments, traditional authorities and communities. Policymakers and donors should implement policies, regulations and programmes that are aligned and support sustainable landscape governance at scale.

7. More blended finance and public money needs to be directed towards biodiversity-positive business models

Investments in forests and sustainable land use have a relatively high perceived risk return profile. Therefore, public money is essential to de-risk the emerging asset class of nature-based solutions and leverage private finance. Donors should use their funding to ensure biodiversity outcomes are maximised and investment ready models are incubated.

8. Siloed working hinders the nature-based solutions transitions needed

There’s a need for collaborative sharing of lessons and experiences between project developers, companies, investors, government and NGOs. For instance, in the case of cocoa in Ghana, the Cocoa Forest Initiative has played in critical role in providing a multi-stakeholder platform for collaboration between national governments, cocoa companies and civil society. Policymakers and donors should support initiatives that foster lesson sharing beyond the normal suspects.

9. The market for project developers and incubators needs to expand

Project development is difficult – it requires specialist knowledge, experience and resources. For example, the forest friendly business models incubated under P4F are a product of local expertise of the P4F team and their partners, and established tools and processes to support idea development. Donors and impact development funders should increase the availability of funding for development and incubation services, to provide companies with the right support they need to incubate nature-based solutions.

To mainstream sustainable investment – start with the leaders

Transitioning sustainable land use financing starts with the leading pioneer investors. Investing in nature-based solutions as an asset class is still very niche. Investors should build relevant knowledge in this area in order to better screen for risks and opportunities. Those leading pioneers that have already made investments in nature-based solutions need to share their learnings with others in the investment community so that investments in this space can be realised more quickly.

These recommendations are by no means exhaustive, but for forest friendly business to become mainstream, it is essential that governments, businesses and communities work together to ensure that all can prosper from the protection and regeneration of forests and biodiversity.

Partnerships for Forests (P4F) is funded with UK aid from the UK government. It is implemented by Palladium and Systemiq.