The United States, United Kingdom, Norway, and nine corporate heavyweights came together at this week’s Climate Leaders’ Summit with a joint commitment to mobilize at least US$1 billion before the end of this year to prevent tropical deforestation.
The coalition is “a game-changer,” says the Environmental Defense Fund (EDF), which has spent two decades collaborating with Indigenous communities, forest peoples, and Brazilian and American NGOs on the results-based financing model upon which the coalition—called Lowering Emissions by Accelerating Forest finance (LEAF)—is based.
“The global initiative represents by far the single largest private-sector investment to protect tropical forests,” EDF writes.
Joining the three national governments in the coalition are Airbnb, Amazon, Bayer, Boston Consulting Group, GlaxoSmithKline, McKinsey & Company, Nestle, Salesforce, and Unilever. EDF says many more companies are expected to sign up in the coming months.
Explaining how LEAF will function, the Washington Post writes that its corporate signatories will pay countries or large states that have tropical forests “an amount equal to $10 a tonne for avoided carbon dioxide emissions” upon receipt of proof that these jurisdictions have demonstrated “a five-year record of success compared with historical five-year benchmarks.”
The Post adds that it will be the responsibility of the governments involved to enforce the necessary forest protections.
Critically, only companies that have “already pledged to achieve net-zero carbon emissions by 2050 or sooner” can join LEAF. The Post adds that “the companies say they will not earn any return on their investments and are sinking money into the forestry projects out of concern about climate change, as well as pressure from consumers and shareholders.”
But while there is no direct profit in the initiative, “returns can have many faces,” said Unilever Chief Supply Chain Officer Mark Engel. He told the Post that getting involved in protecting forests can lower costs, and also increase sales by strengthening a brand.
“We want to stay relevant for consumers with our brands,” he added.
A key benefit to LEAF’s unique funding mechanism is that it can do an “end run” around one of the main contemporary obstacles to forest protection—namely, corruption.
“Corruption of local officials has fuelled deforestation by ranchers, loggers, and growers of cocoa trees from Latin America to western Africa to Indonesia and beyond,” writes the Post. Under the egregiously corrupt tenure of Brazil’s President Jair Bolsonaro, for example, “deforestation has surged to a 12-year high.”
LEAF will also offer an alternative to the often-ineffective cap-and-trade deforestation programs that many investors use to offset their emissions. Under such programs, “compliance often broke down,” the Post explains. “In some places, one forested area might be left alone, while another down the road was cut down.”
The initiative is just one of the many “tools, carrots, and sticks” that will be needed to protect tropical forests, said Eron Bloomgarden, executive director of Emergent Forest Finance Accelerator, which will be monitoring LEAF’s performance.
“But we think this is a really important carrot,” he added.
Critically, no company that signs on to this leafy—and hopefully effective—“carrot” will be given a free pass for their own emissions. Victoria Tauli-Corpuz, executive director of Tebtebba, an international Indigenous research organization, said any emissions reductions companies gain through the program must come in addition to “deep cuts in emissions from their own value chains in line with science-based reduction targets.” The former UN special rapporteur on the rights of Indigenous Peoples added that the coalition will help ensure “that the rights of Indigenous Peoples who have and who continue to protect these forests are respected and fulfilled.”
And that, says EDF, is “just the tip of the iceberg” for what the initiative could accomplish.
“The new model of forest finance being pioneered by LEAF could channel tens of billions of dollars per year into ensuring sustainable livelihoods for Indigenous Peoples and forest communities, advancing sustainable development in forest countries, and protecting global forests on the scale needed to address the climate crisis,” EDF writes.
The scale and speed of the project’s expansion is “unprecedented,” Bloomgarden added.
“This feels real,” he told the Post. “There are a lot of pressures and forces on companies to do this and maintain it.”
And none too soon, observes EDF. Declaring 2030 as the date by which tropical and subtropical deforestation must end in order to meet global climate, biodiversity, and sustainable development goals—as well as sustaining the “the well-being and cultures of Indigenous Peoples and other forest communities”—the organization warns that society is running out of time.
“The fate of the world’s forests—and climate—is in the balance,” said EDF Senior VP Nathaniel Keohane. “It’s not a moment too soon to mobilize investment at scale.”