The REDD theme in Warsaw this week was “landscapes” – paying not only to save forests, but to do so by protecting biodiversity and supporting communities. That’s where private conservation finance has been heading for years, and now a coalition of Netherlands-based corporates and the Dutch government has launched an initiative that makes it explicit.
20 November 2013 | WARSAW | The Netherlands has long been a leader on international environmental issues, and now the Dutch government, together with some of the country’s largest corporations, have shown that all the landscapes talk here in Warsaw doesn’t end with words with the launch of a new public-private partnership model for financing REDD+ projects.
The idea for the Platform BEE REDD+ Initiative – BEE stands for Biodiversity, Ecosystems and Economy – emerged from recommendations issued by the country’s Taskforce on Biodiversity and Natural Resources in 2011, one of which was to explore the possibility of REDD+ for the private sector under a platform that included civil society, the government and the private sector.
“One of the outcomes was that REDD+ sounds interesting because we can actually do something about climate, biodiversity, communities and we can do all of that in the context of climate action,” said Jan Willem den Besten, Senior REDD+ Programme Officer for the International Union for Conservation of Nature National Committee of the Netherlands (IUCN NL), which is working alongside the Confederation of the Netherlands Industry and Employers and the Ministry of Economic Affairs in the Netherlands on the initiative. “Of course, the idea was that there would be a compliance market pretty soon so a lot of companies were very interested because they thought ‘we can gain pre-compliance experience’.”
After the task force completed its work, it became clear that there would not be a compliance market for REDD, he said. “But still, several companies thought that they did want to do something, get their hands and boots dirty to see how it works because in the future there will probably be a REDD+ mechanism after 2020 and also simply because they believe in it,” he said.
The Ministry set up and financed the platform to support the green economy and support the private sector in finding opportunities for more sustainable production and supply chains, he said. As part of that platform, the BEE REDD+ Initiative was established, with four Dutch-based corporates joining forces to support REDD projects: carpet manufacturer Desso, energy competitors Eneco and Essent, and development bank FMO, which had previously invested in a REDD+ fund.
“Each of these companies has a strong internal policy to reduce their impact on climate change,” he said. “Each of these (energy) companies is trying to prepare for a landscape where we don’t depend on coal as a means to use electricity.”
In the preliminary discussions, the companies asked about whether this initiative could be a mechanism to address their biodiversity impacts. The four companies are all members of the IUCN NL’s Leaders for Nature coalition – a network of 20 multinationals and major Dutch companies working together on greening the economy and focusing on biodiversity and ecosystems as part of wider sustainability and business policies – and are starting to see how they can map the impact of their operations.
“They’re all trying to grapple with this issue: how can we reduce our impact on natural capital?” he said. “Climate is part of it, but also biodiversity. The idea that you could do something about your biodiversity impact, even though REDD is not a mechanism to offset biodiversity, was an interesting component.”
The Burning Season
For Mark Meyrick, head of Eneco’s carbon desk, preservation of biodiversity is personally important to him and the main driver of his involvement in the carbon markets and the development of projects to reduce greenhouse gas emissions. He and his colleagues were shocked and deeply affected by the film The Burning Season, a 2008 documentary about the burning of rainforests in Indonesia featuring Dorjee Sun, CEO of Carbon Conservation.
“We thought at that time trying to get involved with REDD was going to be very, very difficult and actually not a great value proposition in terms of time and money because in those days CDM (Clean Development Mechanism) still had some decent value and was easier to do,” he said. “We wanted to do it because it really fit in with the belief system that is endemic within Eneco.”
The energy company, which has several gas-fired power plants, tries to reduce its emissions as much as possible and offsets what it cannot reduce such as business travel and power usage, Meyrick said. “We really wanted to encourage those businesses within Eneco that were offsetting their footprint to instead of using Gold Standard VER projects to look at REDD as well and see the value they brought, both in terms of the offset credit they could produce, but also those wider benefits that a REDD+ project could produce. It was very much important to us to tell the good story of whatever REDD+ project we got involved in.”
The company supported the Kasigau Corridor REDD+ project in Kenya by purchasing the first 50,000 issued credits from the project and is a member of the CODE REDD coalition. Eneco is also working on a project in Mexico that has some great biodiversity aspects to it.
“It is a little bit of a case with REDD projects of that old fairy tale about the frog and the prince, you do kiss a lot of frogs in this business before you find your prince,” he said.
In 2011, Eneco developed a Code of Conduct with IUCN and the World Wildlife Fund to encourage best practices for private sector engagement in REDD+ for both voluntary and potential compliance markets, with full recognition that some environmental NGOs do not like REDD, he said.
“We wanted to make ourselves, as much as possible, NGO proof, because I’ve sat inside offices with climate demonstrators outside against a particular project we might have been involved in,” Meyrick said. “We certainly didn’t want people banging on our door saying ‘look at what Eneco’s doing.’ It was really important to develop as robust a code of conduct for our activities in this area as possible, which we did.”
However, Meyrick said he has real questions about demand and whether sufficient value can be generated to defeat the alternative land uses that take place in many forested areas. “Were you to put REDD into any kind of compliance regime, you open yourself up to many of the issues that beset the CDM,” he said. “Beyond that, I don’t think we can really rely on the voluntary sector to inject the necessary value to do what’s needed. But that being said, doing something for us is better than doing nothing so we hope this initiative will be a great success.”
The Floor is Yours
Carpet manufacturer Desso is trying to move as much as possible to an environment that is sustainable and REDD is part of the company’s vision, said Managing Director Roland Jonkhoff. Even though it is a small company, Desso has been asked to talk about its approach to REDD+ to some of the world’s largest corporations so its participation in the initiative was a logical fit, he said.
Christian del Valle, head of the recently-closed $80 million Althelia Climate Fund which will work with the initiative to find a pilot REDD project, praised the long history of leadership of the Dutch government and companies on environmental and social issues, with platform BEE being further evidence of that commitment.
“We certainly would be a big supporter of BEE even if Althelia weren’t involved,” he said.
The initiative is also proof that meaningful action can be taken now to address deforestation, resource depletion, biodiversity, and conservation issues, with the private sector at the forefront of many of these efforts, del Valle said.
“Markets are driving deforestation today,” he said. “It’s absolutely the case that private sector activity is at the heart of the problem. The leadership shown by Desso and Eneco and the other signatories warms my cold heart.”
The organizers set a target to have a memorandum of understanding (MOU) for the initiative completed by February 2014, but finalized the MOU with Althelia October 31. The MOU specifies that the companies intend to invest in REDD projects, with due diligence recently completed on a few projects and the first project likely located in either Ethiopia or Indonesia, according to current thinking. The investment will be made within a year and the first credits could be available in 2015 or earlier. The initial investment is not yet set in stone, but likely around $700,000 or more.
“Some of the leading corporates have gotten behind this and there’s room for a lot more participation going forward,” del Valle said. “The convening power of government, in between these COPs, has got to mobilize. We’d like to see Platform BEE REDD+ Initiatives across the EU.”
The companies would also like to use the initiative to engage and influence discussions with the government on ways that policy can be more supportive of REDD+ projects such as, for example, offsetting travel-related emissions through REDD+ rather than restricting offsetting to Gold Standard or CDM-equivalent offsets. “It’s interesting to see how a public-private partnership can work that way,” said den Besten.
One of the advantages of joining the coalition is that the companies can take risks and learn lessons about REDD+ collectively, he said.
“I think working as a group made it possible for the companies to come out of that zone of being careful and not knowing exactly how to test the waters,” he said. “The companies are ready to step out and do something new. Because it is a group, you feel stronger to do something out of the normal.”