Everyone’s a winner: the smart way of doing business

A woman holds a sapling that will be planted in a reforestation area in Tigray, Ethiopia. Photo by M. Edliadi/ CIFOR

By Douglas McGuire, Coordinator of the Forest and Landscapes Restoration Mechanism, FAO

Ravaged landscapes, parched riverbeds and destitute communities. These are maybe not the first images that come to mind when you think about forests. But every year forests are being degraded and lost by an area about the size of Belgium. In fact, the total amount of degraded forest and other potentially productive land in the world today is an area roughly the size of South America.

Forests already deliver countless benefits to a full 1.6 billion people — 25% of our planet’s population — and a multitude of benefits to the rest of us in terms of energy and water supply, and in the fight against climate change.

In recognizing the need to safeguard all the benefits that forests bring to so many people, the global development community has set ambitious restoration goals, since reinforced by Sustainable Development Goal 15 (life on land), among others. But how much investment is needed to restore the planet’s degraded forests and other productive lands to meet these targets?

Take the Bonn Challenge — to restore 350 million hectares of degraded and deforested lands around the world would require USD 36 billion annually.  Seems a lot at first glance? Not so much when we look at other budgets, such as military spending. The combined budget of several OECD countries was a staggering USD 900 billion in 2016. Now imagine the benefits that just 5% of that military spending would reap for forests and vulnerable forest communities.

Additionally, according to recent estimates, meeting the Bonn Challenge would generate an impressive USD 84 billion per year in net benefits and bring direct additional income opportunities for rural people. Beyond the potential financial returns, restoration would lead to reduced migration and reduced conflict by improving livelihood opportunities and living conditions, thereby keeping people on the land.

Often support for development isn’t viewed from an economic or business perspective. But fortunately there are smart funders out there: impact investors. They understand there is an intelligent way of doing business that will bring a variety of returns to all parties. This means considering the three Ps — profit, people and planet — in their business models, also known as a ‘triple bottom line.’ In addition to making money, these investments strive to improve the livelihoods and standard of living of local communities while ensuring that the environment is not harmed, or even better, that environmental conditions are improved.

So if the funding is available and there are impact investors willing to engage, where are the investments? To target private sector investment, farmers and suppliers must build bankable projects backed by relevant business models. In many cases farmers or suppliers lack information and knowledge about financing opportunities, how to gain access to them and make the right connections.  So the next question is: how do we fill that gap?

Take it to the farmer

Of course there are challenges around balancing the three Ps, as it is clearly far more difficult to measure planet and people accounts in the same way as profit. But there are some private companies that are able to deliver products while also delivering progressive change, managing the triple bottom line approach well.

So working directly with the farmer or supplier — all the way from developing business models to developing organic crop technologies — and by paying farmers and suppliers premium prices that allow them to live sustainably, is all part of the triple bottom line, and the smart way to invest.

No greater investment

FAO’s Forest and Landscape Restoration Mechanism recently organized, with partners, the inaugural Forest and Landscape Investment Forum (FLIF) in Kigali, Rwanda, in the context of both the Bonn Challenge and the African Forest Landscape Restoration Initiative (AFR100), which aims to restore 100 million hectares of deforested and degraded landscape in Africa by 2030. Setting the stage for future similar events, the forum focused on boosting investments needed to achieve these ambitious restoration goals across the region, and reinforce partnerships for increased engagement in forest and landscape restoration.

As a marketplace, the forum set the foundation for future investments by bringing together business champions and investors from Eastern Africa and beyond, as well as national and international cooperatives, commercial banks, development banks, impact funds, and insurance companies from all over the world. The event promoted a broad spectrum of investments in forests and landscapes, be it for environmental, social, economic or financial returns. Building on the success of the forum, FAO hopes to replicate it in other regions.

There really is no greater investment than that which we make in a healthy and prosperous collective future, and the triple bottom line approach to business will be ever more critical in development financing. Experience has shown that we can improve people’s lives and the planet while still making a profit: a triple win.