Over the past three years, there has been a shift towards more concern about environmentally and socially sustainable practices among major commodity companies. The New York Declaration on Forests brings many of these companies together, but important initiatives have also evolved on regional and national levels.
At the same time, finance institutions specialized in responsible investments successfully exerted shareholder pressure on companies to move towards greater sustainability.
But how can the finance sector actively support deforestation-free commodities?
This session will shed light on some critical, practical questions regarding successful engagement of key financial sector actors (especially private investors and banks) in the emerging market for deforestation-free commodities.
Topics to be discussed:
- The challenges involved in the shift to deforestation-free supply chains, according to parameters relevant to the financial sector: rates of return, counterparty profiles, investment periods and liquidity, deal size and volumes, investor risks (credit, market, policy), and transaction costs.
- The understanding of project specific financing needs (smallholder finance and related challenges such as aggregation) and the broader investability requirements (e.g. of institutional investors) necessary to achieve scale and reduce capital costs.
- The way financing works today and what systemic changes are needed to increase capital inflow into deforestation-free supply chains.
Based on existing – yet very limited – investment in deforestation-free supply chains, participants will jointly identify critical successes and failures to learn from.
The session will look at key differences in financing conditions between traditional and deforestation-free investments in the context of different commodities and regions.
Financing of sustainable cattle ranching in Para state, Brazil, will serve as a concrete case study examined at the session.
Key questions addressed:
- How can the financial sector be engaged at scale in the growing market for deforestation-free commodities?
- What are the requirements for making potential investment opportunities in deforestation-free supply chains bankable?
- What case studies illustrate the investment potential?
