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Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
Financing the World's Forests: integrating markets and stakeholders
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Financing the World's Forests: integrating markets and stakeholders

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First keynote speaker presentation 'Stepping up to Copenhagen - options for forests' by Andrew Mitchell (GCP) …

First keynote speaker presentation 'Stepping up to Copenhagen - options for forests' by Andrew Mitchell (GCP)

Imperial College - 3rd August 2009

Published in: Economy & Finance, Business
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  • So what’s driving deforestation? The simple answer is Exports & Consumption, for example: Brazilian beef represents 60% of the global volume, it is the world's biggest exporter 40% of these exports are to Europe (the UK is the fourth-largest customer) The Amazon region is responsible for 80% of the growth in Brazilian beef production But that’s not the end of the story. Soy often replaces beef after the land becomes less productive and cattle ranchers move further into the forest And guess what, the EU is also the largest import market for soybeans in the world Over on the other side of the world, Palm oil plantations are now the leading cause of rainforest destruction in Malaysia and Indonesia, again driven by global demand (UNEP 2007) For anyone who thinks they’re not very familiar with Palm oil, it is a vegetable oil found in 1 in 10 products on our supermarket shelves, including chocolate, sweets, bread, crisps, detergents and lipsticks. 84% of UK companies that import palm oil had done nothing to make sure their palm oil is not from a destructive source according to one survey in 2005 (FoE) ‘ CLICK’ So, as we can see emerging there, the Inconvenient Truth is, that it is partly us in Europe as investors, retailers and consumers in this supply chain who are underwriting deforestation
  • It’s not only about carbon, rainforests act as a utility supporting business One of the other services provided by forests is rainfall generation The Amazon for example stores 3 trillion tonnes of water It releases 20 billion tonnes of water vapour to the atmosphere daily So in this sense the Amazon is the biggest business supporting utility on the planet; in fact it is directly supporting $1 trillion of agribusiness, hydropower and industry in the Plata basin, which all share this Eco-dependency A number of models now predict significant decreases in this service level due to deforestation Compounding this, Hadley centre models have demonstrated that as temperature’s rise Brazil’s soya exports could slump by more than a quarter over the next 12 years due to climate change http://www.ft.com/cms/s/0/62a5d5d0-670b-11dd-808f-0000779fd18c.html?nclick_check=1
  • Building on the success of the sustainability reporting frameworks established by the Carbon Disclosure Project and the Global Reporting Initiative, amongst others, and utilizing methodologies developed by Fauna and Flora International’s Natural Value Initiative and other relevant projects, we aim to create a toolkit for assessing the impact of corporate sourcing policies on deforestation rates. This in turn will be used to produce a report which informs investors on the relative opportunity and risk of participating companies. I’ll just mention a few key milestones in our projected timeline The FFD questionnaire will be launched in May The first Global Forest Footprint Disclosure report will be published in Dec. 2009 providing the investment community with insight on forest related exposure within the food sector.
  • So why should Forests matter to Investors?
  • GCP sees Tropical Forests as ‘Eco-utilities’ or nature’s factories, providing critical ecosystem services that we all use but no one pays for. In this view they can present opportunity and risk to investors From an Opportunity perspective: 25% of terrestrial carbon is stored in the world’s tropical forests (Bonan, 2008) 1.2 billion tonnes of carbon are sequestered by tropical forests each year. This carbon capture and storage service could be valued at $35-89 billion according to two recent studies (Markandya et al, 2008; Denman et al, 2007) From a Risk perspective - Studies estimate that deforestation contributes between 18 and 25% of total global carbon emissions (FAO, 2005; Gullison et al., 2007). The UN and the EU are currently debating how to deal with these forest emissions If we include the value of all the ecosystem services forests provide the value maybe as high as $1.7-4 trillion according to The Economics of Ecosystems and Biodiversity study (Pavan Sukhdev, TEEB)
  • So, what will the Forest Footprint Disclosure Project do? It will be a global process to facilitate assessment of operational and consumption related forest footprints Thereby assisting the financial community: to understand the opportunities and risks associated with forest related value Promoting transparency: of the standards companies use to assess their impact on forests Increasing awareness: of the commodity-deforestation relationship Encouraging a better understanding: of the economic value of forest ecosystem services I nforming investor and consumer decision making Ultimately the initiative is designed so that investors can use this information to inform their interaction with companies. Those companies who have protected their brands by successfully managing their forest impact risk are likely to present the best prospects for sustained shareholder value in the longer term.
  • Building on the success of the sustainability reporting frameworks established by the Carbon Disclosure Project and the Global Reporting Initiative, amongst others, and utilizing methodologies developed by Fauna and Flora International’s Natural Value Initiative and other relevant projects, we aim to create a toolkit for assessing the impact of corporate sourcing policies on deforestation rates. This in turn will be used to produce a report which informs investors on the relative opportunity and risk of participating companies. I’ll just mention a few key milestones in our projected timeline The FFD questionnaire will be launched in May The first Global Forest Footprint Disclosure report will be published in Dec. 2009 providing the investment community with insight on forest related exposure within the food sector.
  • Transcript

    • 1. Financing the World’s Forests: Integrating Markets and Stakeholders Imperial College - 3 Aug 2009
    • 2. Stepping up to Copenhagen Options for Forests Financing the World’s Forests: Integrating Markets and Stakeholders - Imperial College - 3 Aug 2009 Andrew W. Mitchell Founder & Director Global Canopy Programme Research Associate Zoology Dept University of Oxford
    • 3. Core Areas <ul><li>science </li></ul>finance policy A Crisis of Values
    • 4.  
    • 5. “ There will be no solution to climate change, without a solution to deforestation” (Nobel Laureates Symposium, 2009) Aircraft Emissions = 2% Energy Emissions = 25 % Forest Emissions = 18% Forest emissions are equivalent to flying 12.5 million people from London to New York every day!
    • 6. SOURCE: Pathways to a Low Carbon Economy , McKinsey report, Feb 2009 20% of the Problem - 40% of the Solution
    • 7. Emerging Frameworks for Forests UNFCCC - CDM > REDD > 2012 EU ETS > 2013 US Market - Waxman-Markey Bill Australia/Others Voluntary Markets - CCX CBD - PINC? CBD - Green Development Mechanism
    • 8. CDM > REDD > REDD + > PINC ? (Pro-active Investment in Natural Capital) Tradable Currency = 1t/CO2 > 1 ha/forest? Figure 2: Three complementary and reinforcing mechanisms for conserving and restoring forest and mitigating and adapting to climate change
    • 9. Sources of $ US$ 17-33 Billion /yr International Auctioning (AAUs) National Auctioning of Allowances REDD Markets ODA Interim Financing Mechanism
    • 10. Interim Funding for REDD <ul><li>HRH Prince of Wales hosted historic meeting of world leaders in London alongside April’09 G20 </li></ul><ul><li>35 Countries </li></ul><ul><li>G8 Statement </li></ul><ul><li>Norway Wking Gp </li></ul><ul><li>Report mid Sept’09 </li></ul>Meeting at St James’s Palace, 1 April’09
    • 11. Timing of payments (IWGIFR)
    • 12. Fund flows Tropical Forests Facility Rainforest Bond Rainforest Nations Direct Funding Private Investors Payments OECD Govts Guarantees/ Repayments Carbon Permit Auctions Special Levies (e.g. fuel) Earmarking Taxes World Bank Technical Support Issuer/ Advisor
    • 13. Business Drives Deforestation <ul><li>60% of globally traded beef is from Brazil </li></ul><ul><li>40% of exports are to Europe </li></ul><ul><li>80% of the growth in Brazilian beef production is in the Amazon </li></ul><ul><li>EU is also the world’s largest import market for soybeans </li></ul><ul><li>Palm oil plantations are driving deforestation in Malaysia and Indonesia </li></ul><ul><li>84% of UK companies importing palm oil have done little to ensure it is not from a destructive source </li></ul>Beyond Copenhagen?
    • 14. Emerging Earnings Risks - Reputational - Regulatory - Environmental
    • 15. “ Are we creating wealth that’s worth having?” Clinton Global Initiative, New York, October 2007
    • 16. Natural Capital & Financial Capital A Tale of Two Economies? Could Water become the new Oil?
    • 17. Valuing Forest as Global Eco-Utilities? <ul><li>+ 80% </li></ul>
    • 18.  
    • 19. Utility to Business <ul><li>The Amazon </li></ul><ul><li>3 trillion tonnes of water stored </li></ul><ul><li>20 billion tonnes of water vapour transferred daily </li></ul><ul><li>$1 trillion of industry share this eco-dependency </li></ul><ul><li>Deforestation means declining service provision </li></ul><ul><li>Rising temperatures will compound the effects </li></ul>The Amazon’s Rainfall Service
    • 20. Natural Capital - A New Asset Class?
    • 21. Don’t Bank on Copenhagen Forests - Natural CCS we can’t afford to do without…. GDP > Gross Destructive Potential! TEEB - will drive recognition of Natural Capital values.
    • 22. www.globalcanopy.org www.littlereddbook.org www.forestdisclosure.org
    • 23.  
    • 24. Why should Forests matter to Investors?
    • 25. Forests are ‘Eco-utilities’ of immense value <ul><li>Opportunity </li></ul><ul><li>45% of terrestrial carbon is stored in the world’s forests </li></ul><ul><li>1.2 billion tonnes of carbon sequestered worth $35-89 billion per year. </li></ul><ul><li>Underpin Food, Energy and Health security globally. </li></ul><ul><li>Risk </li></ul><ul><li>18-25% of total global carbon emissions from deforestation </li></ul><ul><li>$1.7-4 trillion annual cost of forest ecosystem service loss </li></ul><ul><li>Poltical and Regulatory famework likely to change fast </li></ul>
    • 26. “ Are we creating wealth that’s worth having?” Clinton Global Initiative, New York, October 2007
    • 27. Forest Footprint Disclosure <ul><li>A ‘Toolkit’ to enable business to report on operational and consumption related impacts on deforestation </li></ul><ul><li>Direct and indirect </li></ul><ul><li>Available to the financial community to i nform investor decision making </li></ul><ul><li>Promoting transparency and awareness </li></ul><ul><li>Preparing for future risks and opportunities </li></ul><ul><li>Ministerial launch 15th June </li></ul><ul><li>1st Report - January 2010 </li></ul>
    • 28. We can’t do this without you! We cant’ afford to wait!

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