The Private Sector and REDD+ :
Trends, Challenges and Opportunities
Florence Bernard, Programme Associate, ASB Partnership for the Tropical Forest Margins
Tony La LaViña, Facilitator, Informal Group on REDD+ of LCA
Alfred Gichu, REDD+ Readiness Coordinator, Kenya Forest Service
Armin Sanhoevel, CEO, Allianz Climate Solutions GmbH
Jonathan Shopley, Managing Director, The CarbonNeutral Company
29TH NOVEMBER 2012
DOHA CLIMATE CHANGE CONFERENCE

The Private Sector and REDD+ :
Trends, Challenges and Opportunities
Florence Bernard
ASB Partnership for the Tropical Forest Margins
29TH NOVEMBER 2012
DOHA CLIMATE CHANGE CONFERENCE

Improving REDD+ outcomes by fostering
successful private sector engagement
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The REDD+ Supply Chain
Primary Distribution
production Processing and trading Consumption

INVESTMENT
Who Form of Intervention Motivation
Investment funds Direct investment with Re-sale for profit within
project developers voluntary or pre-compliance
Banks markets
Pre-buying carbon
credits through purchase Gain of experience in
agreement REDD+
Emissions-intensive Pre-buying carbon Voluntary credit offsetting
industries credits through purchase
agreement
Large multinational Grant Corporate Social
firms Responsibility (CSR)
Medium- to large- Direct investment Business for profit
sized carbon offset
private firms

PROJECT DEVELOPMENT AND IMPLEMENTATION
Who Form of Intervention Motivation
Medium to large-sized Development and • Niche of activities
carbon offset private implementation of • Business for profit
firms REDD+ projects
Large multinational Co-implementation of • Corporate Social
firms REDD+ projects Responsibility
(technical expertise and • Greening their image /
technological capacity) Branding

CARBON CREDIT TRADING AND RETAILING
Who Form of Intervention Motivation
Trading and retailing / Re-sale for higher prices in
Financial firms Intermediary between the future
investor and producer

CARBON CREDIT PURCHASING
Who Form of Intervention Motivation
Purchase agreement • Voluntary carbon
Emissions-intensive offsetting
industries • Pre-compliance
• CSR
Large multinational • Branding
firms

VALIDATION AND CERTIFICATION
Who Form of Intervention Motivation
Audit firms, Audit • Business for profit
Certification firms • Niche of activity

CAPACITY-BUILDING AND TECHNICAL ADVISORY
Who Form of Intervention Motivation
Technical expertise • Business for profit
regarding deforestation • Niche of activity
and degradation
Consulting firms mapping via remote
sensing analysis;
capacity building; law
advisory

Key findings
• Functions not mutually exclusive; a private sector actor
can wear several “hats” simultaneously
• Private sector involvement is critical for scaling up
investment in REDD+, fostering innovation in REDD+
and addressing drivers of deforestation.
• Top 3 motivations:
1. Re-sale of carbon credits,
2. Voluntary carbon offsetting or pre-compliance purposes,
3. Corporate Social Responsibility, Branding
• Emergence of a strong secondary forest carbon market
• Growing involvement of financial institutions

Challenges to Private Sector Involvement
1) Uncertainty on long-term and robust demand for
REDD+ credits
• Central role of UNFCCC to
ensure demand for
tradable REDD+ credits
2)Lack of a clear regulatory and policy framework
•Strong policy signal and policy clarity needed: national
REDD+ strategies, national emission targets, clearly
defined roles

Challenges to Private Sector Involvement
3) Unclear land tenure and Carbon
ownership systems
• FPIC with the communities, clear
Benefit Sharing Mechanisms
4) Lack of a Legal Basis for Private Investment
• Due diligence in the investment process
• Insurance and Risk-Sharing Mechanisms
• Appropriate Dispute Settlement Arrangements
5) Appropriate Social and Environmental Safeguards

Potential strategies to stimulate
private sector involvement in REDD+
• Enhancing investment though compliance
carbon markets
• New and emerging compliance markets : California and
South Korea’s cap-and-trade systems, Australia’s new
climate legislation and Japan’s Bilateral Offset Credit
Mechanism

Potential strategies to stimulate
private sector involvement in REDD+
• Crediting using a nested framework
• Direct issuance of performance-based payments to the
private sector
• Enables crediting of subnational projects independently
from the overall national performance
• Integrated, jurisdiction-wide accounting frameworks
within a country

Potential strategies to stimulate
private sector involvement in REDD+
• Engaging the Private Sector in National-Level
Strategies
• Involvement of sector actors
as both private drivers of
deforestation (e.g., timber,
mining), as well as potential
investors
• Shaping an overall policy framework that is
win-win-win for all parties

motivations and types of interventions?
• What are the current challenges for private sector engagement in REDD+?
• How can private sector engagement in REDD+ be enhanced?
Thank You !
In exploring these key areas, the research aims to increase the scope and scale of effective
private sector involvement in REDD+. The research concludes that while challenges exist,
private sector involvement can help bridge the financing gap between public sector
financing and developing country needs, as well as make vital contributions to REDD+
http://www.iisd.org/climate/land_use/redd/publications.aspx
initiatives by providing technical expertise.
http://www.asb.cgiar.org/homepage
Click on the corresponding cover below to download your copy:
The three-year initiative, Building REDD+ Policy Capacity for Developing Country
Negotiators and Land Managers, was delivered with the generous support of the
Norwegian Agency for Development Cooperation (Norad) as part of its Climate and
Forest Initiative civil society support program.