Last year’s United Nations Conference on Sustainable Development in Rio de Janeiro concluded under a cloud of ambiguity. Some organizations called it an outright failure while others deemed it a moderate success. However, one of the few rays of optimism came from Brazil, which recently decreased the rate of deforestation in the Amazon, a major cause of global warming, to the lowest levels since record-keeping began in 1988.
Deforestation’s role in catalyzing climate change was referenced in the conference’s resulting document, The Future We Want, which noted “the importance of ongoing initiatives such as reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.”
Reducing Emissions from Deforestation and Degradation, better known as REDD+, is a United Nations initiative using market and financial incentives to halt deforestation, which occurs at the rate of the area of one football field lost every few seconds and contributes more to global greenhouse gas emissions than all of the world’s cars, trucks and buses combined.
REDD+ strives to protect the array of ecosystem services forests provide, such as facilitating food, water and air production, minimizing storm damage and producing a wide range of natural medicines — in total valued at $33 trillion, or twice the U.S.’s annual GDP. With most of the world’s forests located in developing countries in Central and South America, Sub-Saharan Africa and Southeast Asia, corrupt government, war and poverty make it difficult to stop illegal deforestation in the form of unsanctioned logging, cattle ranching and subsistence land clearing. REDD+ projects attempt to preserve forests in the developing world by creating business incentives for companies and wealthy nations to invest and forested countries to benefit economically from stopping deforestation.
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In his new ebook, REDD+ and Business Sustainability: A Guide to Reversing Deforestation for Forward-Looking Companies, Brian McFarland discusses the escalating problem of tropical deforestation and how conservation projects such as REDD+ can both avert ecological crisis and contribute to business sustainability and profitability. He cites five practical ways for companies to get involved.
First, companies can develop their own REDD+ project. While this gives them more freedom in deciding what a project will accomplish and a higher potential return on investment, it requires covering a substantial amount of upfront cost and calls for a high understanding of carbon markets.
Alternatively, firms can donate to a nonprofit supporting an existing program. Giving money to charitable organizations fighting climate change such as the William and Flora Hewlett Foundation is an easy way to promote REDD+ without needing any specialized knowledge of carbon markets.
Businesses also can invest in companies developing their own projects. Providing financial backing to organizations actively engaged in REDD+, such as CarbonCo, Ecosystem Restoration Associates and Wildlife Works Carbon, can help protect forests without needing complex knowledge.
Another option is for organizations to directly invest in a specific REDD+ undertaking. Marriott International committed $2 million to the Juma Project, a large-scale REDD+ project in Brazil and plans to use the project to offset the emissions produced by its hotels and offices.
Lastly, McFarland suggests companies can invest in a pooled fund. Besides allowing diversification across projects and geography, pooled funds also reduce risk exposures. Currently the Terra Bella Carbon Fund, created and managed by Terra Global Capital, is seeking investments and the World Bank also has several funds, some of which provide project finance and technical assistance to REDD+ initiatives.
Participating in these projects benefits businesses by increasing customer loyalty, fostering goodwill in local communities, enhancing corporate social responsibility principles and providing unique marketing opportunities that can increase profits. Additionally, protecting forests safeguards the aforementioned ecosystem services, contributing to global prosperity.
The future of REDD+ is uncertain, McFarland says. The future demand and supply of REDD+ projects will depend on a number of factors, including whether more governments, including the U.S., develop cap-and-trade schemes or private businesses and investors get more involved. If financial innovations such as pooled funds continue to be developed, it could become easier and less risky for businesses to engage in payment for ecosystem service forest conservation projects like REDD+.
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@mikehower is a freelance writer interested in telling the stories of companies and organizations engaged in sustainability, clean technology and social entrepreneurship. He also blogs about sustainable business and politics at SustySavvy.com.