Private sector involvement with REDD+

IIED worked with partners to understand and document the scale of private sector engagement with REDD+, which aimed to reduce emissions and conserve forests in specific countries. This was achieved by developing a series of national-level case studies, research into opportunities for further private sector engagement and commitments towards zero-deforestation supply chains.

2012 - 2015
Duncan Macqueen

Director of forests, Natural Resources research group

Isilda Nhantumbo, Bright Sibale, and Duncan Macqueen exchange ideas at a Forest Governance Learning Group Learning Event in Mozambique. Photo: Leianne Rolington

Reducing emissions from deforestation and degradation (REDD+) aims to compensate countries that reduce emissions by reducing deforestation, as well as conserving, sustainably managing or enhancing forests, as a means of mitigating climate change.

REDD+ evolved rapidly in several countries supported through the Forest Carbon Partnership Facility (FCPF) and the United Nations REDD Program (UN-REDD). Many countries were still developing REDD+ readiness preparation plans, while others implemented their plans and developing their REDD+ strategies.

Alongside these national government-led processes, other institutions – including NGOs and the private sector – were involved in REDD+ implementation.

Private sector involvement

There has been ongoing debate about the extent and the timing of private-sector engagement in REDD+. Some maintain that early engagement is important to inform the design of REDD+ architecture at a global level and to test the robustness of the policy and legal systems for ‘investing’ in ecosystems services commodities, such as carbon. For example, our research has shown that carbon rights legislation is not yet ready for private sector REDD+.

But others believe that the issue of rights to land, forests and carbon need to be addressed before involving the private sector. This ensures that investment does not take place at the expense of the rights of local communities.

Issues such as free, prior and informed consent, the principle that a community has the right to give or withhold its consent to proposed projects that may affect the lands they customarily own, occupy or use, as well as properly designed benefit-sharing mechanisms, are key to establishing REDD+ projects that will benefit local forest-dependent people.

What did IIED do?

To inform this debate, IIED worked with partners to develop national-level case studies to document the various private sector initiatives being undertaken in specific countries at the time, with the project focused on Tanzania, the Democratic Republic of Congo and Mozambique.

Our analysis found important insights into innovative ways to secure private sector engagement in REDD+, but also indicated that legal vacuum prevailed. No country had clear legislation on what carbon rights are, why they should be bundled with land and forest rights, or the conditions/prerequisites for acquiring and transferring those rights to the private sector.

Nor does legislation ensure that private sector REDD+ helps local land users increase productivity and use forest resources more efficiently, thereby addressing the underlying drivers of land use and land use change.

Policy recommendations included a need to set out clear rules, rights, obligations and processes, and establish whether carbon rights and traded credits should be taxed, and if so by how much.

Following these national case studies, IIED focused further research on Tanzania and Mozambique, where opportunities for further private sector engagement had been identified. As in many countries, micro, small and medium-sized enterprises (MSMEs) in the domestic market are the obvious target for governments wanting to foster engagement with REDD+ strategies. In both countries, agriculture, logging and charcoal production are driving deforestation and forest degradation.

Policy recommendations included the need to look at existing legal frameworks, identify incentives and opportunities for promoting sustainable land uses – including land tenure rights and government land use policies to incentivise long-term investments in sustainable land uses.

The opportunity to attract more private sector financing has helped prompt reflections on needed reforms, particularly on the need to clarify who has the legal right to benefit from any financial value associated with forests and trees. Strategies to engage the private sector must also ensure that enterprises are providing environmental and social safeguards within REDD+ funded projects.

The private sector

Finally, this area of work looked at how the private sector is beginning to make commitments towards zero-deforestation supply chains, specifically cocoa. IIED investigated whether smart regulation – a complementary mix of government and voluntary private-sector policies – make cocoa and chocolate more sustainable.

Policy recommendations included a smart regulation approach, mixing policy instruments with government regulation, reviewing market and non-market incentives must be higher on policy agendas, integrated and complementary legislation for each commodity in the chain and better land use planning.

Ultimately, the private sector must take responsibility for implementing voluntary instruments and complying with legislation. Climate change resilient cocoa will be crucial to the bottom line for future business. Targets and progress towards zero deforestation supply chains for cocoa and chocolate should be made public and provide a learning opportunity for companies, local producers, consumers and governments.