Promoting Private Sector Investments in Sustainable Forestry

Promoting Private Sector Investments in Sustainable

Forestry

Expert Workshop on Financial and

Institutional Innovation for Reducing

the Risks of Private Sector Investments

in Sustainable Forestry

Workshop Report

Solsona, 21‐22 April 2016

1

Content:ExpertWorkshoponFinancialandInstitutionalInnovationforReducingtheRisksofPrivateSectorInvestmentsinSustainableForestry

Glossary ......................................................................................................................................... 2

Introduction .................................................................................................................................. 3

Background ................................................................................................................................... 4

Report on the first day of the workshop ....................................................................................... 5

Session I: Inauguration .............................................................................................................. 5

Session II: Sharing good practices and case studies .................................................................. 8

Investor level perspectives ........................................................................................................ 8

Project level perspectives ........................................................................................................ 12

Session III: Group Work on identifying gaps and defining innovation needs .......................... 17

Summary of discussions Group 1: Investors and Bankers ................................................... 18

Summary of discussions Group 2: Project Developers and Forest Communities ................ 19

Working Groups Reports and plenary discussion: ............................................................... 20

Report on the second day of the workshop ................................................................................ 21

Session IV: Institutional mechanisms including partnerships and alliances ............................ 21

Session IV (2nd part): Enabling environment for risk mitigation and management ................ 27

Session V: Way Forward – Roadmap for an effective community of practice ........................ 29

Final considerations ............................................................................................................. 32

Annexes ....................................................................................................................................... 33

Annex I. Detailed program ....................................................................................................... 33

Annex II. List of Participants .................................................................................................... 35

2

Glossary

AFD/FFEM Agence Française de Développement ‐ Fonds Français pour l’Environnement Mondial

AfDB African Development Bank

AGF Advisory Group on Finance

AsDB Asian Development Bank

CAF Latin American Development Bank

CBA Cost‐Benefit Analysis

CFS Committee on World Food Security

CFS‐RAI CFS Principles for Responsible Investment in Agriculture and Food Systems

CIFOR Centre for International Forest Research

CPF Collaborative Partnership for Forests

CSR Corporate Social Responsibility

EFI European Forest Institute

ESG Environmental, social, and governance

FAO Food and Agriculture Organization of the United Nations

FAST Finance Alliance for Sustainable Trade

FDI Foreign direct investment

FFFs FAST Financial Affairs

FLR Forest and Landscape Restoration

FSC Forest Stewardship Council

FSPs Financial Service Providers

GEF Global Environment Facility

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

GM‐UNCCD Global Mechanism ‐ United Nations Convention to Combat Desertification

HNWI High Net Worth Individuals

IWC International Woodland Company

LDN Land Degradation Neutrality

MIGA Multilateral Investment Guarantee Agency

MRV Monitoring, reporting and verification

NGO Non‐Governmental Organisation

ODA Oversees Development Assistance

PPP Public Private Partnership

PROFOR Program on Forests

PwC PricewaterhouseCoopers

REDD+ Reducing Emissions from Deforestation and Forest Degradation

SFM Sustainable Forest Management

SIAs Sustainable Investors Associations

SMEs Small and medium‐sized enterprise

TIMO Timberland investment management organization

UNCCD United Nation Convention to Combat Desertification

UNCTAD United Nations Conference on Trade and Development

USAID United States Agency for International Development

WBCSD World Business Council for Sustainable Development

WWF World Wildlife Fund

3

Introduction

This report contains the proceedings of the Expert Workshop on

Financial and Institutional Innovation for Reducing the Risks of

Private Sector Investments in Sustainable Forestry, held during

21‐22 of April 2016 in Solsona, Spain. The two‐day Expert

Workshop was organized by FAO in collaboration with the Forest

Sciences Centre of Catalonia (CTFC) and other development

partners.

Key stakeholders from various fields including impact finance,

private banks, insurance, development banks, forest and

landscape enterprises, etc. had the opportunity to share

knowledge and experiences on existing and future potential

financial and institutional approaches to mitigate and manage

risks to promote investments in the forest sector. The gathering

of experts also provided an opportunity to establish a community

of practice for long‐term knowledge and experience sharing on

this topic, and to promote synergies for collaboration.

For the detailed list of participants of the workshop, please see

annex II.

The workshop brought together 26 participants from 14 different

countries. The first day of the workshop focused mainly on

presentations about good practices and lessons learned, ending

with a working‐group session where gaps and innovation needs

were discussed. The second day was dedicated to institutional

mechanisms including partnerships and alliances. A final session

took place on future proceedings, resulting in first elements of a

roadmap for an effective community of practice.

For the detailed program of the workshop, please see annex I.

The main objectives of the

workshop were:

i. Presenting,

benchmarking and

analysing the existing

financial and institutional

risk mitigation and

management strategies.

ii. Specifying (or stating,

clarifying) risk categories

and analysing potential

gaps with the above risk

mitigation and


iii. Defining

recommendations based

on lessons learned on how

to innovate for financial

and institutional risk

mitigation and


iv. Launching the process of

designing policy and

technical guidance on how

to effectively establish risk

mitigation and

management strategies‐

including developing an

outline of the publication

on this subject.

4

Background

This workshop was organized in the framework of the Food and

Agriculture Organization of the United Nations (FAO) led initiative

on “Financial and institutional risk mitigation and management

strategies”. This initiative stems from the lack of significant funding

for the forest sector in key areas of intervention such as forest

plantations, natural forest management, small and medium forest

enterprises, local and community forestry, and large‐scale forest

investment projects including REDD+, while private capital is

available for investments. Underlying efficient business models can

bring substantial financial returns to investors in all these activities,

but many traditional investors are still reluctant to invest.

One of the barriers to more private investments is the wide range of

(real and perceived) risks associated with forestry. Political, socio‐

economic, market, weather and climate risks are some of the reasons

why investors hesitate to invest in the sector. According to FAO and

GM‐UNCCD (2015) more than USD 300 billion are needed per year by

2030 to achieve the land degradation neutrality target (SDG 15.3) for

which the forestry sector will be a major contributor. However, in the

absence of suitable risk mitigation and management strategies, it will

be difficult to mobilize the scale of resources required.

While some risk mitigation and management strategies exist at the organizational level and at the

biophysical level (e.g. resistant and resilient tree species, mixed cropping systems, climate change

adaptation strategies), at the financial and institutional levels they are still underdeveloped. Much

less attention has been paid to the identification, development and application of these strategies.

Potential financial losses at stake in the forest sector are manifold: loss of capital (trees, soil, etc.,),

loss of revenues from wood and non‐wood forest product value chains, default payments, and

market and price fluctuations are some examples of risks that require mitigation. In this context,

some of the existing key risk mitigation approaches worth exploring include: credit guarantees and

credit enhancement, due diligence and assurance, portfolio diversification, private sector insurance

(political and commercial risks), public sector insurance (political risks), securitization as well as the

development of buy‐back agreements. Other important approaches for reducing financial risks

include related government policies (backed‐up by laws) and investment support services to private

stakeholders and partnerships or platforms for standardization of investment proposals. Further,

relevant examples from agriculture and other sectors could also serve as good entry points for

exploration and adaptation.

However, current information on existing as well as potential financial and institutional risk

mitigation and management strategies in forestry is limited. Lack of opportunities for sharing of

knowledge related to successful examples within and across nations is further constraining effective

expansion and adaptation of suitable strategies elsewhere. The goal of the proposed initiative, being

led by FAO and other development partners, is to specifically address this policy and knowledge

gap.

Objectives of the

initiative

i. Review, analyse and

identify potential

financial and institutional

risk mitigation and

management strategies

to scale up sustainable

private sector forestry

investments.

ii. Promote global,

regional and national

understanding/mainstre

aming of identified

innovative strategies.

iii. Drawing on the above

inputs, develop policy

and technical guidance

on financial and

institutional risk

mitigation and

management.

5

Reportonthefirstdayoftheworkshop

The first day of the workshop took place at CTFC’s headquarters and consisted of 4 inaugural

speeches, 9 expert presentations from 9 different organizations, and a work group discussion

among all participants. Expert presentations referred to good practices and lessons learned in

existing financial and institutional risk mitigation and management strategies, from investor

level and project level perspectives. The goal of the work group was to identify and analyse

potential gaps and define innovation needs.

The presentations were grouped in three sessions (I, II, and III) with lively interactions of the participants (questions, answers, and comments between the audience and the speakers). The list of countries, organizations, and contact information of the speakers can be found in Annex II.

SessionI:Inauguration

The session was opened by Mr. Denis Boglio,

Executive Director of CTFC, and Mrs. Thais

Juvenal, the Team Leader of Forest Economics

and Governance of FAO. Both welcomed the

participants and underlined the importance of

the subject for the future of sustainable

forestry.

What do we mean by sustainability? What

different activities are involved? With these

two open question, Mrs. Juvenal put emphasis

on the need to support countries and forest

industries with the overall goal of promoting

private sector forestry investments.

She also explained that FAO is engaged in supporting countries in order to help them achieve

their sustainable development goals and build forestry capacities. She also remarked that we

need to work while keeping development green and

sustainable.

From FAO, there were two presentations in the inaugural

session. First, by Mr. Rao Matta, Forest Financing Officer,

and the second by Mr. Ludwig Liagre, Forest and

Landscape Finance Specialist.

1. Mr. Denis Boglio and Mrs. Thais Juvenal in the Inauguration Session

“We need to be able to

support the dialogue

with the private sector”,

Mrs. Thais Juvenal

6

Objectivesandrationale,byMr.RaoMatta,FAO “Mobilizing Private Sector Forestry

Investments: Innovative Strategies for Risk

Reduction and Risk Management”, Mr.

Matta’s presentation started with putting

on the table the great paradox that

currently entails investing in forestry:

there is immense potential for investment

yet on the ground investments are scarce.

He talked about the growing importance

of investing in forest products and

services, in the context of climate change

and green development policies. “How can

we face these challenges and promote

better and bigger forestry investments? There are however new developments and new

possibilities. The political significance of forests also has increased. Mr. Matta also provided

examples of a FAO study demonstrating significant regional variation in forestry investments,

like Latin America where there is substantial investment, contrasting it with that of Africa, where

there has been less investment so far.

He then presented some of the major barriers to investments which include high risk and

uncertainty. One of the objective of this meeting ‐ he said ‐ is to bring out successful cases of

private sector investment and share this knowledge and continue to fill the information gap

among countries and key stakeholders. Presenting and analysing the existing risk mitigation and

management strategies is an initial step in that direction to promote a better understanding on

the major risk categories areas, including the gaps in the current strategies.

Expectedresultsandshortintroductiontothebackgroundpaper,byMr.LudwigLiagre,FAO Based on the “contribution forms” filled out by participants before the workshop, Mr. Ludwig

Liagre pointed out to the main work lines for the future, to be discussed:

Table 1 Work Lines to be discussed. By Mr. Liagre

Knowledge development and sharing capitalization

Products development Community of practice / Expertise hub

Acquire wide view of the different investments possible, address the emergency needs in the developing countries

Need to develop new products from the forest side. Elaborate

a good framework for the forest start‐ups and engage

private investors

Build a global roadmap or community of practice to exchange knowledge and increase communication

between involved stakeholders. Also at small scale, support

communication between forest exploitations/stakeholders in

the same region

2. Mr. Rao Matta and Mr. Ludwig Liagre during the Inaugural Session

7

Mr. Liagre also introduced the background document and ideas for a future technical paper (see

Annex III). He highlighted the need to develop a technical paper with a highly critical and analytic

point of view. “This document will be created through collaborative work, engaging also the

private sector and global institutions.”

Relating to emerging issues, Mr. Liagre encouraged the participants to think about how to

involve all stakeholders and increase the communication between them. The same way, he

explained the necessity of a common roadmap, and to build a community of practice for sharing

lessons learned, needs and challenges.

Comments:

“There are hundreds of pages

in Google talking about this

topic. It will be helpful to be as

open minded as possible to

select all the information

available. Years ago it was

easier to get in detail but now

it’s really difficult. How can we

address these problems? What

should be the communication

tools?”

“The aim of this Workshop

should be about financial

instruments and better

institutions practices to

minimize the investment risk

in the forestry sector. This is

really a big subject.”

“Which is the strategy? The

most important thing is to

have sustainable financial

tools to keep evolving. The

most important thing is to

brainstorm and look ahead.”

“We would like simplify the

complexity. We need to find

this communicative language

to help us work easily. This

should be a key focus of this

workshop. “

“We should mix the investors

and the project managers.”

“Publications are really

important, we’ll do our best

and try to help and address

communication mechanisms

to make our work available to

a wide public and keep

evolving. “

“Let’s suggest another kind of

communication initiatives”

“This technical paper will

attract investors (that’s why

we are here)”

“FAO is a traditional and

technical agency… Our

traditional products are

papers to motivate

discussions and to generate

dialogues and meetings and

communicate these

conclusions to governments.”

“The world is changing and

FAO is changing as well.

Nowadays, a technical paper

is not the aim, it is just to

support the development of

tools that could show the

feasibility of investments.”

“Let’s begin to design concrete

activities related to market

gaps.”

“I’m very keen to have simple

instructions to point people in

the right direction. “

“Give me a good reason to

invest! We have to talk about

important things. This is what

investors must know.”

“Investors want to meet

people, and later meet the

forest. This is the correct order

and the correct way of doing

the things.”

“Who are the real target

groups? Who must we

address these sessions to?

Investors are really investors

because they like taking

risks. We have the

communication challenge of

presenting forest‐related

risks to investors.”

8

SessionII:Sharinggoodpracticesandcasestudies

The aim of the Session II was to share good practices and case studies, either from investors’

or from projects’ level perspectives.

Investorlevelperspectives

Buildingpartialriskmechanisminsupportofthe20X20InitiativeandpartnerimpactfundsbyMr.OctavioCarrasquilla,LatinAmericanDevelopmentBank(CAF)

Mr. Carrasquilla started his speech by explaining the Forest Program, of the CAF? which main

objective is to strengthen the development of Forestry and Forest Conservation through the

implementation of green economy, so as to allow member countries to migrate to low‐carbon

and climate resilient economies with social inclusion. The program has CAF financing and the

support of other strategic partners, private enterprises, and governments. It is structured in five

components, one of which is Restoration and Recovery of Degraded Lands and Forests.

Initiative 20x20 is a country‐led effort to bring 20 million hectares of land in Latin America and

the Caribbean into restoration by 2020. This initiative is a good regional example of how to

enable a positive environment for private sector investments.

CAF is setting up a partial risk guarantee mechanism offering coverage of risks taken by private

equity impact funds engaged in the Regional Initiative 20x20. This is based on certifications

adopted for the projects, the Initiative 20x20 and the due diligence of CAF.

3Projects’ scheme of the partial risk guarantee mechanism. Source: Mr. Octavio Carrasquilla

9

FinancingmechanismforsmallscalecooperativesandCSRstrategyinforestinvestmentsinMorocco,byMariemDkhil,CreditAgricoleduMaroc(CAM)

Mrs. Dkhil talked about 2 different financing mechanisms:

‐ Financing through "Tamwil El Fellah", a finance company created by Crédit Agricole du

Maroc (CAM) in partnership with the Moroccan state. Tamwil El Fellah was created in

order to give access to finance for farmers who are excluded from traditional bank

financing because of collateral insufficiency. Thanks to a guarantee fund that partly

covers the risk, Tamwil El Fellah provides financing to small scale forestry cooperatives

that produce NTFP.

‐ Financing through CAM for forest cooperatives that have a contract with the Moroccan

High Commission for Waters and Forests to sustainably exploit forest resources. This

partnership between the bank and the public sector ensures:

o a sustainable use of the resource: extracted resource is controlled by the

Commission,

o and risk mitigation: mainly because the exploitation contract between the High

Commission and the cooperative is renewed only when overdue credits are

paid.

This partnership works as follows:

Table 2 Financial mechanism for forest cooperatives, by Mrs. Dkhil

Risk mitigation Resource sustainability Economic sustainability • Hypothecation of goods • Direct payment to the beneficiary (NFF, township, etc.) • Contract renewal is subject to the payment of overdue credits

• Endorsed by the HC through the tender / contract system

• Increased profitability: lower transaction costs (no intermediary), better control over sale prices • Improved governance for the cooperative

Portugalvs.Australia:thedifferenceinforestryriskmitigationstrategiesandkeytakeawaysfrominvestors’perspective,byCarlaWadewitz,BANIFInvestmentBank

Mrs. Wadewitz, from the BANIF Investment Bank, covered in her presentation different

approaches between Portugal and Australia in terms of forestry risk management practices and

key takeaways. She also talked about the key issues that private investors like to know before

taking any forestry or agro‐forestry investment decisions and also exposed the differences

between Portugal and Australia regarding this aspect.

10

4 Australia and Portugal have one thing in common: wildfires

The starting point was wildfires: one thing Portugal and Australia have in common. With regard

to the Investment Bank of Portugal, Mrs. Wadewitz explained that they tend to keep bridges

between Portugal and Australia in the forestry investments risk. They are trying to fight forest

fires, working hand in hand with forest communities, and associations. They have reduced the

number of fires significantly and keep analysing the potential risk of forestry fires.

Concerning the private investors’ rationale, Mrs. Wadewitz also raised the question if it was just

about fire protection, or if the numbers were the most important variable. She linked this idea

with an extensive list of at least 20 criteria (exs: landownership distribution, certification, agro‐

forestry diversity, financing conditions, existence of forestry communities & associations, etc.)

to be used as an integrated assessment methodology for the investment and sustainable

management of long term assets such as forestry or agro‐forestry.

As a final conclusion, Mrs. Wadewitz encouraged players like FAO and CTFC to help

national/local/regional private investors in some of the investment criteria, like:

‐ Web based database for private investors;

‐ Interaction with national governments on key issues (ex: land ownership) for worldwide

harmonization;

‐ Interaction with Project developers for sourcing pipeline;

‐ Interaction with Google/ESA for integration of satellite tools into the platform to help

investors minimize costs and have a clear idea of the investment.

Takethemoneyandrun;whentohandthemoneytoavoidtherun,byFrancescaNugnes,FinanceAllianceforSustainableTrade(FAST)

Mrs. Nugnes’ speech was divided in three arguments: (1) Increasing chances for investors to be reimbursed (2) A triangular financial product (3) The role of public money.

Reminding the importance of waiting for market prices to get better, and to provide a loan long

enough to enable the enterprise to freely negotiate the next harvest prices, Mrs. Nugnes also

reminded key questions:

‐ Investing own money, not borrowed down‐payment

‐ Being flexible

‐ Incorporating all dimensions of risk (social, environmental and financial)

‐ Diversifying the source of information

‐ Collecting, storing and analysing the Impact Investment data over time

‐ Attracting new investors

11

To reach the objective of mitigating risk, Mrs. Nugnes proposed a 3‐actor group: investor,

enterprise, certification agency / investor, enterprise, technician / investor, enterprise, buyer,

etc. Also the number 3 appeared on the recommendations: on the one‐hand, co‐invest: finding

partners and join forces will establish and increase dialogue between policymakers and private

investors. On the other hand, the presence of public money in the financial product facilitate

start‐up projects. And finally, she recommended face‐to‐face meetings by going on the field.

Finally, Mrs. Nugnes encouraged investors to assume all dimensions of risk to have also the

complete dimension of revenues.

Forestinvestmentrisks–perspectivesfromrecentprojects,byChrisKnight(PWC)

Mr. Knight, representing PwC as Assistant Director, Sustainability and Climate Change, talked

about how to reduce risks through the following points: 1) regional economic development

(RED); 2) better research; 3) focusing on revenues, returns and reduced costs of capital; 4)

retrospective processes; 5) resilient financial systems.

Mr. Knight explained that PwC and its clients are helping local communities to develop their

business models with small loans, and is also contributing to connect rural developers with

experts in order to make the projects work.

Furthermore, Mr. Knight highlighted the necessity to promote

realism: “We need to promote realism, to donors and investors,

and not expect to have big results after two years of funding. What

we can expect is to have cooperation and partnerships and

mobilisation in a certain local or regional area.” Another

important request was the need to educate investors and bring

them closer to technicians with knowledge as well as the actual

field reality.

The audience wondered how to connect these actors with business, and remarked that we must

focus on the foresters rather than on forest communities because business is not made for forest

communities but for foresters. Also the lack of communication between forest communities and

banks was highlighted: “Forest communities do not typically have the means to come to banks

asking for loans”. This lack of communication affects the public authorities: “The public authority

has no real idea of how investors are needed”, was also noted from the audience.

“There is some ignorance

in the finance sector on

forestry opportunities”,

Chris Knight

12

Projectlevelperspectives

Lessonslearntfromprojects’duediligenceandvaluation,byChristianHeld,UNIQUEForestInvestmentDivision

Mr. Held, from the international consulting firm UNIQUE – Forestry and land use, addressed

these questions in his contribution:

1. How to avoid / mitigate financial risks in forest investment projects?

2. How to balance quality of plantation management vs needs to expand planted areas in

the face of limited financial resources (site‐species‐market approach)?

3. How to create benefits from a management team combining forestry and financial

expertise?

He also brought good practices and case studies from the project level perspective, and talked

about the financial risks:

Related to technical and operational

management

Inherent to project design, frequently resulting

in downward spirals and "stranded" projects

External financial risks

Relating to technical and operational management risks, Mr. Held explained that these risks can

be addressed by smart approaches. On one hand, mitigating them through project design and

operation. On the other, through due diligence. The main factors affecting the internal rate of

return are timber and biological growth. Thus, "performance comes first" when designing and

implementing investment projects.

Mr. Held finally provided a table about rules for project level financial risk management:

“Risk mitigation involves

costs”, Christian Held

5 Lessons‐learned table, by Mr. Held

13

TheNicaforestReforestationPilotPrograminNicaragua(NRPP),byØyvindBerg,AcrossForest

Mr. Øyvind Berg brought the example of the Nicaforest Reforestation Pilot programme (NRPP)

in Nicaragua. This programme is managed by Across Forest AS, Nica Forestal S.A with the

assistance of the international forestry management group Brinkman & Associates. This project

will show investors the possibility of creating value by planting trees in deforested lands in

Nicaragua.

So, as Mr. Berg said, this is a reforestation programme but

also a long‐term investment. Nicaragua is the second

poorest nation in the region after Haiti. After decades of

political instability, the country has achieved a remarkable

economic turnaround and is now focusing on innovative

ways of reducing poverty. The objective of this programme

is directly related to the idea of creating value for rural

communities and helping these poor areas.

The Nicaforest Reforestation programme started as a pilot

activity, with a small plantation. Nowadays there are 9

clusters reforesting land at municipal level, overlapping 20 different forestry initiatives. The

project is FSC‐certified, has a Gold Standard in pipeline, a clear strategy to support planting up

to 20.000 ha. and has become a bankable project with an excellent Rol opportunity.

Mr. Berg showed the GPS techniques to identify the most valued areas combining reforestation

areas and good growth conditions. This, as Mr. Berg remarked, is an important issue to take into

account before starting a plantation activity.

Another highlighted point was the leasing of the lands. Mr. Berg told to the audience the

advantages of sharing benefits by using Benefit Agreements with landowners. This will make the

project achieve a higher impact. This way, landowners become investors too.

The main challenge for a reforestation program like this is that it represents a very long term

investment (20 years). Investors are not offered an exit at an earlier stage. For most investors

this is beyond their investment horizon. Therefore, in order to attract investors to forestry

investments, which always will be long term, one should develop a set of mechanism that early

investors are offered an exit after year 5‐7 when commercial thinning start generating cash, and

maybe another liquidity event and/or resale at year 12‐14 when the plantations are reaching

their break‐even. This again indicates that a plantation may be sold and resold many times over

its life span.

6 Key success factors for growth in plantation. Source: Ø. Berg

14

PlantationInvestmentsinAfrica:drivers,obstacles,gaps,casestudy,byPetriLehtonen(Indufor)

Mr. Lehtonen, from Indufor, showed the African panorama in terms of forestry investments. He

began the speech asking the following questions: “Why there are no investments in Africa

despite really good opportunities there? Anyway, the industrial wood has kept growing. Where

do these investments and funds in Africa come from?” He displayed detailed data to show the

problems related to forestry investments on this continent. He brought answers to the following

questions:

Why investors are not investing and financiers not funding plantation development (in Africa)?

‐ Local investors and financers are opportunistic

‐ Strategic investors are facing barriers to entry

‐ Financial investors have demanding investment criteria

‐ Development financing required to create enabling conditions

Major obstacles:

‐ Land tenure and Land use

‐ Industrial Infrastructure – Integration to value chain and markets

‐ Technology and Productivity

‐ Financing Gaps

Mr. Lehtonen provided two Take‐home Messages packages:

Take home message (1)

‐ Global megatrends, regional demand and diminishing natural forests call for

investments in forest plantations and wood processing industries in Africa.

‐ Forest plantations are an important vehicle to improve living standards create

employment and reduce poverty.

‐ Operating environments are rapidly improving in many African countries

‐ Stakeholders in forest investments have many reasons to follow Africa closely and take

actions.

Take‐home Messages (2)

The key question is to manage and mitigate the unique risks

‐ Commitment required on national and local level.

‐ Appropriate technology, scale and logistics in place.

‐ Develop secure market channels.

‐ Proof of good performance in Africa.

15

Innovationstocreditforlong‐terminvestment:theCIDREcaseinBolivia,byMr.NiclasBenni(FAO)

Mr. Benni talked about the CIDRE (Development Finance Institution) and its important role as a

risk mitigation tool across the forestry harvesting value chain. The CIDRE study is part of a

compilation of case studies on “Innovative Risk Management Strategies in Rural and Agricultural

Financial Markets” in Latin America.

CIDRE offers a wide range of lending services (credits and loans). He presented the “Credit for

forest plantations” which is a credit committed to finance the establishment, management and

use of a planted forest on the part of the smallholder. It is really important to evaluate,

certificate and acknowledge the ownership of the forest plantations and the continuous

evaluation of the entire project.

This is directly related to the technical assistance provided by CIDRE, which is one of the key

expertise of this entity. Mr. Benni remarked that CIDRE is the 3rd largest loan provider for rural

underdeveloped areas and they are still growing while trying new systems, for example in

Bolivia.

He also provided some key considerations to take into account:

‐ CIDRE’s expertise and international advantages in the forestry sector made it possible

for them to develop an effective alternative form of guarantee for smallholders, which

allowed it to mitigate the risks associated to lending higher amounts for longer terms in

rural context.

‐ The combined contribution of various elements (valuation and certification, technical

assistance, specific profile of credit officers...) made it possible to develop a highly

effective product that was adapted to smallholders’ requirements.

‐ The regulatory framework of the Bolivian financial sector was determinant for CIDRE’s

success in implementing its credit model, since it gave legal validity to alternative

options for guarantees.

Although nowadays CIDRE’s provision of credit to forest plantation is currently frozen due to

modifications in the overall financial regulatory framework, the hope is that its experience could

lead the way for similar innovations in other parts of the world.

Insuranceandothereconomicinstruments,byPhilCottle(PardusUnderwriting)

Mr. Cottle brought the insurance companies’ vision, representing PARDUS, a global forestry

insurance provider. Mr. Cottle made a point differentiating risks according to the perception.

For investors, he said, risk is high, but for forest managers risk seem to be lower. He highlighted

the need to bring over this different perspective to directly deal with the real risks. “All is about

perception”, he said.

16

His speech was also focused on the nature of timberland investment risk and he provided

relevant information related to the climate change and wildfire risks and trends: from

Dlugolecki, A. et al. (2009), the results of a 2009 study of unusual temperature events showed

that what was a historically 10‐year event, now occurs every 2,7 years; a 20‐year event occurs

every 4,3 years, and the return period for a 100‐year event has become of just 12,5 years.

Mr. Cottle finally provided some insurance observations to take in consideration:

‐ Little understood therefore ignored as a tool for investors.

‐ Risk is more about perception often than actual exposure.

‐ Perceived risk is high for investors and low for forest managers.

‐ Simple mechanism. Protects returns to the enterprise.

‐ Corporations may insure for share price.

‐ Investors may insure for market place advantage in addition to increasing risk being

experienced.

‐ Insurers have greater knowledge about risk severity and frequency than investors or

forest managers (consider natural hazard discount rates).

‐ When fires start (authorities protect life and property first before forests (Canberra Fire

2003).

‐ Tight budgets mean fire protection often limited.

He also presented the different types of risk coverage related to the forestry sector, and the

recent changes in the forestry insurance products. Among them, Mr. Cottle presented new

products developed by Pardus in 2015, Value@Risk.

With Value@Risk, forest is re‐evaluated based on: gross values

less expected salvage. Mr. Cottle defended the importance of

discussing and developing the Value at Risk table for the

timberland, as it may be modified for fire or wind effects.

“Which losses can you

afford?”, Phil Cottle

17

SessionIII:GroupWorkonidentifyinggapsanddefininginnovationneeds

Session III opened the stage for enhanced investments in forest and landscape restoration. Two

groups were formed in order to discuss guidelines for reaching future goals commonly. The aim

was to take into account different points of view and perspectives: (1) Investors/Bankers

(stakeholders with large financing capacities), and (2) Project developer/Forest communities

(stakeholders who need financing)

They were asked to review the following issues:

- Risks and challenges: Barriers, constraints, costs.

- Gaps: Understanding/knowledge, data, tools, communications, governance, policies.

- Priorities for change: Actions, solutions, innovations, reforms, etc.

7 Participants were invited to form two groups for the discussion. Source: Ludwig Liagre

Group 1

Group 2

18

8 During the Work Group

SummaryofdiscussionsGroup1:InvestorsandBankers

“There is a lack of quality

projects, certified projects

and also more types of

certification”

“How can we find business

cases? There aren’t”

“We need a whole

extensive service, facility

“Is forestry too much

fragmented? Processes

can help to aggregate”

“We need to find a way to

go over the gap between

formal and informal

governance”

“What’s happening inside

and outside projects?

Take care on ethical

issues”

“Financers don’t know

about forestry (or maybe

they’re not willing to)”

“There’s a need to

improve the

understanding of

business plan and models

of forestry”

“There’s the need to

increase competiveness of

forestry projects”

“We should improve

communication between

forest owners, project

managers, financers and

authorities”

“Could be good

improving technical

capacity on the ground,

skills, and operational

know‐how”

“There is a gap of

knowledge in relation to

better engage in

discussions”

“We need a source of

project developers, and to

educate them" “There is a lack of

institutions that give you

everything you need”

“Could be good

disseminating good

practices”

“There’s a lot to learn

from agricultural finance

models”

“We need to exploit the

informal expertise,

learning from them”

“Could be good using

opportunities created by

climate change”

“There is a legal

framework, but

institutions don’t

implement it”

“We need an integrated

value chain”

19

SummaryofdiscussionsGroup2:ProjectDevelopersandForestCommunities

“There are difficulties to

find financial assistance

to agroforestry, not

related to direct food

plantations”

“If you’re an individual

you’re not eligible” “A project developer has

to be sure about the

market possibilities”

“It is not good finding

investors or pushing a

project without knowing

what would happen”

“If there’s a production

ongoing, it’s easier to

have support. But if you

want to start from the

beginning… There are no

real professionals to do

business with”

“There’s something more

than establishing the

production. You have to

ensure the entire supply

chain”

“A product must have a

value chain” “What we can do is to

continue supporting the

process if there’s only

one gap in the value

chain (even if it’s a good

or bad chain) and try to

solve it and wait for the

next generation to solve

the further one”

“A good point to start is

finding old capital, local

business leaders who

have forests and are

investing by itself. We

need to push them” “It’s impossible to export

high productive

methodologies from one

region to another unless

you’ll be able to export

all the actors”

“Probably we’re in a good

moment because

investors have gained

experience by passed bad

experiences”

“Information is crucial and

must be totally publicly

opened”

“More open access to

data will help create

approximations between

actors”

“There are areas where

there are products

ongoing on the agro

sector, but not in the

forestry sector”

“The forests are public,

and there is really market

and commercial options

but nobody does

anything”

“Sectors which are

developing are the ones

politically driven”

“There are no barriers to

keep growing”

20

WorkingGroupsReportsandplenarydiscussion:

Many issues emerged from the discussion of the participants during this last session.

Summarizing, main important were:

Building integrated value chains

Addressing knowledge and communication gap

Building a good pipeline of bankable projects

Creating an enabling environment

Establishing a community of practice

Concerning the lack of quality projects, according to participants, this could be solved by creating

more types of certifications. A better training of projects managers is also important, along with

the dissemination of good practices, even if it is complicated to export them to other countries.

All these issues included financial capability and a good governance which could overcome

ethical issues such as bribery, corruption and lack of transparency.

To solve the problem of fragmentation (many and small projects), participants proposed to take

into account lessons learned from agriculture extensions. Connecting buyers with sellers, an

integrated value chain through a holistic approach, and bridging the gaps between informal and

formal sectors, are the main priorities highlighted.

Relating to the knowledge gaps, all agree it is very connected with the communication gap

between forest owners, projects managers, financers, and authorities. It is necessary to

share/have information, such as data, tools, and contextualization, available between all

involved actors. Also, it is clear there should be an institutional development: infrastructure,

partnerships, public policy support, policies and legal frameworks, and enforcement. Industrial

organizations have also been named as part of this knowledge gaps.

Among others, the need to increase competiveness of forestry projects has been highlighted, to

solve the lack of awareness, and improve the operational “know how”, that is to say, the

technical capacity on the ground.

9 Participants wrote down their comments on a flipchart paper

21

Reportontheseconddayoftheworkshop

The second day of the workshop also took place at CTFC’s headquarters and involved two

sessions. Session IV consisted of 6 expert presentations from 5 different organizations, and

session V was dedicated to identify the way forward. Finally, there were the closing remarks,

facilitated by Mr. Denis Boglio, General Director of CTFC, and Mrs. Meritxell Serret, Regional

Minister of Agriculture of Catalonia.

Expert presentations referred to institutional mechanisms including partnerships and alliances,

and how to enable environment for risk mitigation and management. The session dedicated to

the way forward aimed at drawing a roadmap for an effective community of practice.

SessionIV:Institutionalmechanismsincludingpartnershipsandalliances

PublicPrivatePartnership(PPP)projectsasariskmitigationtoolforprivateinvestmentsinforests:ExperiencesandlessonsfromtheGermanDevelopmentCooperation,byMr.JanBock(GIZ)

Mr. Jan Bock, from the International Forest Policy Programme of GIZ, talked about PPP projects

as a risk mitigation tool for private investments in forests. Using the Sleeping Beauty as a

metaphor for sustainable forestry, Mr. Bock raised the issue of whether it could be also a long‐

term strategy.

Mr. Bock explained the basic idea of PPP, as the joint of development‐policy goals with the one’s

of private industry, in order to achieve greater development‐policy impacts through

cooperation. He remarked that PPP projects involve multiple stakeholders, and they are

interesting for their connection with the markets.

As an example, Mr. Bock presented the GIZ develoPPP.de

programme, through which GIZ has worked with over 1,000

companies during the past 20 years, from large corporations to

small enterprises. From 1999 to 2015, the programme has

developed more than 1.500 projects; 37,2% of those public and

62,8% private.

“It is not only timber production, there are a lot of other things too”, he said. Some examples

were reforestation, afforestation, agroforestry, non‐timber forest products (NTFP), and

forest/wood based industries, some of them based on certifications, yet in order to export a

product to Europe, protocols are needed. In addition, he defined PPP as success stories involving

capacity building. NTFP, seemed to be easier than timber since it doesn’t need processing nor

cutting trees.

“If we are not

connected to the

markets, there is a

problem”, Jan Bock

22

Therefore, Mr. Bock presented PPP as a mitigation tool for commercial and production risks,

market risks and for political and reputational risks, and as an adequate instrument to develop

business models and value chains.

For the way forward, he presented the following recommendations:

- Strengthen the involvement of the domestic private sector.

- Develop long term partnership in order to influence framework

conditions.

- Systematic integration into bilateral (forest sector) programmes:

governance reform and private sector cooperation.

Buildingallianceswiththeprivatesector:experienceofWBCSDbyMr.MikeMayfromWBCS,ForestSolutionsGroup

The WBCSD Forest Solutions Group (FSG) was presented by Mr. Mike May, who talked about

business solutions for a sustainable world. The FSG presents a global platform for strategic

collaboration across the forest products value chain. FSG aims to bring most of the world’s

forests under sustainable management, to expand markets for responsible forest products and

to ensure growth and vitality of forest resources today and for future generations.

As Mr. May explained, FSG publically reports progress about their sustainability performance in

accordance with internationally recognized practices and standards. “The objective is to be

involved in dialogues about the forestry environment and development. We need availability of

results to support financial activity”, he said.

10 Map of the value chain members of the WBCSD Forest Solutions Group. Source: Mike May

23

Mr. May also provided a structured overview of the flagship initiatives, which include:

1) Best practices for Sustainable Forest Management focused on the work with the forest

certification systems.

2) FSG actively collaborates with The Forest Dialogue, an independent platform and

process for multi‐stakeholder engagement.

3) Sustainable Value Chains & Procurement works with WRI on the Sustainable

Procurement Guide for wood and paper‐based products.

4) Values and Benefits of Forest Products demonstrate the wide range of solutions that

forests and forest products provide in particular in relation to climate change.

5) Key Performance Indicator Project hosts the annual reporting work of the FSG to the

membership principles.

6) Targeted communications and outreach is key to inform and connect with critical

audiences and influence policy frameworks through targeted communication and

outreach.

Their Key Performance Indicators are:

- Best practices for Sustainable Forest Management

- Collaboration with The Forest Dialogue

- Sustainable Value Chains & Procurement

- Values and Benefits of Forest Products

He also noted targeted communications and outreach as a key to inform and connect with

critical audiences and influence policy frameworks.

Thepartnershipbetweenforestryandagriculture:theprogressofPortugalintermsofforestryproductsdiversificationandriskmanagement,(Casestudy:FlorestaAtlânticaFund)byMrs.CarlaWadewitzfromBANIF

Mrs. Carla Wadewitz dwelled upon the progress in Portugal in terms of diversifying forestry

products (combining timber production with other products) and risk management (maximizing

the output of land opportunities for revenues, for example with NWFP).

24

Mrs. Wadewitz started her presentation with the major conclusions: Providing direction to

market conditions, country conditions, partnerships and risk management will allow a successful

investment.

Floresta Atlântica Fund was presented as a case study:

- Floresta Atlântica Fund (€20 Million) was launched in October 2007 and its main purpose

is to promote sustainable forestry development through the commitment of public‐

private initiative.

- Investment policy is based on product diversification. She emphasized the idea of being

smart in combining forestry and agro products (exs: nuts, berries, mushrooms, etc.) to

maximise IRR.

- It took into account sharing steps between the

forest management value chain and the

agricultural exploitation value chain.

- It includes multiple partnerships, among local

agents, local communities, local authorities,

certification entities and scientific community.

- It counts with Int’Graal‐WinForest, a modular

information management system that allows for an

efficient management of agricultural and forestry assets, optimizing operations and

maximizing the return from this sustainable investment.

- Regarding to the systemic risks analysis, the final evaluation of forest fire hazard is

through the integration of two key elements: fire history and potential propagation.

11 Major conclusions according to Ms. Wadewitz

“In the value chain,

agriculture and forestry

share steps. Collaboration

contributes to reducing

costs”, Ms. Wadewitz

25

LandDegradationNeutrality(LDN)FundProject,byMrs.CarolineBouquet(Mirova)

Mrs. Caroline Bouquet presented the Land

Degradation Neutrality (LDN) Fund Project, the 1st

large‐scale initiative dedicated to reaching LDN,

imagined by the United Nation Convention to

Combat Desertification (UNCCD). To achieve LDN,

large amounts of financial resources need to be mobilized, so it is crucial to attract private

investors in addition to public money.

The LDN fund was defined as different. On the one hand, this project intends to be a pilot of this

new investment territory, promoting land rehabilitation and sustainable land management. Still,

they want to promote what already exists and train to upscale these initiatives. On the other

hand, a partnership has been established with Mirova, the responsible investment management

company dedicated to structure the Fund.

Mirova is needed to assist and provide support to widely

diverse investors and institutions. They are currently

creating an investment framework and analysing a first

batch of potentially good projects.

Without geographical restrictions, they are currently looking for projects on the basis of the

following criteria:

1. Significant contribution to land restoration.

2. Project size with scalability/replicability potential

3. Financial profitability/ bankability

4. Project readiness (pilot‐project implemented, feasibility study already carried out)

DevelopmentBanksCoalitionforForests,byOctavioCarrasquilla(CAF)

Mr. Octavio Carrasquilla, representing CAF, talked about a potential future Forest Working

Group within the International Development Finance Club (IDFC). The speech was focused on

the description, internal organization and functions of this potential group. Mr. Carrasquilla

highlighted that its mission, in a long‐term perspective, is to address the challenges for

sustainability by investing in forestry. He also presented the 6 different IDFC working groups:

1) Climate change.

2) Sustainable Infrastructure.

3) Sustainable Urban Development,

4) Efficiency Energy.

5) Triangular cooperation.

6) Health.

7) Forests (not yet created / proposal from CAF)

LDN is a state where the amount

of healthy and productive land

resources remains at least stable

More than $300 billion per year

are needed to achieve land

degradation neutrality by 2030

26

The main objective of the Development Banks Forest Working Group would be the revitalisation

of the forest sector through strategic development banks partnerships and the exchange of

experiences, generation of synergies, economies of scale and efficiency of management in order

to better support forestry development.

The Specific Objectives for the Working Group that Mr. Carrasquilla shared were:

1) Exchange knowledge, experiences and lessons learned in financing forestry and forest

conservation.

2) Construction of joint mechanisms and market‐based instruments to change consumer

preferences and encourage green innovation financing and the forestry sector.

3) Generating a pattern of proposed schemes for forestry projects that integrate different

forest products and services to facilitate their financing.

4) Evaluation and systemization of good practices for environmental and social assessment

and monitoring of forest financial operations, including investment in skills

development and training.

5) Development of new financial products and mechanisms for reducing the financial risk

of developing the forestry sector, including support for the establishment of sound

regulatory frameworks and local economies with social inclusion.

27

SessionIV(2ndpart):Enablingenvironmentforriskmitigationandmanagement

Principlesforresponsibleinvestmentinagricultureandfoodsystems.CFS‐RAIandForestry–Introductiontoatoolforinvestment,byMr.MichaelRiggs(FAO)

Mr. Riggs talked about the CFS‐RAI principles

as an investment tool, since they could

enable a positive environment for risk

mitigation and management. He started his

presentation by emphasizing the importance

of attracting not just more investment, but

better investment.

These principles were developed and

endorsed by the United Nation’s Committee

on World Food Security (CFS) that uses a

multi‐stakeholder, inclusive approach to

develop and endorse policy

recommendations and guidance on a wide

range of food security and nutrition topics.

The objective of the CFS‐RAI principles is to

promote responsible investment in

agriculture and food systems, thus

contributing to food security and nutrition,

and also supporting the progressive

realization of the right to adequate food in

the context of national food security.

How do we make these principles useful? As

Mr. Riggs explained, “A key problem is finding

adequate assessment of investments in rural areas. We must address government, non‐

government and private sector actors, create partnerships and strengthen the enabling

environment for investment, share knowledge and build the capacity of institutions and

individuals so that effective processes are in place.”

For that reason, FAO is developing an Umbrella

Programme for CFS‐RAI, an overarching concept to

support all stakeholders in translating the CFS‐RAI

principles in concrete actions.

Several ongoing activities are being carried out,

including advocacy at international events, information

material, initial capacity assessments with key

stakeholders and the establishment of partnerships.

Principles for Responsible Investment

in Agriculture and Food Systems

1. Food Security and Nutrition

2. Economic development

3. Gender Equality

4. Engage and empower youth

5. Tenure of land, fisheries, forests,

water

6. Natural resources and climate

change

7. Cultural Heritage and Traditional

Knowledge

8. Safety and Health

9. Governance and Grievance

Mechanisms

10. Impacts and Accountability

“Investing in forests is an insurance policy for the

planet” 21 March2016 – the International Day of

Forests, UN Secretary‐General Ban

Ki‐moon

28

Greeninvestmentpromotion,byMrs.LuisaNenci(SustainValues)

Mrs. Luisa Nenci talked about the financial sector contribution to sustainability, as green finance

aims to address the financial challenges faced by sustainable development. Achieving profitability and sustainable development is possible through efficient markets, risk management and ethical

standards implementation. While an efficient market should guarantee the maximum comfort to the community through the fair allocation of resources, risk management refers to addressing adequately the consequences of human actions and ethics is concerned with ensuring fair treatment to all parties including future generations.

Mrs. Nenci drew‐up the state‐of‐the‐art on the issue by explaining the lack of common

definitions and data that is making difficult to provide a robust estimate of the current level of

climate‐friendly investments from institutional investors.

Furthermore, Nenci explained that there is a lot of untapped potential in terms of capital,

because the actual investments are well below the level of required climate‐friendly

investments. Investors are finding it difficult to find investments that are climate friendly and

also comply with their financial investment criteria, across all asset classes. Mostly is public

finance (central, state or local governments and their agencies) that continues to drive private

investment and grew steadily. Mainly came from development finance institutions which

provided 33% of total climate finance flows. Although, private investment remained the largest

source of global climate finance. While Institutional investors are generally increasingly investing

more in fixed income and alternatives, and less in equities.

Analysis find that the share of climate‐friendly investment in the portfolios of pension funds and

insurance companies is around 1‐2% for green, between 5‐10% for brown, and for high‐carbon

sectors around 20‐25%. However, as explained, there is a significant level of uncertainty tied to

these estimates.

Between the financial mechanisms presented, there are:

- Alternative finance (funds of funds)

- Forest bonds

- Network finance (the landscape fund)

- Demand Dividend Investment (Eleos Fundation)

- Supporting green securitisation

- Pooling of climate‐friendly assets (Kommunal invest)

- Small‐hold aggregation mechanism

- Community investments

- Venture Capital/Business Angels

- Crowdfunding

- Social and Environmental Credit Rating (SECR) system

29

SessionV:WayForward–Roadmapforaneffectivecommunityofpractice

On the basis of the areas of work that emerged during the Working Group sessions and with the

lively interaction of the participants, a roadmap began to take shape:

1‐ Build integrated value chains / Address fragmentation

Compiling and analysing success stories and good practices of value chain integration,

including aggregation, extension systems, out grower schemes, public private

partnerships, certification schemes, examples form the agriculture sector, etc. (target

group: project developers and forest communities/smallholders)

Product: Study on success stories and good practices for forest value chain

integration as a risk mitigation strategy

Developing a capacity development offer and trainings on value chain integration to

empower smallholders and project developers.

Product: A capacity development concept on value chain integration to empower

project developers and smallholders

In selected countries/value chains, supporting existing local and domestic

structures/organizations/institutions to foster value chain integration and reach scale.

Product: Tailor made advisory services to foster value chain integration and

scalability

Supporting strategic alliances for upscaling value chain integration good practices.

Product: Tailor made advisory services to support strategic alliances and partnerships

for value chain integration

30

2‐ Address knowledge and communication gaps

Developing knowledge on the forest sector’s specific risks and risks mitigation

mechanisms, especially on financial and institutional approaches.

Product: Database of financial and institutional innovation practices for risk

mitigation and management

Ensuring improved communication between value chain stakeholders to bridge

information gaps

Product: Communication channels enabling systemic information exchange

between VC stakeholders, for selected VC and countries

3‐ Build a good pipeline of bankable projects

Developing capacities of smallholders and project developers in designing bankable

projects (attractive to impact and institutional investors).

Product: Capacity development concept + Test Training

Supporting the design of bankable projects in selected countries and value chains.

Product: Bankable projects concepts to be made available in selected countries and

value chains

Compiling business cases and models (database of landscape‐based business

opportunities)

Product: Database of landscape business cases, detailing country and value chain

specific opportunities and responsible person for the project

4‐ Strengthen the enabling environment

Specifying the key success factors (KSF) for enhanced private investments in selected

countries and value chains (including on ESG, tenure, public policy and incentives issues,

etc.).

Product: Benchmark study of KSF for selected countries and value chains (including

on ESG, tenure, public policy and incentives issues, etc.) + Related policy briefs

Developing capacities on KSF for enhanced private sector investments

Product: A capacity development concept is available, targeting policy makers and

government officials + Test training

31

5‐ Establish a community of practice

Designing a community of practice for enhanced private sector engagement in

sustainable forestry

Product: A platform concept is available, specifying target groups, governance,

communication channels, expected outputs and products, etc.

Facilitating the community of practice (CoP)

Product: The CoP/platform is launched and facilitators have been identified in

order to ensure sustainability of the CoP, efficient and regular communication with

involved stakeholders

12 All the group outside of CTFC

32

Finalconsiderations

This report reflects several outcomes that emerged during the Expert Workshop on Reducing

Risks of Private Sector Investments in Sustainable Forestry. It became clear that discussions

focused primarily on promoting forestry investments, and especially on how to mitigate risks,

and what kind of financial and institutional measures are needed to mitigate them. There are

still more questions than answers to what can be done to reduce risks.

The Next Steps were drafted as a roadmap on the basis of the discussions during the Working

Groups: building integrated value chains, addressing knowledge and communication gaps,

building a good pipeline of bankable projects, creating an enabling environment and establishing

a community of practice.

The importance of collecting the results of previous projects was stressed, using the existing

experience to create in‐depth analysis, in an attractive way for future investors. There is also a

need to establish clear information sharing opportunities and guidance on useful financing tools

in order to reduce risks as much as possible.

Participants also concurred on the need to enable dynamic environments and to adopt

mechanisms to help fragmented businesses access better finance and market services in order

to reduce costs, and likewise, to build integrated value chains making use of existing local and

domestic structures.

Still, they all agree, on an optimistic note that the convergence of scenarios during the last two

years has gone in a good direction for enhanced investments in the forest sector.

During the Workshop, it also became very clear that the FAO plays a key role globally in

supporting the process and acting as an umbrella organization for the main initiatives. Potential

FAO role could involve particularly the following activities:

Work with interested partners on selected case studies to extract lessons learned;

Support community of practice on effective forest finance instruments and risk

mitigation approaches…;

Work with interested partners on finance for sustainable supply chains in countries

with potential demonstrative impact.

FAO and CTFC would like to thank once again all the participants for their excellent contributions

and continued support to this activity.

33

AnnexesAnnexI.Detailedprogram

Thursday, 21 April 2016

(Good practices, lessons learned, gaps and innovation needs)

08.30‐09.00 REGISTRATION

09.00‐10.30 SESSION I : Inauguration

09.00‐09.30 Welcome and opening statements by dignitaries FAO (Thais Juvenal), CTFC (Denis Boglio)

09.30‐10.15

Objectives and rationale

Expected results and short introduction to the background paper

Getting to know each other

Rao Matta, FAO

Ludwig Liagre, FAO

All participants

10.15‐10.45 COFFEE BREAK

10.45‐12.00 SESSION II: Sharing good practices and case studies (Investor level perspectives)

Facilitator: Thais Juvenal

10.45‐12.00

Building partial risk mechanism in support of the 20 X 20 Initiative and partner impact funds.

Financing mechanism for small scale cooperatives and CSR strategy in forest investments in Morocco

Portugal vs Australia: The difference in forestry risk mitigation strategies and key takeaways

Take the money and run; when to hand the money to avoid the run.

PWC (tbd)

Octavio Carrasquilla, Latin American Development Bank (CAF) Mariem Dkhil, Credit Agricole du Maroc (CAM) Carla Wadewitz, BANIF Investment Bank Francesca Nugnes, Finance Alliance for Sustainable Trade (FAST) Chris Knight

12.00‐13.00 LUNCH

13.00‐14.15 SESSION II (Contd.): Sharing good practices and case studies (Project level perspectives)

Chair: Rao Matta

13.00‐14.15

Lessons learnt form project due diligence and project valuation

The Nicaforest Reforestation Pilot Program in. Nicaragua (NRPP).

Plantation Investments in Africa: drivers, obstacles, gaps, case studies

Key barriers for investments in Forest and Landscape Restoration

Christian Held, Unique Forestry Oyvind Berg, Across Forest Petri Lehtonen, Indufor Ludwig Liagre, FAO

34

Insurance and other economic instruments Phil Cottle, Pardus Underwriting


14.30‐17.30 SESSION III: Group Work on Identifying gaps and defining innovation needs

Facilitators: From among the participants

14.30‐17.00 Group – I (Investors, bankers)

Group – II (Project developers, managers and technical service providers)

Facilitated GROUP exercise

17:00‐17:30 Working Group reports and plenary discussion

Friday, 22 April January 2016

(Institutional mechanisms including partnerships, alliances and roadmap for action)

09.15‐10.15 SESSION IV: Institutional mechanisms including partnerships and alliances

Facilitator: Ludwig Liagre

09.15‐10.15

Public Private Partnership Projects as risk mitigation tool for

private investments in forests: Experiences and lessons from the

German Development Cooperation

Building alliances with the private sector: experience of

WBCSDwith example of “the Forest Finance Toolkit”

The partnership between forestry and agriculture: the progress of

Portugal in terms of forestry products diversification and risk

management

Development Banks Coalition for Forests

Jan Bock, German Development

Cooperation (GIZ)

Mike May, WBCSD, Forest

Solutions Group

Carla Wadewitz, BANIF

Investment Bank

Octavio Carrasquilla, CAF


10.30‐11.30 SESSION IV: (Cond) Enabling environment for risk mitigation and management

10.30‐11.30

RAI Principles as an investment promotion tool

Green investment promotion

Michael Riggs

Luisa Nenci

11.30‐12.30 SESSION V: Way Forward‐ Roadmap for an effective community of practice

FAO, CTFC, WB and other Development Partners

11.30‐12.30

Next steps, roles and responsibilities

Development and dissemination of information including the forthcoming publication

Closing remarks

Plenary

Regional Ministry of agriculture of

Catalonia

12.30‐13.30 LUNCH BREAK AND DEPARTURES

35

AnnexII.ListofParticipants

Experts

Country Name Organization Position Contact details

Portugal Carla Wadewitz

Banif Investment Bank & Catolica Lisbon School of Business & Economics

Investment Manager & Professor

[email protected]

France Caroline Bouquet

LDN Fund Mirova Analyst caroline.bouquet‐[email protected]

United Kingdom

Chris Knight PwC Forestry and Ecosystems Leader

[email protected]

Deutschland Christian Held

UNIQUE forestry and land use GmbH

Head Timber Economics

christian.held@unique‐landuse.de

Canada Francesca Nugnes

FAST Financial markets and Information Manager

[email protected]

Spain Inazio Martinez

EFI ‐ EFIMED Head of Office [email protected]

Deutschland Jan Bock GIZ International Forest Policy Program (IWP)

[email protected]

Italy Ludwig Liagre

FAO FLR Mechanism

Forest & Landscape Finance Specialist

[email protected]

Italy Luisa Nenci Sustain Values CEO & founder [email protected]

Morocco Mariem Dkhil

Crédit Agricole du Maroc

Expert Financing Sustainable Development

[email protected]

Italy Michael Riggs

FAO Capacity Development Officer

[email protected]

Spain Mike May FuturaGene Vice President Public Affairs

[email protected]

Spain Narcís Ribes CTFC Forestry Policy [email protected]

Italy Niclas Benni FAO Rural Finance Consultant

[email protected]

Venezuela Octavio Carrasquilla

Latin American development bank (CAF)

Chief Executive [email protected]

Norway Øyvind Berg Across Forest CEO [email protected]

Lebanon Patricia SFEIR

SEEDS‐Int Rural Development Expert

patricia.sfeir@seeds‐int.org

Finland Petri Lehtonen

Indufor Deputy Managing Director

[email protected]

36

United Kingdom

Phil Cottle Pardus Underwriting

Head of Agriculture

[email protected]

Italy Rao Matta FAO‐FoA Forestry Officer [email protected]

Italy Thais Juvenal FAO‐ FoA Team Leader Forest Governance and Economics

[email protected]

Other participants

Country Name Organization Position Contact details

Spain Arnau Picó CTFC Projects Group [email protected]

Spain Carla Bellera CTFC Science Communication

[email protected]

Spain David Solano CTFC International Affairs Director

[email protected]

Spain Denis Boglio CTFC General Director [email protected]

Spain Meritxell Serret

Ministry of agriculture of Catalonia

Minister for agriculture of Catalonia

Promoting Private Sector Investments in Sustainable Forestry

Documents

Transcript of Promoting Private Sector Investments in Sustainable Forestry