Background
Ending tropical deforestation in the next seven years is essential to meet the goals of the Paris Agreement. Yet the global rate of tropical deforestation has remained stubbornly persistent at roughly 12 million hectares a year for decades, despite various international efforts to slow it. Tropical primary forest loss in 2021 resulted in 2.5 Gt of carbon dioxide emissions, equivalent to the annual fossil fuel emissions of India, the world’s third-largest emitter.
A growing body of research shows that the benefits of forest preservation extend beyond the carbon cycle to other environmental services outcomes. In fact, the non-carbon effects of forests are not only crucial to the fight against climate change, but also positively impact food and water security, public health, biodiversity, and the world’s ability to adapt to a warming planet.
Corporations increasingly seek to deliver on a range of nature-based sustainability commitments, acknowledging that to achieve global climate and conservation goals, they must also reverse nature loss. Private sector commitments have gradually changed to include sustainable forest management, conservation and restoration, and the removal of commodity-driven deforestation and tropical forest degradation from key supply chains. A prime example of companies driving this trend are consumer goods manufacturers (CGMs).
The Consumer Goods Forum’s “Forest Positive Coalition of Action” is comprised of CGMs that have not only pledged to leverage their buying power to end deforestation within the palm oil value chain, but also to move towards positive impacts on nature, linked to the scale of their sourcing of commodities.
Innovative Partnership
Lestari Capital designed the Rimba Collective for industry collaboration on complex sustainability issues. Through Rimba, companies positively impact natural capital within and without corporate supply chains. Rimba offers an efficient way to produce the outcomes needed to achieve change at scale. Companies acting alone do not achieve the same level of effectiveness or efficiency. The Rimba Collective’s current geographic focus is Indonesia, Malaysia, and Papua New Guinea. It aims to build out its project portfolio to a minimum of 500,000 hectares by 2026.
The Rimba Collective is a one-of-a-kind financing and project outcome delivery mechanism. Its sophisticated approach aggregates finance on the demand side and works through a portfolio approach on the supply side. Its model is simple, relying on engagement, predictable financial commitments, and verified delivery of claims. A built-in 10% loss allowance helps mitigate the inherent risks of conservation and restoration projects.
Launched in April 2021, the Rimba Collective’s initial investors are its founding partners, Nestle, PepsiCo, P&G, and Unilever. As more companies join, they will add to the ability to scale beyond the initial target of 500,000 hectares of forest conservation. Rimba’s investors commit to a long-term project financing timeframe. This steady financing stream will fund biodiversity and other important environmental services outcomes such as raising the standard of living of nearly 10,000 households.
Solution
The Rimba Collective’s growing portfolio is located within priority conservation landscapes. It supports numerous project typologies within and without value chains. All projects undergo rigorous legal, technical, and financial due diligence, and are independently monitored and verified annually for impact. The portfolio yields environmental services outcomes (ESOs) which accrue to investors according to their investment share. These include not only carbon reduction, but biodiversity and community benefits.
The ESOs are certified under independent verification standards such as The Climate, Community & Biodiversity Standard (CCBS), Verified Carbon Standard (VCS), and Plan Vivo. ESOs are tracked in a dedicated registry and retired on behalf of investors to meet their corporate sustainability commitments.
Companies face ever-increasing demands from consumers, governments, and regulators. Nature-based solutions are increasingly in focus. The Rimba Collective’s reporting is adaptable to stakeholder needs, evolving regulatory frameworks, and disclosure standards such as the EU Taxonomy and the EU Corporate Sustainability Reporting Directive (CSRD); the Convention on Biological Diversity’s COP15 Global Biodiversity Framework; Science Based Targets for Nature; and the Taskforce on Nature-Related Disclosures (TFND).
Expected Impact
The Rimba Collective is scalable, and its pipeline of projects is growing. As new companies join, the positive impact on climate, community, and biodiversity increases. The Rimba Collective currently targets putting $1bn to work over the next 30 years to protect and restore a minimum of 500,000 hectares of forest. It aims to positively impact the livelihoods of 32,000 people in rural communities in Southeast Asia; raise the living standards of 10,000 households; ensure that over 9,000 children get health, education, and clean water; and benefit 60 endangered and vulnerable species through habitat conservation and restoration. While Rimba has first been rolled out to the palm oil value chain, the model can easily be adapted to be fit for purpose for other industries (such as rubber, coffee, cocoa, and textiles) and across new geographies.
Sources
- https://vimeo.com/791894944
- https://research.wri.org/gfr/latest-analysis-deforestation-trends
- https://www.wri.org/research/not-just-carbon-capturing-benefits-forests-climate
- Interview with Michal Zrust (Chief Executive Officer at Lestari Capital), Lestari Capital