current context & solutions forest conservation
New standards needed for Voluntary Carbon Offset market to address fragmentation
Voluntary Carbon Markets Integrity (VCMI) initiative (corporate programs)
Integrity Council for the Voluntary Carbon Market (ICVCM) (quality of carbon offsets)
perceived low performance, transparency and integrity put many projects under pressure for
Opportunity to promote high quality long-range projects and aggregation for investment and support from financial institutions and Governments
Environmental and social benefits usually have no market value. Evaluated strictly in terms of financial gains, most restoration projects generate returns that are too low to attract private investors.
Incentives to degrade land outweigh incentives to restore it. Agricultural subsidies and poor enforcement of laws banning illegal logging encourage harmful practices.
Land restoration is essential to mitigate climate change, yet climate finance is difficult to access. Transaction costs and bureaucracy make it time-consuming and costly for governments and other stakeholders in developing countries to access these funds.
Funding for restoration is sometimes limited to small environmental budgets. Lack of awareness and coordination among ministries of environment, agriculture, and other sectors means that restoration projects tend to be underfunded.
Many restoration projects are too small to be attractive to institutional investors. They may require only $1–10 million in capital, while institutional investors often look for minimum investment sizes of at least $50–100 million.
Many restoration projects have very long investment horizons of 10 to 20 years because restoration is a multiyear process. This long time frame significantly limits investor interest.
Restoration is considered risky as there is no investment track record, and countries where restoration is needed most may have governance and land tenure issues.
7 main barriers to investment
millennial challenges
Change has never been as fast, far reaching and radical, as what most of us are witnessing at the beginning of this new millennium. Interrelated mega-challenges include an acceleration of advances in information technology - resulting in the disruption of markets, expectations and behaviour - globalisation, north-south shift of economic power and influence, regional conflicts, increasing water scarcity in most places, and impacts of climate change and response measures, to just name a few.
These mega-challenges can easily be perceived as overwhelming, and are even further compounded by struggling economies, low growth and a challenged financial sector.
making sense of it all
These interrelated mega trends increase both the challenge and the level of uncertainty. Confidence in investment opportunities and resulting returns are under pressure in most areas. Trust in Government and corporate governance is very low. While there is an ever increasing need for advisory, perceived usefulness and return on investment of services provided by the traditional players in the consulting and financial sectors are clearly under pressure.
what we se
Mega challenges are tough, yet they also need addressing and yield the opportunity for change and betterment. In fact, all significant growth markets stem from challenges and a proposition to address them.
cutting through the noise
Mega challenges are tough, yet they also need addressing and yield the opportunity for change and betterment. In fact, all significant growth markets stem from challenges and a proposition to address them.
Given the increasing wave of information, multiplying analysis and existing solutions is not going to be good enough. What is needed is experience and a sound and holistic understanding of markets and their mechanisms, and the ability to connect the dots.