Green Bonds in the REDD?

Could REDD+ poison the green economy process? Standards are needed to finance productive investments. Photo: Tim Cronin/Center for International Forestry Research (CIFOR).

Could REDD+ poison the green economy process? Standards are needed to finance productive investments. Photo: Tim Cronin/Center for International Forestry Research (CIFOR).

Red and green go together on holly bushes and apple trees and but do they go together in finance?

Today at the Forests Asia Summit, a panel discussed the implications and practicalities of a report from the United Nations Environment Programme’s International Resource Panel on the links between REDD+ and the green economy.

The session assumed that reducing deforestation and conserving forests for the sake of climate change mitigation is critical for equitable and sustainable development. On the surface, that assumption seems obvious — people rely on trees, forests provide critical ecosystem services and, as a natural resource-based sector, forests have the potential to be green.

Evergreen Yew trees, however, have bright red berries that are lush and beautiful… and deadly poisonous. Is there a risk that REDD+ will poison the green economy process?

Mark Burrows from Credit Suisse is speaking out to ensure that REDD+ financing risks don’t diminish the green economy.

Introducing the concept of green bonds, Burrows noted that the finance sector can support REDD+ investments that are truly equitable and sustainable. However, he cautioned that ‘Green bonds need to help, not hinder the process’. There is a risk that, without standards, green bonds will incentivize the wrong actions.

There isn’t just an environmental risk to poorly implemented financial tools for REDD+ investments. The financial sector still has a tendency to see green investments as high-risk. As such, independently assessed and verified standards are needed to finance productive investments in REDD+. This doesn’t just reduce environmental risk — it also, according to Burrows, allows us to ‘de-risk green’ for the financial sector.

As Burrows stated, ‘There is $22 trillion dollars out there looking for a home’. Standards, green bonds and REDD+ could launch the finance sector — and $30 billion of this homeless funding — into the green economy.

Jaime Webbe is moderating a youth roundtable discussion at the Forests Asia Summit on key topics relating to the Summit theme “Climate change and low emissions development on the ground”.

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