There are many reasons why forest-based mitigation should be interesting to the private sector generally and financial institutions specifically (for more information, please refer to REDDy Set Grow - Part 1).

However, in order to mobilise this private sector capital at the required scale, it is paramount that policymakers (i) offer avenues and formats for the private sector to invest and engage in the protection, rehabilitation and creation of forests; (ii) increase the financial competitiveness and attractiveness of forest-based climate mitigation investments and (iii) reduce the investment risks involved. While a global framework for forest protection, conservation and enhancement is now a top priority in the international climate change negotiations, there is no consensus yet that a framework agreed upon at this political level will (i) aim to involve and (ii) be effective in involving the private sector at scale and unlock the required volumes of investment and finance.

It is therefore essential that:

(i) Financial institutions fully understand the nature of the commercial opportunities, and potential investment avenues in the area of forest-based climate change mitigation; as well as the public mechanisms and risk-mitigation instruments available for such investments.

(ii) Policymakers, including in particular UNFCCC negotiators, understand the needs, priorities and views of private sector investors, lenders and insurers in relation to the specific characteristics of forest-based mitigation opportunities, so as to facilitate their involvement. Without such involvement, it seems likely, for reasons outlined in this report, that the effective implementation of forest-based climate change mitigation at the needed scale seriously risks remaining an idea rather than becoming a reality.

Improving the understanding, along these lines, of both stakeholder groups is the fundamental objective of the two parts of these UNEP Finance Initiative publications.