Forest Investor Club_2023 Annual Report.pdf

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• Through this work, we identified a number of barriers hindering greater investment in NbS. These are related to market readiness, investor capacity, pipeline development, commercial considerations, clear and consistent standards, methodologies, data and metrics and the broader enabling environment

• Executive Summary

• The U.S. Department of State formed the Forest Investor Club (FIC), a network of leading public and private financial institutions, companies and other investors in forests and nature, in November 2021 as part of its broader USD $9 billion commitment to conserve and restore forests and other natural ecosystems

• FIC and its members are committed to accelerating the deployment of capital into the protection, restoration and sustainable management of forests and nature

• FIC aims to address traditional barriers to scaling NbS investments in emerging and frontier markets in particular. To do so, it is facilitating new partnerships and collaboration among its members and with other partners, such as catalytic capital providers and companies

• FIC also identifies new potential investable opportunities, promotes pre-competitive knowledge sharing and solutions and showcases and amplifies innovative investment strategies, partnerships and best practices

• we aim to facilitate new partnerships and collaboration to improve risk-return profiles and other commercial considerations of NbS investments, identify new potential investable opportunities, build capacity and understanding on best practices for investment in nature markets and foster knowledge sharing by showcasing innovative investment strategies

• In assessing the landscape of initiatives with similar objectives to support greater NbS investment, we identified that 17 of 64 initiatives analyzed share four key characteristics – a focus on solutions to traditional investment barriers, new partnership facilitation, the development of a pipeline of investment opportunities and being multi-stakeholder in nature

• an estimated 55% of the world’s GDP depends moderately or highly on nature and ecosystem services broadly,2 while nearly a quarter of people around the world rely on forests for their subsistence needs, livelihoods, employment and income.

• Existing forests are home to roughly 80% of the world’s terrestrial biodiversity

• Wildlife populations globally decreased by 69% from 1970-2018 and may experience even more loss under a warming climate,

• All told investments in nature could generate over USD $3.6 trillion in annual business opportunities and 191 million jobs by 2030

• the forestry and logging market will grow by 6.3% annually to reach USD $438.5 billion by 2026.

• demand for primary processed wood products will increase by 37% between 2020 and 2050

• Some projections of the carbon credit market (both compliance and voluntary) estimate potential growth of 31% annually to reach USD $4.4 trillion in 2031.

• Total global investment in the world’s terrestrial and marine ecosystems amounted to an estimated USD $154 billion in 2022, representing 2.6% growth from 2021. Most of that growth came from the private sector – while private sector investment represented 17% of total nature investment in 2022, it experienced 9.9% growth from 2021,18 much of it driven by the growing carbon market

• It’s estimated that to realize the full potential of nature to limit climate change to below 1.5°C warming, halt biodiversity loss and achieve land degradation neutrality in necessary timeframes, total global investment into NbS would need to more than double by 2025 – to USD $384 billion per year – and rise to USD $484 billion per year by 2030.19 All in all, there is an estimated USD $11 trillion total financing need between 2022 and 2050 for NbS to meet ambitious climate change, biodiversity and land degradation targets

• FIC focuses its efforts specifically on scaling up investments in NbS in emerging and frontier markets. These markets are often home to some of the greatest sources of natural capital, yet face underinvestment and greater barriers to attracting additional private capital.

• Barriers hindering investment in nature-based solutions

• Markets