Everyone’s a winner: The smart way of doing business

Lynsey Grosfield
9 June 2017
0 comments

What comes to mind when you think of forests? Green trees, tranquility, birdsong and babbling brooks? Perhaps not so much ravaged landscapes, parched riverbeds and destitute communities.

But every year forests are degraded and lost by an area about the size of Belgium. In fact, the total amount of degraded forest and other productive land in the world today is an area roughly the size of South America.

Forests already deliver countless benefits to a full 1.6 billion people – 25% of our planet’s population – and a multitude of benefits to the rest of us in terms of energy and water supply, and in the fight against climate change (to name but two).

In recognizing the need to safeguard all the benefits that forests bring to so many people, the global development community has set ambitious restoration goals. But just how much investment is needed to restore the planet’s degraded forests and other productive lands to meet these goals?

Take just the Bonn Challenge – to restore 370 million acres of degraded and deforested lands around the world would require USD 36 billion annually. Seems a lot at first glance? Not so much when we look at other budgets, such as the combined military spending of several OECD countries – a healthy USD 900 billion in 2016. Now imagine the benefits that just 5% of that military spending would reap for forests and vulnerable forest communities. Just imagine.

Additionally, according to recent estimates meeting the Bonn Challenge would generate a staggering USD 84 billion per year in net benefits and bring direct additional income opportunities for rural people. And that beyond those potential financial returns, restoration would lead to reduced migration and reduced conflict by improving livelihood opportunities and living conditions, thereby keeping people on the land.

Often support for development isn’t viewed from an economic or business perspective. But fortunately there are smart funders out there – impact investors. They understand there is a smart way of doing business that will bring a variety of returns to all parties. This means considering the three Ps – profit, people and planet – in their business models. This is called a ‘triple bottom line’. And in addition to making money, these investments strive to improve the livelihoods and standard of living of local communities while ensuring that the environment is not harmed, or even better, that environmental conditions are improved.

Take it to the farmer

Of course there are challenges around balancing the three Ps as it is clearly far more difficult to measure planet and people accounts in the same way as profit. But there are some private companies that appear to manage the triple bottom line approach well. Dean’s Beans Organic Coffee is a strong example of a company whose philosophy is deeply rooted in fair trade and sustainable ways of working. While delivering a top-notch product to clients, they also use their product for progressive change. Dean’s Beans have worked in many countries assisting farmers to obtain and maintain organic certification, which brings a price premium in the market as well as protecting and enhancing soil, water, worker health.

So working directly with the farmer or supplier – all the way from developing business models to developing organic crop technologies – and by paying farmers and suppliers premium prices that allow them to live sustainably, is all part of the triple bottom line, and the smart way to invest.

Now, if the funding is available and there are impact investors willing to engage, where are the investments? To target private sector investment, farmers and suppliers must build bankable projects backed by relevant business models. In many cases farmers or suppliers lack information and knowledge about financing opportunities, how to gain access to them and make the right connections. So the next question is – how do we fill that gap?

No greater investment

FAO’s Forest and Landscape Restoration Mechanism and partners hosted the inaugural Forest and Landscape Investment Forum (FLIF) in Kigali, Rwanda. The Forum acts as a marketplace bringing together farmers and producers, business champions and investors from Eastern Africa, as well as national and international cooperatives and agribusinesses, commercial banks, development banks, impact funds, and insurance companies from all over the world to promote a broad spectrum of investments in forests and landscapes, be it for environmental, social, economic or financial returns. Through this event FAO is filling a critical knowledge and communication gap, and beginning to break down some of the barriers to investment in forest and landscape restoration.

There really is no greater investment than that which we make in a healthy and prosperous collective future, and the triple bottom line approach to business will be ever more critical in development financing. Experience has shown that we can improve people’s lives and the planet while still making a profit – a triple win.

KEYWORD(S):

Leave a Reply

Leave a Reply

  • (not be published)