Financial leaders call for investor-friendly forest-carbon market
London, 6 May 2011 - Leading financial institutions upped the ante on their future role in mitigating climate change as they called for more effective forest-carbon regulations during a United Nations report launch in London Friday, just months ahead of an international climate change meeting to be held in South Africa.
Banking, insurance and investment representatives at the event welcomed the findings of the new study, REDDy - Set - Grow: Opportunities and roles of financial institutions in forest-carbon markets, which stresses that the financial sector must step up its engagement in the emerging green market, and makes the case for its improved regulation to facilitate this.
Offers of cooperation by financial representatives at the event to work with their national and international regulators mark a turning point in efforts to get the forest carbon market off the ground, only months ahead of United Nations Framework Convention on Climate Change (UNFCCC) climate change talks that will possibly lead to a new mechanism to reduce deforestation and forest degradation, known as REDD+.
"The market for forestry carbon has significant potential but will require concerted efforts in the design phase by policy-makers to ensure that it attracts flows of private capital. Because of the ability for sustainable forestry projects to deliver not just carbon but also biodiversity and community benefits, financial institutions stand ready to work with governments to help ensure the full potential is realised," said Abyd Karmali, Managing Director and Global Head of Carbon Markets at the Bank of America Merrill Lynch, during the press conference, which was held at the banks' European headquarters in London.
Governments successfully agreed in Cancun last December to making REDD+ a core component of the next global regime on climate change. To date, this has been carried forward by UNEP, the UN Development Programme and the Food and Agricultural Organization, with parallel and supportive work by the World Bank. However, the question of how this global mechanism will be implemented and financed remains unresolved, and will be a critical subject of future UN climate convention negotiations - including upcoming talks in Durban, South Africa.
The commitment of the private sector and financial institutions toward the implementation of REDD+ is crucial, the UNEP Finance Initiative (UNEP FI) study says, since the overall investment needed for implementation of REDD+ activities appears to exceed public capabilities and will thus largely hinge on action from the private sector.