Livelihoods for nature

Green Business

The global environmental market is being driven by significant growth in Asia in terms of both value and share of global trade in environmental services and resources. The growth is led by Peoples Republic of China and the ASEAN region including increase in number of companies with ISO 14001 certifications in PRC, ASEAN countries and India. The region has also witnessed expansion of green revenues and exports and there is a trend of number of firms becoming more environmentally responsible including actively pursuing opportunities for green certification and participating in green business networks. This bodes very well for Asia and also creates opportunities for organisations such as IUCN that have already established partnerships with the private sector including through development of platforms. However, this is primarily driven by large corporations or companies that are part of supply chain of multinational companies, while a large proportion of the nationally focused small and medium enterprises continue in terms of their traditional approach of being resource intensive and contributing to environmental pollution. (Madhu Khurana, Growing Green Business Investments in Asia and the Pacific Trends and Opportunities, ADB Sustainable Development Working Paper Series, ADB 2020)

As per the ADB working paper authored by Ms Madhu Khurana, green businesses in Asia can be categorised into two: (i) environmental goods and services (EGS) and; (ii) greening of business that involves business adopting measures to change products and processes to improve environmental sustainability. The growth of green businesses is driven by a number of factors with some being consumer consciousness, regulatory pressures such as command-and-control regulations or market based instruments, availability of green finance and private sector investments in relevant R&D among others.

Increasingly there is a need to establish market based incentives for the growth of green businesses. The ones that are currently already quite developed are those related to consumer consciousness and the need for greening of supply chains. There is a need to deploy capital markets for leading on greening of businesses through rewarding green businesses that rely on traditional sources of capital through lower financing costs while penalising those that are not environmentally and socially responsible. The other role capital markets can play is of developing green financial instruments including standardised green bonds, green credit and green insurance that can address the long-term financing needs for transforming businesses to a greener/environmentally responsible pathway.

The other market based motivation is of establishing markets for environmental services focused on ecotourism, wetland mitigation banking and markets for biodiversity. This will help to internalise destruction of ecosystem services through products and schemes such as payments for ecosystem services, direct offsets and banking mechanisms. The growth of sustainable and ecotourism can generate funds that can be ploughed back into conservation of natural resources, supporting the livelihoods of indigenous peoples and local communities, support sustainable economic development, enhance foreign exchange inflows and provide green jobs. Ecotourism can generate funds for conservation of natural resources, economic development, foreign exchange inflows, and local employment. Similarly wetland mitigation banking which has been piloted in the US is an approach of financial institutions such as banks in conserving wetlands while offsetting or compensating for expected adverse impacts. The establishment of biodiversity markets provides another mechanism for internalising biodiversity impacts through payment for biodiversity management schemes, biodiversity offset schemes, among others. (Madhu Khurana, Growing Green Business Investments in Asia and the Pacific Trends and Opportunities, ADB Sustainable Development Working Paper Series, ADB 2020)

Sustainable Financing including Conservation Finance

As clearly referred to in a paper by Ms Sherry Madera together with London Stock Exchange, titled, ‘Charting the Future of Green Finance in Asia, sustainable financing has achieved considerable progress in 2020 and the relevant regulatory authorities across Asia have adopted measures to promote development of green finance. One such measure is the announcement by the Monetary Authority of Singapore (MAS) in March 2020 related to placing Singapore dollar 2bn to selected asset managers demonstrating commitment to deepen green finance activities. In addition, funds flow into environmental, social and governance (ESG) investments in Asia witnessed a considerable increase led by issuance of sustainable finance bonds and as per data from Refinitiv Lipper, assets under management for ESG funds in Asia were at USD60bn as of end-December 2020 doubling the amount for 2019. In addition, according to the Global Sustainable Investment Review 2020, in China ESG mutual funds have witnessed significant growth and also seen an increase in ESG products. A survey by China Social Investment Forum (SIF) found that 86% of investments will consider sustainable investment factors with more than half indicating environmental violation as being a key factor for influencing their investment decisions.  

There are considerable opportunities in terms of green bond issuance with the Bank of China in 2020 issuing Asia’s first blue bond. ASEAN region is a success story in terms of regional collaboration on sustainable finance with ASEAN Finance Ministers and Central Bank Governors in March 2021 announcing a number of measures to deepen sustainable finance. These include endorsing the ASEAN Sustainability Banking Principles, relevant regulators and capital market forums establishing an ASEAN taxonomy for sustainable finance and endorsement of the ASEAN Capital Markets Forum Action Plan 2021-2025 with all three objectives addressing sustainable finance.  (Accelerating Sustainable Finance Together Global Progress Report of the Sustainable Banking and Finance Network, Evidence of Policy Innovations and Market Actions across 43 Emerging Markets, October 2021).

However, there continues to remain challenges for enhancing green financing in developing countries of Asia including countries not having coherent policy frameworks and adequate resources for climate change mitigation and adaptation including by deploying nature based solutions. Some of the challenges identified by UNESCAP and GGGI in their publication titled, ‘Green and Climate Finance Options to Support the Post Covid -19 pandemic Recovery and Climate Action’ are: “(a) constrained fiscal space; (b) weak institutional capacities to implement NDCs, (c) policy and regulatory gaps; and (d) lack of investment-ready projects”. According to this report, due to the complexity of factors playing out in acting as barriers to green and climate finance, it is important to not just modify green and climate finance policies but also related business and investment policies for scaling up green and climate finance. It is important for countries to address the complicated links between regulatory, institutional and administrative hurdles to doing business.

A range of financing instruments and mechanisms have been identified by GGGI and UNESCAP for addressing risk sharing and risk mitigation including those related to, but not limited to: (i) project financing such as the ‘First Advanced Municipal Solid Waste to Energy Project in Vietnam; (ii) funds and facilities such as the establishment of the Mongolia Green Finance Corporation; (iii) thematic bonds such as the recent Fiji Sovereign green bond; (iv) carbon offset project; and: (v) debt for nature/climate swaps such as the Seychelles Debt Swap (Green and Climate Finance Options to Support the Post COVID-19 Pandemic Recovery and Climate Action, UNESCAP and GGGI, 2020).

There were some key recommendations that emerged from a jointly organised webinar with COSAI and SEARCA titled, ‘Asia Regional Dialogue on innovative financial mechanisms for sustainable agriculture agriculture’ in November 2021.  Some of the recommendations included the importance of recognising farmers as part of solution and not problem in terms of sustainability in agriculture and that recognising innovation can take place at all levels, the leadership role that farmers associations and cooperatives can play in designing financial mechanisms tailored to the local context with people and nature at their centre.

IUCN Asia’s primary focus on livelihoods for nature has been related to private sector engagement. The IUCN Asia region was the first region in IUCN to establish a business and biodiversity programme to coordinate the development and nurturing of business and biodiversity engagements across Asia.

PRIVATE SECTOR ENGAGEMENT

The private sector engagements have been developed around the three entry points of the BBP Global Strategy 2012 adopted by the IUCN Council.

Entry Point 1 Businesses adopt policies to manage biodiversity risks so as to avoid and minimize biodiversity impacts and seek opportunities for biodiversity conservation and benefits for natural resources‐dependent people.

Some of the recent relevant engagements include:

1. Collaboration with INSEE (Siam City Cement) in Cambodia, Sri Lanka and Vietnam related to restoring quarry sites and reducing impact of cement plans
2. Collaboration with Engro Elengy, Pakistan on mangrove restoration
3. Vulture conservation in Thar with Sindh ENgro Coal Mining Company
4. Collaboration with Karot Power project in Pakistan for reducing the impact on biodiversity of the hydropower project
5. Collaboration with Shanghai Electric Company to reduce the impact of the Rupsha Power project in Bangladesh on aquatic biodiversity
6. Collaboration with OIL India to reduce their impact on biodiversity in around the Dibru Saikhowa National Park of upper Assam
7. Collaboration with two largest pharmaceutical companies in Bangladesh to promote vulture safe drugs as opposed to drugs that led to mortality of vultures

Entry Point 2 Supply chains apply sustainability standards and safeguards that positively impact biodiversity and local livelihoods.

1. Collaboration with ITC in Bihar, India on sustainable agriscapes management
2. Collaboration with ProVN in Vietnam to establish pilot projects demonstrating circular economy model
3. Collaboration with Hennes & Mauritz (H&M) in Bangladesh on supporting the activities of the Bangladesh Water Multistakeholder Partnership
4. Collaboration with Coca Cola Thailand on addressing marine plastics pollution issues at the local level
5. Collaboration with ANT Forest on developing a Gross Ecosystem Product assessment methodology to assess ecosystem services and socio-economic benefits of ANT Forests

Entry Point 3 Public and financial sector policies promote the integration of biodiversity and livelihood values in business decision‐making.

1. Business and Biodiversity Platforms
   1. Leaders for Nature business and biodiversity platform in India supported by fees from members
   2. Vietnam Business for Environment business and biodiversity platform in Vietnam supported by the TH Corporation
   3. Karachi Conservation Platform business and biodiversity platform in Pakistan supported by fees from Members
   4. Thailand Business and Biodiversity Platform supported by Toyota Corporation

Private Sector Sponsorship Projects

Some of the examples of private sector sponsorship projects are as follows:

1. IUCN India Country Office is working with the funding from the TCS Foundation to develop the Himalayas for the Future Initiative
2. Support from Audemars Piguet for fostering ownership for restoring ecosystem services of forest landscapes of the Miyun Watershed in China
3. Support from HSBC for waste management in Horton Plains National Park in Sri Lanka
4. IUCN globally has received funding from Huawei for a project ‘Tech for Nature’, focused on using communications and technology to help achieve fair and effective protected areas through the IUCN Green List Standard. Tech for Nature is being implemented in the Maldives, Thailand and Vietnam
5. Support from UBS Optimus Foundation for building systems thinking to address the coastal squeeze in Mekong Delta

CONSERVATION FINANCE AND NATURAL RESOURCE ECONOMICS

Examples of IUCN Asia relevant projects/initiatives

1. Establishing Gross Ecosystem Product methodology to quantify the linkages between ecosystems and human well-being so as to assist in the development of sustainable management and governance of ecosystems. Currently working with ANT Group on establishing GEP methodology for nearly 20,000 ANT forests in China
2. Establishing biodiversity credit accrual system in the Kanneliya Forest Reserve in Sri Lanka
3. Establishing innovative funding systems to promote sustainable land management in the Central Highlands of Sri Lanka
4. Establishing sustainable financing mechanisms in the Ton Le Sap in Cambodia for supporting community based fisheries management

GREEN ENTREPRENEURSHIP

Except for some work on sustainable tourism and community based tourism through MFF and CEPF grants, there has been very little done on promoting green entrepreneurship in the IUCN Asia region. Potentially, a large area of expansion of supporting small holder green entrepreneurship, establishment of community based enterprises and supporting small and medium enterprises in mainstreaming biodiversity conservation and sustainability considerations into their operations. The GCF Gandaki Basin Nepal project and the GCF Knuckles project have built in green enterprise elements into the design of the project including supporting nature related community enterprise development. IUCN Asia region could potentially benefit from the experience and expertise of relevant members and create collaborative opportunities.