Conserving, managing, and restoring forests and other ecosystems could provide one-third of the greenhouse gas emissions reductions needed to meet the Paris Agreement. Yet just 3% of climate finance is invested in work to protect nature.
Southeast Asia’s forests — one of three critical ecosystems in the U.S. Plan to Conserve Global Forests — are shrinking faster than those anywhere in the world as companies clear forests to produce commodities such as rubber, coffee, cacao, and coconut.
Enter USAID’s Green Invest Asia program.
From 2017–2023, Green Invest Asia helped agriculture and forestry businesses in Southeast Asia adopt low-emissions practices and connect with green investors. The project had three objectives: build the pipeline of investment-ready projects, lower barriers to investment in sustainable companies, and create a community of practice to help companies and countries work together to tackle the biggest obstacles to low-emission land use.
These efforts have helped the region balance economic growth with protecting forests critical for global climate change goals — while leading to some big results. The project helped catalyze $446 million for projects that will reduce a projected 156 million tons of carbon emissions and improve management of 1.7 million hectares of land, more than the entire country of Timor-Leste or the U.S. state of Connecticut.
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1. Building the Pipeline
One challenge to financing sustainable commodities is that prospective investors don’t always know how to find commercially feasible activities. Green Invest Asia provided mentorship and assistance to businesses to help build a pipeline of investment-worthy projects.
For example, USAID helped businesses inventory and verify their greenhouse gas emissions, resulting in an unprecedented 15-company collaboration — representing 20% of the world’s Robusta coffee supply — to standardize carbon emission measurement in Indonesia and Vietnam’s coffee sector. Based on this success, the Sustainable Coffee Challenge network is replicating this work in coffee supply chains in Latin America, demonstrating how USAID’s advisory support can drive innovation across entire industries.
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2. Lowering Barriers to Investment
Green Invest Asia also identified a need to support financial institutions to meet Environmental, Social, and Corporate governance (ESG) requirements they are facing, and to inspire investor confidence in sustainable lending. This is especially true when companies are relatively small, or when banks need assistance navigating new government policies to spur green investment.
For example, in 2018 Vietnam began requiring banks to report ESG risks in their lending. Green Invest Asia developed a toolkit to help banks navigate this requirement, and began working with four of the country’s largest banks to identify opportunities to invest in climate-positive and gender-inclusive projects. Two of these banks have independently expanded this work, including scaling up their green lending activities and discussions with Green Climate Fund to provide large-scale green lending in Vietnam. USAID has since expanded this work to Cambodia, setting the stage for more cohesive green investing across the region.
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3. Creating a Community of Practice
While both corporate and national commitments on climate action incentivize investment in sustainable agriculture and forestry, long-term investment at scale requires structural changes among industries and financial systems. Green Invest Asia convened major players in the coconut, coffee, cocoa, and other industries to discuss how to improve sustainability across supply chains.
For instance, GIA worked with seven of the world’s largest coconut companies to launch the Sustainable Coconut Charter — the industry’s first attempt to standardize sustainability commitments across an entire region. The Charter has grown to 17 signatories — including AAK, Nestlé, and Unilever — that represent nearly half of the $40 billion annual global trade in coconuts. Signatories are now working with GIZ (Germany’s main international development agency) to train close to 10,000 coconut farmers in the southern Philippines on sustainable land use, and are also working to create an industry supplier scorecard to assess environmental and social risks in the coconut supply chain.
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A More Sustainable Region
Green Invest Asia’s work with financial institutions, companies, governments, and local communities has shifted millions toward more sustainable investments while helping the region meet its economic needs. The program concluded in July, but USAID is looking for partners for a new project to further attract investment in sustainable land use across Southeast Asia.
Through work like this, USAID is helping tackle the climate crisis and demonstrate the business case for investing in sustainable commodity production.
For more information, see USAID Green Invest Asia’s final report.
This blog was originally published on Medium.
Suphasuk (Bird) Pradubsuk
Suphasuk (Bird) Pradubsuk is a Program Development Specialist at USAID Regional Development Mission for Asia. Currently, she manages regional activities on nature-based solutions and climate finance in the land use sector. She has over 20 years of experience in climate change and ecosystem management across the Asia region.
