Indonesia’s Bukit Tigapuluh National Park sits at the centre of the island of Sumatra and is one of the world’s great ecological hotspots, home to plants and animals not found anywhere else.
Its residents include a laundry list of Indonesia’s most iconic wildlife, including the Sumatran elephant, tiger and orangutan.
But just outside the park’s boundaries are sprawling oil palm and rubber plantations, which chew up the area’s dense jungle and threaten animal habitats.
A project spearheaded by the United Nations Environment Programme (UNEP) and several partners, however, is giving animals more breathing room.
The Tropical Landscapes Finance Facility has channeled US$95 million in financing to Indonesia rubber producers and helped them plant dense fields of trees on already marginal land, sparing virgin forests. In the face of rising demand for Indonesia’s natural resources, experts say this innovative financial model is key to slowing deforestation.
This comes as governments from around the world prepare to adopt a Global Biodiversity Framework at the UN Biodiversity Conference in December 2022. Among the key issues under discussion is mobilization of resources for the framework’s implementation to halt and reverse nature loss, including deforestation.
“This is a practical solution to accelerate investment in deforestation-free supply chains by providing long-term capital with strict sustainability-linked lending criteria to stimulate green growth and local livelihoods, protect biodiversity and shield agriculture production from future climate hazards,” said Mirey Atallah, Head of the Nature for Climate Branch at UNEP.
In Indonesia, an area of forest the size of Los Angeles was lost in 2020 alone, largely due to the expansion of palm oil and timber plantations. The country’s rate of deforestation is declining, in part due to government policies such as a moratorium on clearing primary forests and peatlands. But growing global demand for commodities, such as natural rubber, continues to threaten the unique ecosystem of Bukit Tigapuluh National Park.
Globally, forests are home to more than half of the world’s land-based species of animals, plants and insects. They combat climate change because of their capacity to remove carbon from the atmosphere and store it.
Despite their importance, each year approximately 12 million hectares of forest are destroyed, an area equivalent to the size of Portugal. This deforestation, together with agriculture and other land use changes, is responsible for roughly 25 per cent of global greenhouse gas emissions.
Indonesia is the world’s second-largest producer of natural rubber after Thailand. Used to make tires and other goods, such as surgical gloves, footwear, hoses and pipes, natural rubber is produced with the sticky substance that comes from rubber trees grown in the tropical landscapes of Southeast Asia.
With a population of 260 million people, Indonesia is expected to be among the top-five economies in the world by 2030. Experts say it stands to harness significant environmental gains from a transition to sustainable production models by ensuring that ecosystems are maintained, endangered species are protected and rural livelihoods are enhanced.
The Tropical Landscapes Finance Facility is a practical solution to accelerate investment in deforestation free supply chains.
The Tropical Landscape Finance Facility is designed to support that process. It is a partnership between UNEP, the Indonesian Ministry of Environments and Forests, ADM Capital, BNP Paribas and local non-governmental organizations. It brings long-term finance at below market rates to projects and companies that stimulate green growth and improve rural livelihoods.
The initiative navigated complex issues, including historical deforestation and land ownership disagreements, and brought together teams from across the government.
Along with funding compact rubber plantations, it helped to create a 9,700 ha conservation area beside Bukit Tigapuluh National Park which has served as a transit corridor for elephants, tigers, orangutans, sun bears and various endangered bird species.
“One thing that other companies can learn from [this] experience is a commitment to allocating a large enough area for wildlife conservation,” said Adi Junedi, Executive Director of the Indonesian Conservation Community Warsi, an NGO working on the project. “This approach needs to be adopted by other commodities companies, but encouragement from the government, NGOs and investors, such as the [landscape facility] is required.”
Loans under the Tropical Landscape Finance Facility are issued on the condition that ambitious environmental and social impact targets are reached. By tying environmental and social commitments to receiving below-market-rate finance, the model ensures that projects are accountable to meeting their targets, say its backers.
They believe the model can be replicated in other countries, fostering sustainable commodities markets that will safeguard nature, address the climate crisis and improve the lives of rural communities.
UN Biodiversity Conference
From December 7-19, countries will meet in Montreal for COP 15 to strike a landmark agreement to guide global actions on biodiversity. The framework will need to lay out an ambitious plan that addresses the key drivers of biodiversity loss and puts us on the path to halt and reverse nature loss by 2030.
See UNEP’s COP 15 page for more information and the latest updates.
