Rimba Collective: Re-thinking Conservation Funding

Originally written for majalahcsr.id — A new sustainable financing scheme that embeds the conservation costs into the cost of doing business; Rimba Collective is poised to be the largest private sector-enabled forest conservation initiatives.

Used in various products of consumer goods from chocolate to instant noodles, detergent to shampoo, palm oil is the most consumed vegetable oil globally with growing demand and unprecedented consumption and production growth. Palm oil, which is Indonesia’s second-biggest export behind coal, contributed to more than 14% of forest loss over 2005–2015, totalling 117,000 hectares annually. In light of the recent Paris Agreement and ongoing UN Sustainable Development Goals (SDGs), pressure is growing on public and private sector actors in Indonesia to halt forest loss caused by palm oil production.

The palm oil supply chain is associated with many environmental challenges, such as biodiversity loss and greenhouse gas emissions. The current market economics do not properly recognize these environmental costs in business models and policymaking. Although markets for conservation and ecosystem services are widely recognized as solutions to negative environmental impacts, they are unable to scale due to the disconnect from market transactions. As a result, these conservation efforts are dependent on insecure funding like philanthropy or corporate social responsibility (CSR) budgets that are short-term and produce limited impact.

Delivering large-scale, transparent, and impactful conservation and restoration financing efforts require structural change. To date, the sustainable palm oil cultivation sector is expanding its support to a widening range of sustainability commitments and supply chain actors. Contributing to this effort, Lestari Capital has taken a role in bridging environmental, finance, and commodity sectors. Lestari Capital connects private companies seeking to link specific sustainability goals and associated high-value conservation projects in need of funding.

Earlier this month (8/4/2021), Lestari Capital launched the ‘Rimba Collective’ initiative that aims to deliver US$ 1 billion to protect and restore forests in Southeast Asia over a 25-year duration. Poised to be one of the largest private sector-enabled forest conservation initiatives, Rimba Collective is backed by consumer goods giants PepsiCo, Nestle, Procter & Gamble, and palm oil trader Wilmar International. The initiative aims to protect and restore over 500,000 hectares of tropical forests, starting in Indonesia, before expanding to projects across Southeast Asia.

As part of its efforts to create transformational change in the supply chain, the conservation funding is made as an embedded cost of doing business. Supply chain companies make payments through Special Purpose Vehicles (SPVs) collectively called the Sustainable Commodities Conservation Mechanism (SCCM), which distributes finance to projects annually, for 25 years, based on verified achievement of ecosystem outcomes. Companies may claim these outcomes against their sustainability commitments in the proportion of funds they contributed.

Projects funded by Rimba Collective will be prioritized based on the potential to protect and restore large, continuous areas of natural ecosystems and critical habitats, such as primary rainforest, mangroves, and peatland. All projects will undergo third-party verification to measure three key impacts: biodiversity benefits, social benefits, and climate and area-based benefits.

Rimba Collective allows companies to make climate, conservation, and community-support claims and is designed to fulfil a range of corporate sustainability commitments such as ‘no deforestation, no peat, no exploitation’ (NDPE) compliant supply chains, corporate net-zero targets, and Science-Based Targets (SBTs).

“This mechanism directly complements existing efforts to build more sustainable palm oil supply chains. Linking conservation funding directly with company operations has the potential to be a game-changer for forest protection and restoration” — Michal Zrust, Co-founder and Chief Sustainability Officer of Lestari Capital

Rimba Collective targets to expand to more corporate partners and users when the initiative becomes operational at the end of 2021 and could potentially be applied to other forest-risk commodities such as soy, rubber, coffee, and timber. As new companies join, the project portfolio expands, and hopefully, so does the impact on biodiversity, climate, and communities.