Research that makes a difference

No Trees, No Future - Unlocking the full potential of conservation finance

Tropical deforestation is the second largest cause of climate change behind burning fossil fuels. And the leading cause of deforestation is conversion of these forests to land used to grow commodities such as palm oil, soy, and beef.

Recently, numerous rounds of multi-billion-dollar initiatives have been organised to improve forest management, including through a variety of financial mechanisms, including Conservation Finance (CF).

Associate Professor Kristjan Jespersen from MSC has just been awarded a grant from the David and Lucile Packard Foundation to address questions at the forefront of conservation and business practice about how, and through which mechanisms can the costs of conservation be shared effectively across the palm oil value chain.
 
Tell me more about the project?

We will develop methodologies focused on spatial footprint approaches to estimate lead firms’ responsibility for contributing to conservation finance in the palm oil sector and engage with a network of practitioners involved in conservation finance projects to support models for conservation finance cost-sharing in complex supply chains.

Using a mixed-methods design that combines in-depth case studies, surveys and remote sensing, this project will develop and test a cost-sharing model facilitating businesses’ participation in forest finance.  

Increasingly, stakeholders in conservation finance are investigating approaches linking spatial and supply chain data to identify lead firms’ supply chains’ impacts on land cover. This research will identify several possible models for assessing spatial footprints of firms’ supply chains in the oil palm sector, testing their feasibility with a selected group of investors and conservation project proponents.
 
Why is this project important?

Sharing responsibility for conservation finance in a complex supply chain requires numerous challenging decisions, but the fundamental problem is identifying the degree to which a firms’ supply chain drives ecosystem destruction.

If the responsibilities of firms in complex value chains such as palm oil are not clearly identified, conservation finance will be impeded, and ecosystem loss will continue unabated.

Deforestation continues, and conservation projects are finite. By embedding the costs of conservation into commodity transactions in a fair and equitable way, forest and ecosystem conservation may be made more secure in the long-term, beyond the duration of conservation projects.
 
What will be some of the challenges ahead?

We anticipate that there might be some sensitivity by companies to share their perspectives on cost-sharing. Will companies show willingness to internalize the price of Conservation Finance or transfer the costs to customers? It will be important to engage with the procurement departments of companies rather than just the sustainability departments to obtain a representative view of companies’ priorities and challenges.

Another expected challenge is access to reliable data in some geographies, but we will work closely with other institutions to ensure that modelled approaches are based on the most up to date and credible knowledge.

What longer term impact could this have on society?

It is our intention that the project contributes to companies taking on greater responsibility for conservation finance, embedding long-term conservation costs into the palm oil value chain (that are currently externalized), to support forest conservation, given their critical role in climate mitigation and biodiversity conservation.

Copenhagen Business School is the only Danish institution to have ever received funding through the Packard Foundation.

Profile Associate Professor Kristjan Jespersen