World Bank's forest carbon fund raises concerns

World Bank’s forest carbon fund raises concerns

For Immediate Release

World Bank launches new forest carbon fund amidst secrecy and concerns for the safety of forest peoples

In the margins of the 8th Carbon Expo in Barcelona today, the World Bank’s Forest Carbon Partnership Facility (FCPF)[i]will launch a new fund, known as the FCPF Carbon Fund. The Carbon Fund is designed to pay developing countries for reducing carbon emissions caused by the destruction of their forests. Four industrialised countries, the European Commission, The Nature Conservancy and BP,[ii]have to date pledged a total of US$156 million to the Carbon Fund, which is expected to eventually provide performance payments to countries for curbing deforestation while investors in the fund will receive some form of forest carbon offset in return for their investment.

Risk of undermining readiness phase

Many civil society organisations following the World Bank’s FCPF initiative are concerned that the launch of the Carbon Fund is premature and will take attention away from clearly defining what progress countries are expected to have made during the FCPF’s ‘readiness’ phase – the stage in which countries define a plan of action on how to reduce deforestation.[iii]  Three years into the initiative, the FCPF has yet to clearly spell out how ‘readiness’ of participating countries will be determined and how the World Bank intends to ensure that future actions to curb forest emissions fully respect the rights of indigenous peoples and do not result in adverse social and environmental impacts.

Observers are concerned that discussions on the rules and requirements for Carbon Fund projects ahead of an agreement on the requirements for the ‘readiness phase’ will see Carbon Fund requirements become de facto standards for the FCPF, not least because the Carbon Fund will offer substantially more funding for those countries that qualify. This is of particular concern given the current interpretation that performance payments would be given in exchange for forest carbon offsets. This could exacerbate an already narrow focus on measuring forest carbon rather than on tackling the drivers of deforestation. There is strong concern that if the Carbon Fund progresses too rapidly, the ‘readiness phase’ will be under increasing pressure to adopt weak procedures that will allow countries to progress, irrespective of how much attention a country’s action plan gives to the real drivers of deforestation and the rights of forest dependent communities.

“The FCPF management has consistently failed to make good on long standing promises to clarify what counts as being “ready” for REDD.  Without clear and consistent rules and guidelines for “readiness” in the readiness phase, the Carbon Fund is likely to meet with strong resistance from both investors and forest dependent communities alike,” said Joshua Lichtenstein, Forest Campaign Manager with the Bank Information Centre.

“The launch of the Carbon Fund while the Readiness Fund is still in the early stages of implementation risks undermining the already precarious commitment to safeguards to protect the environment and the rights of forest dependent peoples” said Lichtenstein.

Observers excluded

        Civil society observers to the FCPF have also protested against their planned exclusion from the first meeting of the Carbon Fund and request clear rules of procedure to be established concerning future observer participation. Transparency and openness are fundamental building blocks of effective and accountable governance. The potential for confidentiality clauses from private sector participants in the Carbon Fund sets a worrying precedent.

        “It seems that the involvement of BP, with an appalling record of trashing the environment is already reducing the transparency that has existed so far in the FCPF. BP should focus on cleaning up its own act, including the still highly polluted Gulf, instead of engaging in forest carbon offset credits to avoid meeting climate goals. The Carbon Fund is almost entirely public money and cannot be used to bail out dirty industries like BP,” said Kate Horner, Policy Analyst for Friends of the Earth US.

Importance of phased approach to REDD

Sequencing is crucial in any efforts to combat deforestation to reduce the risk of payments contributing to increased conflict and environmental problems in forested areas. The phased approach, which aims to ensure that governance and rights are strengthened as a first step before countries are ready to accept performance based payments, is widely supported in UN negotiations on REDD and should not be undermined by the World Bank. Donor governments, implementing agencies and investors need clarity that forest dependent communities have clear and secure rights to their lands and forest governance is actively improved – as do the people depending on forests.

“Talking about how countries will be paid for results, when it has not even been determined how the results are to be measured and whether enabling conditions for countries to permanently reduce deforestation have been put in place, will undermine governance, risks leading to conflict and will not attract credible investors for forest protection” said Kate Dooley, Forest Campaigner for FERN.

Ensuring drivers of deforestation are tackled and the rights of forest dependent peoples are respected is the only way to achieve long lasting reductions in deforestation and have a meaningful impact on the climate crisis. The FCPF Carbon Fund must take the lead from the Readiness Fund regarding the rules for the readiness phase. Until that has been done and the social and environmental safeguards in participating countries are strong enough to uphold human rights and protect the environment, any decisions taken around how to pay countries for results will be premature.




In Barcelona:

Josh Lichtenstein, Bank Information Centre:   +1 202-624-0624, [email protected]

Kate Horner, Friends of the Earth US: +1360 319 9444, [email protected]

In Washington DC:

Mark Rentschler, Bank Information Centre: +1 202 624-0635, [email protected]

In Brussels:

Kate Dooley, FERN: +32 2 894 4696, [email protected]


[i]The World Bank maintains three roles in the FCPF, including secretariat, delivery partner and trustee. It is one of the main international climate initiatives set up to fund developing country schemes for Reducing Emissions from Deforestation and forest Degradation (REDD). The FCPF includes a Readiness Fund, which is governed by a Participants Committee of donor and recipient countries, with civil society and indigenous peoples admitted as observers. The Carbon Fund, which aims to pilotperformance-based payments for emission reductions and is governed by the Carbon Fund Participants – so far five donor governments and two private sector participants.

[ii]Government participants to the Carbon Fund currently: Norway, Germany, UK, European Commission and the US.

Private sector participants to the Carbon Fund currently: BP and The Nature Conservancy.

[iii]There are currently 37 tropical forested countries accepted into the FCPFs ‘readiness phase’.

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