Indigenous leaders call for climate finance disruption
Indigenous leaders from around the world continue to use their hard-won visibility to call for a system of climate finance that values their knowledge and work, offers a fair price for the nature-based solutions they provide, and pays them — directly.
“The asset that we bring to the table is knowledge. To think about the future you have to think about the past,” Francisco Souza, managing director of the FSC Indigenous Foundation, said at a Sept. 23 event hosted by the international Indigenous rights organization as part of Climate Week NYC. “We have the solutions already.”
For companies and institutions that have made investments in nature-based solutions and/or buying carbon offsets part of their climate strategy, valuing Indigenous people’s contributions means investing in their organizations and projects, and paying a fair price for offsets.
“We want to tell the [donors] they should try working with [Indigenous organizations] directly. They do not need to go through too many people,” Oumaru Aissatou, vice president of the Network of Indigenous and Local Populations for the Sustainable Management of Forest Ecosystems in Central Africa, said through a translator at the FSC Indigenous Foundation event.
Preserving forests is vital to tackling the climate crisis and protecting millions of species in danger of extinction, and research has repeatedly shown the vital role Indigenous people play as forest stewards. At 370 million, these communities make up less than 5 percent of the human population but manage or hold tenure over 25 percent of the planet’s land surface and support about 80 percent of global biodiversity. A United Nations report released last year, for example, found that the Indigenous people of Latin America — who face increasing, violent threats to their lands and lives — are by far the best guardians of the regions’ forests, with deforestation rates as much as 50 percent lower in their territories than elsewhere.
Indigenous communities make up less than 5% of the human population but manage or hold tenure over 25% of the planet’s land surface and support about 80% of global biodiversity.
Indigenous contributions were officially acknowledged at COP26 in November, where for the first time in COP history, their leaders found themselves drawn into the inner circle of decision-making. The international climate negotiations resulted in the Glasgow Climate Pact, which recognized Indigenous rights and acknowledged the important role Indigenous peoples and local communities (IPLCs) play in “averting and minimizing loss and damage associated with the adverse effects of climate change.”
Too many Malcolms in the middle
Yet despite the fact that their knowledge and work reduce the monetary costs of the climate crisis, less than 1 percent of climate financing goes to support forestry efforts on Indigenous land, and only 17 percent of that money goes specifically to Indigenous-led and local community organizations, according to a Rainforest Norway Foundation report published last year.
The main reason so little funding reaches these communities, the report said, is the middlemen — intermediary organizations that often have complicated application processes and onerous reporting requirements.
About half of total climate funding is channeled through multilateral institutions, the report notes. After that, the top 10 intermediaries for the biggest donors include a mix of large international NGOs, U.N. agencies and consulting companies — not IPLC organizations. Multilateral institutions have historically had limited success in reaching IPLCs directly. For example, the World Bank Forest Carbon Partnership Facility (FCPF) Readiness Fund has given just 1 percent of its total funding to IPLC organizations, according to the report.
“We need to have a model that actually fits what’s happening in our territories. There needs to be flexibility. I’m not talking about flexibility in accountability, I’m talking about flexibility in priorities,” said Gustavo Sanchez, president of the Red Mexicana de Organizaciones Forestales Campesinas, also speaking through a translator at the FSC Indigeneous Foundation event. “We need to change the way we think about the roles we have as donors and beneficiaries and instead see each other as collaborators and equals.”
The appeal for direct investment does not only apply to public money, but private as well. Cutting out the middleman means investing directly in Indigenous-led funds, organizations and projects. It really boils down to trust and reciprocity, Indigenous leaders and advocates say, trust in their decision-making, their priorities and their knowledge.
“I want to be clear that we know the Indigenous world is not perfect; we have many problems, many of them problems that capitalism created,” Emma Pineda, project officer for Latin America and the Pacific Region for the Pawanka Fund, told GreenBiz. “But Indigenous communities have their own systems — systems of government, systems for solving problems, and economies — that work well for them. They’re not the same as the systems in the Occidental world, and often they’re ignored because they’re different, but we have them. We have ways that work.”
We need to change the way we think about the roles we have as donors and beneficiaries and instead see each other as collaborators and equals.
Founded in 2014, the fund supports Indigenous communities by investing in areas such as food systems, climate change resilience, water and natural resource management, and Indigenous economies, as well as language revitalization, women and youth leadership, health and well-being, and more. The idea is to help create self-sustaining communities that thrive on their own terms, Pineda said.
A rip-off of a price
The voluntary carbon markets — where the vast majority of companies that have made carbon offsets part of their climate strategy purchase those offsets — also have their share of intermediary problems. But beyond that, voluntary market prices for offsets that fund nature-based solutions are simply too low.
Carbon offsets are a controversial financial tool, a market-based strategy that aims to mitigate global heating by turning captured CO2 into commodity. When a company buys offsets — each of which typically equals a metric ton of carbon — to fund a nature-based project, it is essentially paying a community for conserving forests or some other practice that results in captured carbon.
A recent Bloomberg Green investigation revealed how oil and gas giant BP inked a deal in 2021 to buy as many as 1.5 million offsets at $4 each through a program in rural Mexico facilitated by the World Resources Institute. CO2munitario, which aims to promote sustainable development in rural economies and protect Mexico’s endangered forests, spans 59 communities in more than a half-dozen states. Bloomberg highlighted one particular community, which received its first annual payment in late 2021, after enrolling in the program two years earlier. The pay, split among 133 community members, amounted to about $40 each.
“By paying $4 per offset to subsistence farmers in remote areas with less access to education and internet, BP has handed over around 15 percent of what others are now offering for offsets from Mexican projects,” the article reads.
That may be true when compared to compliance markets, such as the European Union Emissions Trading System, where forest carbon credits were selling for $12 to $14 in 2021. Compliance markets are marketplaces set up for heavy emitters, such as oil companies and cement manufacturers, who are required by the jurisdiction to buy carbon credits.
But companies using the voluntary markets, which, again, is the vast majority of buyers, were paying a range of $4 to $6 per offset in 2021. Clearly that amount is not enough to fight the forces of deforestation, and the often lucrative financial payoff that comes with them. Even $12 to $14 per offset might not be enough, depending on the project’s location and the economic situation and market forces involved.
This means companies must be prepared to pay a price that will actually result in forest preservation and do the due diligence necessary to make sure that money is getting to the Indigenous and local communities involved.
“We need to have fair conditions of exchange,” Sanchez said. “Sometimes buyers of carbon credits do not pay a fair price. Territories are doing all the work, and markets do not recognize the value.”