Getting sustainable investments in the forest sector straight: Towards an integrating framework

The World’s forests play a crucial role in environmental, social and economic well-being, but they are under threat from deforestation, climate change and atmospheric pollution. Various intergovernmental bodies since the 1992 ‘Earth’ Summit (UNCED) have used principles, criteria and indicators (PC&I) to evaluate sustainable development and sustainable forest management (SFM) in particular. The financial world has been reluctant to invest in SFM, however, as it cannot be easily simplified and is inherently risky due to the dynamics of nature and external shocks, such as forest fires, storms or draughts. Nevertheless, a range of economic, social, environmental and governance initiatives for evaluating, or reporting on, sustainable forest finance (SFF) have been developed over the years. Some of these relate to the economic aspects of forest management, but formal linkages between SFF and SFM are still being forged. The authors place a selection of these initiatives into an integrating framework to provide a more wholistic approach to determining, and evaluating, what constitutes SFF. The results of this integration exercise reveal a strong preference towards environmental and social criteria, but some elements, notably economic sustainability, are less well featured. The shortcomings and challenges of this preliminary study are discussed. The authors conclude more work is needed to help investors and stakeholders overcome the current complexity and confusion in the world of SFF, and see the wood for the trees. • Forests play a crucial role in improving people's well-being, combating climate change and promoting economic growth. • The financial world is reluctant to make private investments in forests as sustainable forest management cannot easily be simplified. • Economic, social, environmental and governance initiatives are analysed for the potential to evaluate or report on sustainable forest finance. • Based on principles and criteria of sustainable forest finance a multi-bottom line, hierarchically consistent framework for sustainable forest finance is elaborated. • This framework enables investors and stakeholders to overcome the current complexity and confusion in the world of sustainable forest finance.