Finance and Carbon Markets (FCM)

Countries and their relevant agencies and multilateral and bilateral institutions, along with both global private and public sectors, are rapidly expanding their engagement in the international voluntary, pre-compliance, and compliance REDD+ carbon markets with a focus on "pay-for-performance" compensation with a foundation of significant biodiversity and social co-benefits. Likewise, the long-term success of these same REDD+ activities depends on attracting and securing funding from the capital markets at significant speed and scale.

The FCMC team assists countries and their institutions build the enabling REDD+ finance and carbon markets frameworks needed to attract and engage funding from the capital markets through financial structures and institutions such as risk management products, loan guarantees, registries, settlement and clearinghouse activities, audit and verification, public and private debt issuance, public-private partnerships (PPP), equity markets, municipal finance, emission reduction purchase agreements (ERPAs), and donor-based support.

These services include collaborating with countries and their institutions to provide them a platform from which they can design national and sub-national REDD+ policies and programs, according to international finance best practices, that reduce risk while promote capital markets participation in REDD+ activities.

Furthermore, activities under the FCM task are closely related to other tasks. For example, robust SES standards and MRV systems are foundational to securing any investment in REDD+ activities, while LEDS provides leverage and diversification for climate friendly private sector engagement.

Even with the centrality of securing long-term financing to mitigate climate change, few national or sub-national REDD+ strategies address how national and sub-national REDD+ activities will be financed, either through bilateral and multilateral or market-based activities. This highlights the need for clearly defined financial models, plans, and supporting policy and investment-grade financial architecture. Building long-term funding at speed and scale requires that public and private funders are attracted to participating in REDD+ activities through long-term risk-adjusted competitive rates of return that are complementary to LEDS and integrated with and founded on the highest quality SES indicators and MRV "best practices."