Nature-based Investing for Just Transition

Criteria 1 Best Practice Indicators

1.1) Conduct multiple-step processes to identify and engage stakeholders and secure informed consent to participate.

1.2) Identify implementation areas with participatory demarcation (as needed).

1.3) Assess land, natural resource, and carbon tenure rights holders and ensure the implementation of activities and benefits allocation are aligned.

1.4) Gather social data through participatory rural appraisals and household surveys to understand and baseline sources of income, use of natural resources, cultural importance, and wealth and well-being levels of participants.

1.5) Develop a community engagement plan during pre-investment.

1.6) Conduct engagement early and ongoing with two-way dialogue, training, awareness, and process for feedback.

1.7) Collaboratively develop long-term implementation workplans based on a shared Theory of Change.

1.8) Deliver training and capacity-building support to transition to a ‘business management’ mindset, including operational and fiscal controls.

1.9) Design processes and training to conduct participatory monitoring.

1.10) Implement adaptive management with regular workplan and budget updates.

Criteria 2 Best Practice Indicators

2.1) Target developing countries for finance.

2.2) Demonstrate willingness to work in countries with higher political risk to build an investment track record of fair risk-adjusted returns from these types of investments.

2.3) Prioritize the carbon typologies such as avoided unplanned deforestation and degradation, which is generally caused by subsistence-based drivers, and support afforestation/reforestation that delivers carbon revenue to reduce risks to natural resources, carbon loss, and food insecurity.

2.4) Develop implementation workplans with a bottom-up community focus that address risks of the people in the NbS program areas.

Criteria 3 Best Practice Indicators

3.1) Develop, at the fund level, a gender and vulnerable populations policy for all investments to enhance gender equity and inclusion of vulnerable people within the governance structure and day-to-day operations of NbS programs financed.

3.2) Collaboratively develop gender action plans with all Investees.

3.3) Integrate gender and vulnerable people-focused activities into the long-term implementation workplans.

3.4) Design monitoring plans to collect gender and vulnerable people’s specific data and measure the gender-specific KPIs.

3.5) Include in adaptive management plans the processes for the gender and vulnerable people data to drive the necessary changes to practices.

Criteria 4 Best Practice Indicators

4.1) Deals must include the legal tenure holders, not intermediaries or governments who do not support a direct link between carbon revenue generation and tenure holders’ production of carbon credits.

4.2) When governments are the counterparties for transactions, deploy spatially explicit nesting GHG accounting (particularly for REDD+) and ensure that benefit allocation aligns with natural resource and tenure rights, providing full rights to the carbon credits they generate.

4.3) When tenure holders transfer carbon rights to another entity, ensure transfers are effectuated in a fully informed manner and the economic impacts of these arrangements are transparently presented and structured with fair economic terms.

4.4) Avoid countries that impose disproportion fees, control monetization of carbon credits, or other impose other requirements that extract value or control from those who produce the carbon credits.

4.5) Contribute to government decision processes in designing laws that include real-world examples of the impact that laws have on the bankability of NbS programs.

Criteria 5 Best Practice Indicators

5.1) Understand the social-economic impacts of stakeholders’ use of natural resources in the NbS program through detailed field data collection, both up-front and ongoing.

5.2) Establish a local project management team dedicated to managing the NbS program and employed full-time.

5.3) Structure activities and budgets to provide community work opportunities related to delivering on the NbS program activities.

5.4) Co-develop the activities to generate new/enhanced income streams, including budgeting for training, inputs, and monitoring.

Criteria 6 Best Practice Indicators

6.1) Ensure the long-term implementation plan and budget reflect the economic impact of practice changes for those who will need to adopt activities during the development of Theory of Change.

6.2) Conduct opportunity cost analysis for switching activities.

6.3) Establish a dedicated NbS program management unit with local staff and provide support and training to oversee activities on the ground.

6.4) Provide local support linking local implementation teams to international expertise to support ongoing technical training.

Criteria 7 Best Practice Indicators

7.1) Design NbS programs collaboratively on a bottom-up basis to ensure direct engagement of communities.

7.2) Ensure that implementation workplans include creating or enhancing legally recognized tenure-holder community groups/indigenous people with direct engagement across multiple stakeholders.

7.3) Secure and/or reinforce legal land tenure of communities/indigenous groups in NbS program design.

7.4) Develop benefit allocation plans with the fundamental premise that those with land tenure and natural resource rights, who adopt new activities for better natural resources use, are the carbon credit creators.

7.5) Deliver business (financial and operational) training and support capacity building for local NbS program management teams to take over full management at the end of the investment period.

7.6) Register baseline social conditions, then monitor and verify ongoing results with 3rd party audit under international standard.

7.7) Avoid transaction structures that assign all carbon rights to the investor and/or developer, only providing a portion of net income return to the NbS program participants and communities.

7.8) Establish a feedback grievance and redress mechanism incorporating local practices and international best practices.

Criteria 8 Best Practice Indicators

8.1) Co-develop implementation and long-term implementation plans.

8.2) Prepare detailed activity-based budgets that support planned activities and scaling of activities over time.

8.3) Prepare robust pre-investment carbon credit estimates for Investors and Investees to make an investment decision.

8.4) Create investment models to understand upfront funding needs and finance returns for both Investors and Investees.

8.5) Update workplans and budgets with Investee at least every 2 years.

8.6) Deploy investment transaction structures that are designed to provide all the financing to reach positive cashflow, avoiding the need to raise additional capital in the future.

8.7) Update carbon credits estimates once field data is collected and as new information becomes available.

8.8) Update the investment model regularly to check on projected cash flow and share with the Investee.

8.9) Design the benefit allocation plans, where possible, to include the establishment of a trust fund where the interest can provide long-term cash flow for participants.

8.10) Execute legal agreements for investment, long-term implementation, and technical services.

8.11) Establish fiscal management to ensure funds are spent as defined under agreements.

8.12) Form a trust or special purpose vehicle (SPV) as needed for local Investee NbS program management.

8.13) Secure, where needed, blended donor funding to create bankability.

Criteria 9 Best Practice Indicators

9.1) Baseline conditions for social, biodiversity, climate mitigation, and adaptation are captured at the start of the NbS program.

9.2) The Theory of Change and its implementation is co-developed around a set of shared challenges and goals.

9.3) NbS program Monitoring plans are developed to monitor at the operational and impact level.

9.4) Investees adopt a program operational performance monitoring plan.

9.5) Training and resources are provided to local implementors to conduct participatory monitoring of program activities and results.

9.6) Data and analysis are shared to identify where changes and improvements need to be made.

9.7) Results are monitored under an international standard with 3rd party audits.

9.8) Regular updates are made based on the data and analysis of workplans, budgets, and engagement processes.