For investors and fund managers
An investor wants to put 10 percent of his capital into sustainable forestry. He finds various reforestation projects across different countries which all claim to perform at similar rates of financial returns and all report to be very sustainable. Because all projects measure their holistic performance by FairForest Metrics, the investor can fairly compare the investment opportunities in a differentiated way. One project shows a higher social performance, another project a higher environmental performance. As gender equality and the creation of employment is prior for this investor, he will move a percentage of his funds into the first project.
By adopting the comprehensive set of FairForest performance metrics as the reporting standard across his forest project portfolio, the fund manager will be able to precisely compare the projects. In this way he is able to better manage the performance of his investments, report towards his investors, and guide future investments.
For project developers
A sustainable reforestation company from Indonesia is raising capital to expand their reforestation activities. The business model is promising but the investor is hesitant as land grabbing is a big issue in the media and a severe risk for impact investors. By using the FairForest Metrics, the project developer was able document that he has carefully assessed the land grabbing issue by prior consultation of local communities, examination of land titles, execution of a social impact study, etc. This makes investment in his company more attractive since investors are able to easily evaluate the performance of the investment.
Advantages of using FairForest Metrics
The above examples have illustrated how these metrics can be used in sustainable forestry. The central advantage of metrics is to show to responsible investors the social, environmental and financial performance of your projects. As a management tool the metrics help to better analyze and systematically improve the project performance, and at the same time to promote transparency and accountability and thus communicate best practice towards all stakeholders.