Forests, Finance, and the Forces Shaping Climate Solutions

Breathe in the Forest Air

As we took in the first breath of humid and deeply floral air in the forests surrounding Sao Paulo, Brazil earlier this week, on our way to the United Nations’ 30th Conference of the Parties on climate change (COP30), my colleague and I reflected on how much a forest always feels like home, despite being halfway around the world. Afterall, what could feel more like home than walking through one of the most important ecosystems on Earth?

Forests help create and filter the water and air we all breathe — and hold one of the most powerful solutions to climate change. The world’s Ancient and Endangered Forests are home to 80% of the world’s on-land biodiversity. And to boot, they are 40 times more effective at storing carbon than new tree plantations. Perhaps the most compelling part is that forests already exist, and no new effort is needed — except to ensure we enable them to continue to thrive.

How Far We Have Come on Climate

As we head into COP30 in Belem, Brazil, I think back ten, even twenty years, to how far we’ve come on climate change. I remember, at age 20, staring at the writing on the wall as climate science reports at COP11 in Montreal projected the world was on track to warm by 6–7 degrees Celsius. A lot of horrible impacts happen at that level, most horrifically the unnecessary deaths of billions of people around the world.

Fast forward ten years to COP21 in Paris. By that time, enough action around the world was underway to bend the emissions curve to get us down to a projected 4 degrees. And now, in 2025, that projection — if all countries do what they have promised to do — is down to 2.3 degrees. Is that too much? Of course. Do we need to do more? Absolutely. Has a massive sea change been underway to minimize the scale of damage from billions down to millions of lives lost? You bet.

On forests in particular, at COP11, Canadian folk singer Bruce Cockburn opened the summit with his lyrics, “If a tree falls in the forest does anybody hear?” Twenty years later, this song would be just as relevant to open this week’s summit in Belem, which sits at the edge of the lungs of the planet — the Amazon. This COP, in its nature, has the potential to be a summit for the world’s forests. Already this week, at the leaders’ meeting in advance of the COP, countries stepped up with over $5.5 billion USD for the Tropical Forest Forever Facility — endorsed by 53 countries at last count.

The question is: Will this leadership continue? What else is needed to enable forest ecosystems to continue to thrive?  

The Next Industrial Sector to Transform

What is most different now from ten or twenty years ago is that we’ve largely initiated the obvious and easy parts of cutting emissions. Scaling up energy conservation, efficiency, and zero-emission renewable power — and electrifying everything that can be electrified. Now we are in the era of tackling “hard to abate” sectors — major industrial transformations of energy-heavy processes that have a broader impact than energy use alone. The materials sector drives one-third of global emissions but receives less than three percent of climate finance.

What if I told you there was a way to make paper, packaging, and textiles with four tonnes less carbon per tonne of product than exists today? And that has a five-fold reduction of impact on biodiversity? That’s what Next Generation materials can achieve — these use circular, sustainable sources as alternatives to tree-based fibre — sources like recycled agricultural and textile waste.

On agricultural waste in particular, 500 million tonnes of crop leftovers are burned every year, contributing to 3.5% of global emissions and severe air pollution. That plant material left on the field is cellulose — and it is a valuable resource able to be turned into paper, packaging, and textiles. Achieving this at scale can relieve pressure on human health and the world’s forests, while scaling a sustainable, circular industry for a very large country’s domestic use and for export.

Canopy’s partners have already committed to 648,000 tonnes of offtake, which is a promise to purchase and use Next Gen materials as they become competitively available. The demand is there, offering a massive ability to derisk production at scale. The technology is there. The competitiveness is there. So how do we unlock this massive opportunity?

Scaling a Sector, Fast

Canopy estimates there is a USD $78 billion opportunity to scale sustainable alternatives to forest fibre by 2033. That’s the amount needed to make 60 million tonnes of low-impact cellulose, and to replace the cellulose currently sourced from forests for products like paper, packaging, and textiles. These technologies have been tried and tested, and are ready to grow.

At New York Climate Week, Canopy opened the door to invite impact investors to work with us to build a $2 billion blended finance platform in India. We are heading to Belem to invite more high impact leaders to join this effort. The goal? Create 1 million tonnes of Next Gen fibre, with the ability to grow to $13–15 billion and 10 million tonnes by 2033.

Why India? The country is an agricultural powerhouse, textile expert, and major paper and packaging producer. Most importantly, 100 million tonnes of agricultural waste is burned on the fields of India every year, contributing to 40% of Delhi’s air pollution during burning season, and on average 150 premature deaths in India per day.

What are Investors Saying?

Today, leading banks and investors know they have to integrate sustainability to succeed. They know that, ultimately, acting on climate in particular is as much about risk management as it is about identifying new opportunities. At the Sustainable Innovation Summit last week in Sao Paulo, I heard from Kuyng-Ah Park, Chief Sustainability Officer of Temasek. She spoke about how Temasek acts as a generational investor,  in other words, a long-term asset owner acting “not only for the current generation, but also future generations.” And, because of that, she added, “We bear directly or indirectly the system risk issues” — of which climate change is certainly one of the biggest of all.”

 I also heard from Amal-Lee Amin, Managing Director and Head of Climate, Diversity, and Advisory for British International Investment (BII), who also reflected on what has changed over the past years on climate finance. “I feel there has been a real shift,” she said. “We’ve shifted more into the ‘how’ now — not the ‘why’ and the ‘what’.” When she spoke about innovative and impactful ways to create change through finance, she noted, “The role of blended finance is a key tool… to help accelerate and scale that private capital to the hardest reach places and benefit the most vulnerable people in particular.”

What Role does Blended Finance Play on Climate Change?

The world needs to mobilize at least $1.3 trillion per year by 2035 to finance climate mitigation and adaptation. As Park from Temasek noted, we will need speed and simplicity to get this done right — and we need to especially mobilize capital in emerging economies, with a whole ecosystem approach. Canopy supports this view, and it is at the centre of how we are working to build our blended finance platform in India. It is essential to support the whole supply chain transition to move at the same time — and doing that takes a holistic approach.

 Karen Fang, Head of Infrastructure and Sustainable Finance at Bank of America spoke last week at the Sustainable Innovation Summit about blended finance as well. In her words, blended finance “is hard to do, is hard to repeat, and there’s not enough of it.” She spoke to how it is “important to go from being reactive on risk to being proactive,” and especially in terms of how we now value protection today to value creation tomorrow. On forests in particular, we know that this natural resource is increasingly at risk due to climate impacts such as wildfires, drought, and unsustainable use. We also know that there is a valuable resource being left on the field and burned, which could be creating economic opportunity and benefit for communities.

 What’s Needed in Belem

Canopy is on the ground this week to find new partners to help build the circular economy for materials production, so that virgin fibre from Ancient and Endangered Forests is no longer part of the supply chain. We, too, are focused on the ‘how’. And will be looking for those who want to join us.

At the UN negotiations themselves, nations have the opportunity to step up with forest commitments and financing, both for, and beyond, the Tropical Forests Forever Fund. Transforming global supply chains will take more than one fund. It will require the private sector and investors to step up and focus efforts on enabling forests to thrive. Canopy believes this type of finance can also greatly contribute to adaptation, resilience, reducing water use, reducing the risk of price volatility, and enabling emerging economies to lead on essential industrial transformation.

This convening in Belem, next to the Amazon itself, has the ability to deliver strong commitments toward enabling forests to continue to thrive. And in the meantime, we’ll continue to drive forward change in every way we know how — leveraging our partnerships with over 1000 brands and producers to shift supply chains in favour of the forests, around the world.

What we know for sure: We can’t predict the future, but we can create it. And we might just surprise ourselves.