Fairventures Social Forestry

Fairventures Social Forestry is a social enterprise offering investment opportunities in forest-based climate solutions through reforestation and conservation of existing forests in Indonesia. Our market-based approach offers responsible investment opportunities that create long-term value, local income opportunities and positive climate contributions. We work on degraded land with secure land titles based on an agroforestry approach, creating income for the local communities from sustainable supply chains in fast-growing timber and selected cash crops, and conserve remaining  intact forest areas while improving biodiversity and carbon impact. In 2019, we opened a 3,000 HA Social Forestry plantation in partnership with local communities in Borneo, Indonesia – the proof of concept for a scalable reforestation that can be replicated on 100,000´s of hectares. The timber produced  by FSF will be used in a modular wood housing system developed by FSF and partners.

Climate change is one of the greatest challenges humanity has ever faced. Even reducing emissions drastically might not be enough to reach the 1.5 degree goal set by the Paris Agreement. Two major drivers of climate change are unsustainable land use and deforestation. In addition toclimate change, deforestation has devastating consequences for biodiversity and the livelihoods of local communities which often depend on intact forests. Indonesia is among the countries most affected by deforestation, with more than 24 million hectares of degraded land that could be restored. 

On the other hand, carbon sequestration through reforestation is among the most efficient climate change solutions, and is one of the only solutions that removes carbon from the atmosphere rather than just reducing emissions, buying time for the transition to a post-carbon society. This requires careful selection of fast growing tree species to achieve impact now, when it is most urgent, and a strategy for how to use the timber so that the CO2 stored within it is sequestered for a long duration while the same land can be used for planting the next generation of trees. FSF’s reforestation solution is designed to sequester carbon at scale while delivering social and environmental co-benefits.

Fairventures Social Forestry has developed a social business model that allows for the rehabilitation of degraded land while providing a return on investment and generating sustainable incomes sources for local communities. The business model is based on multiple revenue streams: fast-growing timber, cash crops and non-timber forest products, and carbon finance. By implementing a model for growing and using fast-growing lightwood, FSF aims at 1) the rehabilitation of degraded land and sequestration of carbon, 2) the establishment of a sustainable timber industry focusing on mass timber construction to substitute steel and concrete in the building sector, and 3) the generation of long term and sustainable income sources for smallholders, local employees and communities. In this way, FSF provides an approach to tackle the global challenge of bringing 2 billion hectares of degraded land back into sustainable economic use for local communities and improving biodiversity and carbon sequestration capacity, both in regard to land use as well as in the timber value chain.

FSF works on degraded land areas with secure land titles provided by the Indonesian Government to local communities via Social Forestry Permits. A Social Forestry Permit is a long-term land use license, not to individuals, but communities. Currently, the Indonesian Ministry of Environment and Forestry provides such licenses for 12.7 Million ha all over Indonesia, (of which 1.5 Million ha are in Central Kalimantan), to address rural poverty and land tenure conflicts.

To cooperate with local permit holders, FSF enters into long-term contractual partnerships with a sharing of net profits. Rural communities in Indonesia face numerous challenges, such as lack of capital, insufficient knowledge about the sustainable and efficient cultivation and management of forest and agricultural products, and poor market access. FSF cooperates with communities to jointly overcome those challenges. As part of its business model, FSF aims at facilitating access to capital required for planting fast-growing timber to implement its reforestation approach  and securing access to markets with well-established industry partners. Additionally, FSF serves as a knowledge provider by offering training to local farmers, implementing best practices know-how and establishing sustainable, efficient, and scalable processes. FSF currently employs 30 staff members and 100+ workers from the communities. This number will double over the next 2 years and increase significantly with expansion to additional planting areas on other social forestry permits.

Local communities in Borneo depend on land use as an income source, but often employ unsustainable practices. FSF’s solution uses fast-growing trees and agroforestry to restore degraded land, provide income to these communities and reduce pressure from natural forest through sustainable production of timber resources. FSF is currently running a pilot project with two communities, but the solution is scalable to comparable areas in Borneo and other parts of Indonesia. The pilot area consists of both degraded land and secondary forests which will have the chance to regenerate over the project’s lifetime with significant ecosystem service and biodiversity benefits.

We are currently implementing our pilot project on 3,000 hectares of degraded land in Central Kalimantan (Borneo), Indonesia, which is part of the social forestry license of the community Mangkawuk. The project was launched in 2018. The land offers the potential for approximately 1,200 ha for reforestation and 1,200 ha for forest conservation, with a total climate potential of approximately 160,000 t CO2eq. This intervention provides livelihoods for approximately 750 people from the communities. We have established our company, recruited all key staff, but have limited our operations to the pilot area so far. With the planned expansion to other areas starting in 2022 or 2023 (depending on investments), we will enter the growth stage.

Reforestation is broadly accepted as a climate solution. However, existing models often fail to acknowledge the crucial role of local communities in the project areas. Where communities are included, reforestation can deliver enormous social co-benefits. Where communities are left out, the long-term success of any project is in doubt. Meaningful involvement of local communities requires an income level at least as high as that previously generated by unsustainable land use practices. Fairventures accomplishes this by combining reforestation with value chain development to ensure ongoing incentives for planting, demand that provides sufficient income for both FSF and the communites, and permanent sequestration of CO2 in the timber products. 

This approach has been welcomed by the reforestation community, donors and policy makers in Indonesia and Uganda, and has given FSF the opportunity to communicate its approach disproportionally to the current size of the company. FSF is committed to advancing reforestation and timber construction alongside each other and hopes to influence the international discussion on climate change in this manner.

Currently, our solution directly serves 500 people, namely 100 workers employed in the pilot project and their families. In one year, this number will increase to 750 people. In five years, following expansion to additional areas, the solution will serve 5,000 people. Beyond those directly affected, the work of FSF contributes to climate change mitigation for all of humanity.

To monitor its field operations, FSF collects extensive digital data by applying drone and cloud-based technology, see also the webmap on www.fairventures.org set up by FSF’s nonprofit sister organization Fairventures Worldwide.

Among our main environmental criteria are the total number of trees planted, ha of degraded areas replanted, m3 of timber harvested/replanted (on plantation), diameter (and growth rates) of trees planted, CO2 sequestrated and conserved or emissions avoided, improved biodiversity (methodology tbd), total area of remaining forests protected.

Our key social impact criteria are the number of employment opportunities created for local communities, incomes created/salaries paid, number of jobs created for women, and profit shared with local landowners.

FSF will employ TREEO, an app developed by Fairventures Worldwide, to provide accurate and fully transparent tree growth monitoring for every single tree planted (the app is expected to be deployed in August 2021). The app uses image analysis and machine learning to provide fast and reliable information on timber volumes in the standing stock. This tool can also be used to accurately document CO2 sequestration via tree biomass measured by the app.

The team of FSF consists of 30 full-time equivalent persons, most of which work in Indonesia and 100 workers contracted from the communities in the area of the pilot project.

FSF’s work is built on 7 years of tree planting experience and data from its non-profit sister organization Fairventures Worldwide in the target area. FSF has an experienced, dedicated team with expertise in forestry, climate finance, timber processing, investment and Indonesian regulations. The team has raised more than 3 million USD and is successfully implementing a 3,000 ha showcase in Borneo, Indonesia since 2018. Currently, the team is evaluating 50,000+ ha of scaling opportunities and has also signed MoUs and offtake agreements with industrial partners. Core relationships with communities, government agencies, experts, and industry partners have existed since 2014 and have proven to be stable. FSF is in an excellent position to implement the solution.

FSF values diversity and has made it a principle to hire Indonesians whenever candidates with the necessary skill set are available. Thus, FSF was able to limit expat presence in the project to three persons with a focus on training and capacity building. Whenever possible, FSF hired people from Borneo, rather than the usually higher qualified Javanese people who would normally take up leadership positions. FSF has been developed out of Fairventures Worldwide, which has a gender-balanced leadership and actively empowers female staff. This approach is the blueprint for FSF, although FSF has not reached gender parity in its leadership, but has been able to empower Indonesian colleagues in key leadership positions (Director of the Indonesian unit, Operations Manager, Community Relations, Legal & Administration). 

In addition, ensuring the participation of women from local communities is a high priority for FSF. Therefore, FSF promotes women’s participation and equality by all means while respecting traditional norms and values of local communities, which may differ from this endeavour.

We believe in our approach and that we can tackle multiple important challenges of our time with it - rural poverty, climate change and ecosystem degradation. Conversations with donors, partners, like-minded reforestation organizations, the Indonesian government and impact investors have confirmed that we are meeting an existing need. We strongly believe that investment-funded reforestation models are a key ingredient for the fight against climate change, and have not met anyone who disagrees. Nonetheless, fundraising for the pilot project has not been easy, and we know that other organizations have had an even harder time. There is a gap, not covered by existing funding instruments, between grant funding to set up the business model and proof of concept and the large-scale investment offered by public and private funds dedicated to financing climate projects. It almost seems easier to secure an investment of 10 million USD for a mature project than to find investors willing to support the first stage with 1 million USD. Our participation in MIT Solve is intended to generate attention to this lack of early-stage investment instruments, so that we and others can build more projects like the one of FSF, for the benefit of communities everywhere, our climate and the biosphere.

We would welcome conversations with public or private investors about the funding gap described above, and generate attention to the potential of projects like ours, but also make connections to like-minded organizations, the donor community and the private sector. We have a good network in Germany, but less so worldwide and would benefit from the attention that MIT Solve can generate and introductions to the reforestation funders in the US. We would also benefit from additional partners related to mass timber construction, be they engineers, architects or decision makers willing to adopt MTC for showcase buildings. In addition, we would be interested in being connected with potential buyers for our various cash crops, as we are still in the process of building sustainable and long-term supply chains with stakeholders who value not only the sustainable management practices of our crops but also the context in which they were grown.

The most relevant contacts for us would be investors, funds and organizations interested in scaling reforestation through commercial means. We would also like to start a conversation with the MIT School of Engineering about our wood engineering project component.

Our solution employs reforestation, the currently best solution to remove carbon from the atmosphere, and partners with local communities, who are so far excluded from climate finance. We are currently piloting a community forestry project with huge climate change mitigation potential and are looking to scale our approach to many more communities in the near future. Thereby, we are combining the fight against climate change with the fight against poverty. With the ServiceNow Prize funds we would be able to accelerate the large-scale implementation of our solution.