The private forest sector is not exempt from requirements for investors and businesses to show that their activities are delivering positive environmental, social and governance (ESG) outcomes. The normalization of more stringent and comprehensive investor reporting standards means that investors are looking to finance activities that deliver ESG benefits. Such developments in reporting standards are being driven by initiatives such as the establishment of ‘taskforces’ for nature- and climate-related disclosures. Although voluntary, these initiatives have gathered momentum – the Task Force on Climate-Related Financial Disclosures (TCFD), created in 2015, claimed 4,000 supporters across 101 jurisdictions by February 2023.
For the forest sector to continue to be able to access capital from investors, the sectoral business model should support both nature- and climate-positive activities. First, the forest sector should ensure its activities do not drive illegal logging activities or conversion of natural habitats. Second, the sector should incorporate nature-based solutions into forestry activities to create environmental and social benefits. Lastly, by diversifying its production model away from monoculture (single-species) commercial plantations and adopting polyculture (multiple-species) practices, the forest sector can better integrate with the natural habitat, improving the resilience of landscapes to pests and diseases and allowing greater biodiversity to thrive.
Trends already at play in the global bioeconomy can facilitate shifts in commodity production within the forest sector. First, bio-based alternatives are increasingly being used to replace fossil fuel inputs in supply chains. Research from McKinsey Global Institute estimates that up to 60 per cent of global inputs have already been – or could feasibly be – replaced with biomaterials. The same source estimates that advances in the use of biological inputs in the production of materials, chemicals or energy could generate between $200 billion and $300 billion in global market growth in the period to 2040.
Some advocates of the bioeconomy propose that it can make a strong contribution in the phasing out of fossil fuels by providing replacements for carbon-intensive products such as plastics, synthetic textiles and building materials, and through the production of bioenergy. Other advocates argue that it could provide a transformative development model that can shape development pathways and technological routes for entire nations. There are also concerns: detractors argue that an over-reliance on the bioeconomy to replace fossil fuels could lead to a ‘land crunch’ as more land is allocated to producing bio-based products. Market-driven land allocation (where land is allocated so as to produce the greatest financial gain) may incentivize land managers to create landscapes for commodity production or carbon dioxide sequestration, rather than for ecological restoration and biodiversity enhancement. Other critics argue that bio-based approaches – especially bioenergy and carbon capture storage (BECCS) – may be co-opted by fossil fuel interests to delay the decarbonization of energy production by justifying the continued use of fossil fuels through carbon offset programmes.
The bioeconomy is generally categorized into three ‘visions’:
- Biotechnology: creates economic growth and new jobs through the adoption of new technologies. This vision relies on the integration of advanced biotechnology with innovation approaches that seek to shorten the time it takes to roll out new technologies to market, through more effective research and development (R&D);
- Bioresource: combines economic growth and sustainability by improving land use and supply-chain processes which enable more effective land management; and
- Bioecology: protects and enhances biodiversity in landscapes and integrates protections with agroecological practices that deliver benefits to local communities.
The adoption of national and local bioeconomy strategies is likely to combine a mix of these visions depending on the specific priorities of the country or region, as well as local factors such as land, water and other bioresource availability; the presence of companies that use (or could use) biomaterials – such as pharmaceutical, biotechnology or forest sector enterprises; and the availability of research and innovation capabilities.
Bioeconomy strategies are becoming prominent in the policy planning of national governments and local authorities in many countries, as well as in the deliberations of supranational bodies or blocs such as the EU.
In recent years, global momentum in this area has grown considerably. Bioeconomy strategies are becoming prominent in the policy planning of national governments and local authorities in many countries, as well as in the deliberations of supranational bodies or blocs such as the European Union (EU). In 2020, almost 60 countries across several continents were seeking to develop bioeconomy-related strategies. Currently, there are many public policy strategies in place, including in China, Colombia, Germany, Japan, South Africa and the US. Notably, three multilateral bioeconomy strategies exist – the Eastern African Regional Bioeconomy Strategy (2020), the European Bioeconomy Strategy (conceived in 2012 and updated in 2018) and the Nordic Bioeconomy Programme (2018).