Allianz has made a direct investment in climate protection in emerging markets for the third time since 2012. The area of Rimba Raya (translated “Infinite Forest”) spans 64,000 hectares or 640 km2, an area twice the size of Munich, and is located in the south of the island of Borneo. This investment will protect the area of jungle in the southeast Asian country of Indonesia from the threat of deforestation and will also preserve a center dedicated to protecting the orangutan population. An agreement has been reached with the Indonesian government not to disclose the volume of the investment.
"Allianz’s investment will help to prevent the threat of deforestation and, as a result, the emission of 90 million tons of CO2 over a 30-year period. The project will provide Allianz with certificates that it can use to offset its own emissions, meaning that the investment is to Allianz’s advantage. Allianz has been operating on a 100 percent climate-neutral basis since 2012 thanks to a combination of moves to reduce its own emissions and certificates like these", said Allianz in a statement.
“For investors like Allianz, carbon markets make it possible to finance climate protection by channeling capital to projects like Rimba Raya in developing and emerging economies,” said Rod MacDonald, who is responsible for this investment at Allianz Global Investors,“ Now we expect the international community to develop the necessary framework for an extensive implementation of REDD.”
Back in 2011, Allianz became involved in a forest protection project in Kenya, the first project in the world to be given REDD (Reducing Emissions from Deforestation and forest Degradation) status. REDD projects involve the local population and ensure that any financial income is used locally, for example to build schools or finance vocational training for the local people.
This was followed, in 2012, by the investment in a project in India to replace conventional light bulbs in private households with energy-saving equivalents. Rimba Raya is the world’s first REDD project to bear the triple CCB Gold Label (Climate, Community & Biodiversity Alliance) and the first that can generate certificates in line with the market-leading VCS (Voluntary Carbon Standard).
Indonesia has been hit particularly hard by the expansion of the palm oil industry. According to the United Nations, 98 percent of the country’s forests are at risk of falling victim to deforestation and slash-and-burn by 2022. Rimba Raya shows that there are cost-effective alternatives: “Rimba Raya paid exactly the same rates that palm oil or timber concessionaires would have paid, and it promises to deliver community development programs unmatched by the broken promises of palm oil. Lastly, the national park and the endangered orangutan have been spared the relentless pressures of palm oil expansion under which they both have suffered for decades,” says Todd Lemons, CEO of the project development firm Infinite Earth.
For Karsten Löffler, managing director of Allianz Climate Solutions, the corporate sector has a responsibility to address environmental problems in up-and-coming economies, too: “Asia is a growth market for Allianz. Global climate protection would have no chance of success if it were to leave these growth markets out of the equation. Rimba Raya will also raise awareness of how to deal with resources in a responsible manner and will help to preserve the habitat of the local population.”
The climate protection project will not only create jobs, but will also allow Allianz to make a contribution to raising awareness and will allow the expansion of a protected area for regional flora and fauna. This, in turn, will promote the quality of life of local communities, who rely on access to clean water and hunting. “It is often precisely the local population that benefits the least from the economic (ab)use of tropical forests. This project, on the other hand, will protect 14 communities with around 2,000 inhabitants who were at risk of being resettled due to deforestation for palm oil,” says Löffler.
The palm oil sector is a major branch of Asia’s economy. Palm oil is a key component of foodstuffs consumed by large parts of the world’s population, particularly in developing countries. Palm oil production is, however, resulting in large-scale deforestation and slash-and-burn.