BioCarbon Fund

BioCarbon Fund


The BioCarbon Fund was set up as a public-private sector initiative managed by the World Bank. The fund supports projects that generate “multiple revenue streams, combining financial returns from the sale of emission reductions (i.e., carbon credits) with increased local incomes and other indirect benefits from sustainable land management practices”. The fund comprises over 20 projects divided into two categories: the UNFCCC Clean Development Mechanism projects and the Verified Carbon Standard projects. The first two tranches of the BioCarbon Fund were founded in 2004 and 2007 and are now closed to new fund participation.

In 2013, the BioCarbon Fund launched a new initiative to support forest landscapes, namely the Initiative for Sustainable Forest Landscapes (ISFL). ISFL is capitalised via a new tranche of funding from the BioCarbon Fund. The initiative supports developing countries’ efforts to reduce emission through testing jurisdictional approaches that integrate reducing deforestation and degradation, sustainable forest management with the climate smart agricultural practices to green supply chains. The ISFL funds large-scale programmes that aim to enable countries and the private sector to adopt changes in the way farmers work on the ground, as well as informing policies made at the international level.

Basic Description

Name of the Fund BioCarbon Fund
Official Fund Website
(ISFL website:
Date Created
Date fund proposed: The BioCarbon Fund concept was first revealed at the Katoomba Group meeting in March 2002, and was approved by the World Bank’s Board of Executive Directors in 2003.
Date fund made operational: The Fund became operational in 2004.

ISFL is operational since 2013.

Proposed Life of Fund Multi-year – undetermined.
Objectives The BioCarbon Fund is devoted to land use. Its objective is to restore and protect ecosystems and to support land transformation. Moreover, the fund aims to create new revenue streams and improve the livelihood of rural communities.

For the ISFL, “[t]he objective is to work alongside private firms that can provide capital, innovation, operational resources as well as technical expertise to accelerate the greening and securing of their supply chains.” Specifically, to:

  • Scale up interventions to jurisdictional landscapes
  • Break down sectoral silos and work across forest, agriculture, and energy sectors
  • Build partnerships with private sector to scale up beyond available public financing
  • Combine results-based payments with dedicated grant funding for technical assistance

ISFL’s overarching aim is to catalyse the development of a low-carbon rural economy that will result in livelihood opportunities for communities and an overall reduction in land-based emissions.

Financial inputs and fund size The first two tranches of the BioCarbon Fund have a total commitment of USD 90 million. The contributors include six governments and public entities and eleven private companies. The full list of investors is available at:

ISFL is a multilateral fund supported by donor governments. The fund’s capital amounts to about USD 355 million and its contributors are: Germany, Norway, Switzerland, United Kingdom, and USA.

No information is available regarding the degree to which these financial inputs are classified as official development assistance (ODA).

Activities Supported The BioCarbon Fund activities include environmental restoration, reforestation for fuel wood, afforestation activities, REDD+ activities, sustainable agricultural land management, fast-growing tree plantations for timber.

Administrating Organization

Secretariat or Administrative Unit The fund is managed by the World Bank. The World Bank’s Carbon Finance Unit handles the day-to-day operation of the BioCarbon Fund which is housed in the organisation’s Climate Change Fund Management Unit.
Trustee The World Bank is the permanent trustee of the BioCarbon Fund.

Fund Finance and Access Modalities

Conditions and Eligibility Requirements Eligibility covers forest countries which are World Bank’s Borrower Members and goes beyond ODA eligible countries.
Accessing the Fund
Access Modalities – To access the BioCarbon Fund, forest countries propose projects that can certify their emission reductions under a variety of standards such as the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCCC).

For selection of ISFL jurisdictions, a series of high-level quantitative and qualitative indicators across three areas are considered, including REDD readiness, general factors not related specifically to REDD+ or agriculture (such as private sector engagement in the country and potential co-benefits) and agricultural drivers.

Projects are only considered if they sequester or conserve greenhouse gases in forests, agro- and other ecosystems.

Financial Instruments – The BioCarbon Fund provides grant funding, grant-based technical assistance and capacity-building effort as well as results-based payments for achieved emission reductions.
Accreditation process – There is no formal accreditation process. Forest countries and jurisdictions approved by the BioCarbon Fund will be entered into the funding portfolio. A project will be proposed by an entity associated with the host country through a Project Idea Note. If the parties decide to continue, then a Project Design Document and an Emissions Reductions Purchase Agreement will be drawn up.
Overview of implementing entities – Private companies, NGOs, government agencies, or international partners. No listing of actual implementing entities is available.
Nature of recipient country involvement – Local level governance relies on a partnership between BioCarbon Fund contributors and local entities. However, no information is available on the degree to which recipient countries are involved.
Allocation criteria
Safeguards, Gender and Indigenous Peoples
Safeguards – The World Bank’s social and environmental safeguard policies apply to all BioCarbon Fund operations.
Gender – All projects are subject to the World Bank’s gender policy. The BioCarbon Fund is therefore committed to address the issue of gender by conducting “gender assessments to review gender inequality in program areas and by developing concrete actions plans to address them”.
Indigenous Peoples – The BioCarbon Fund programmes align with the World Bank Environmental and Social Framework‘s Standards 7 and 10 which require that meaningful consultation is conducted with Indigenous Peoples’ groups. This includes the necessity to obtain the consent of Indigenous Peoples before starting programme activities that affect them.

Fund Governance

Decision Making Structure
The World Bank’s Climate Change Fund Management Unit oversees several carbon finance initiatives and is responsible for managing the BioCarbon Fund. The team is in charge of “supervising and monitoring BioCarbon Fund activities, proposing new projects to the investing participants for review, serving to facilitate interactions with the Participants, and developing the land-use sector based on broad discussions with the public and private sector as well as market regulators”.
The World Bank’s Board of Executive Directors has the ultimate authority to amend the instrument establishing the BioCarbon Fund and to approve the projects’ grants.
Accountability Mechanisms
Independent Evaluation
The BioCarbon Fund has committed to having independent third parties conduct programme evaluations. An evaluation occurred in 2018 and assessed the formative years of the ISFL (2013-18). This evaluation was led by DAI Global LLC in partnership with the World Bank’s Fund Management Team and the ISFL Evaluation Oversight Committee. Two additional evaluations are planned for 2023 and 2028.
Complaint Mechanism
Affected communities can file complaints to the World Bank Inspection Panel when they feel that the Fund “has failed to comply with its own policies and a project has resulted in harm”. This mechanism has been used several times in the past (as for instance by Indian farmers in 2012).
Participation of Observers and Stakeholders The World Bank Group’s tools for stakeholder engagement apply to BioCarbon Fund projects. These tools include World Bank and IFC operational and safeguard policies, Strategic Environmental and Social Assessment, Environmental and Social Management Framework, Operational Policy 4.10 on Indigenous Peoples, and Performance Standard 7.

The BioCarbon Fund declares that it engages stakeholders throughout design and implementation through “studies; consultations; in-country missions and field visits; regular engagement with recipient governments; and steering committees, user groups, secretariats, working groups, and existing platforms.” In addition, participants are involved in the review of proposed annual activity reports and annual budget and business plans.

Transparency and Information Disclosure The World Bank Group’s Policy on Disclosure of Information applies.

BioCarbon Fund’s knowledge centre provides a wide range of documents including monitoring and evaluation reports, workshops and presentations.

In addition, programme overviews offer individual and in-depth details on every funded project, the programme results and the programme contact information (BioCarbon Fund; ISFL).

Other Issues Raised Broadly speaking, the BioCarbon Fund’s role in selling emissions reductions to offset voluntary emissions reductions has been criticised by some civil society organisations. The BioCarbon Fund’s experimentation with “avoided deforestation” that assign monetary values to the capacity of standing forests to serve as carbon sinks was also criticised.

A BioCarbon Fund sponsored reforestation project in Guangxi, China was forced to suspend implementation in 10% of affected communal lands due to tenure and resource disputes.

The BioCarbon Fund “JK Papermill project” has been criticised for putting a financial burden on poor farmers involved in the project, whose financial situations have worsened considerably as they have not been able to repay loans provided to buy seedlings and other supplies needed for plantation forestry intended for paper production.