Forest Carbon Partnership Facility

Forest Carbon Partnership Facility

Summary

The Forest Carbon Partnership Facility (FCPF) is a World Bank multi-donor fund of governments and non-governmental entities, including private companies, and consists of two separate but complementary funding mechanisms, namely a Readiness Fund and a Carbon Fund. The FCPF was created to assist developing countries to reduce emissions from deforestation and forest degradation, enhance and conserve forest carbon stocks, and sustainably manage forests (REDD+). Launched in 2007, the FCPF works with 47 developing countries across the world and 17 donors.

Basic Description

Name of the Fund Forest Carbon Partnership Facility (FCPF)
Official Fund Website www.forestcarbonpartnership.org
Date Created
Date fund proposed: Initial discussions in 2006.
Date fund made operational: 25 June 2008*.

*The FCPF became operational upon the operational date of the Readiness Fund. The Carbon Fund became fully operational in May 2011.
Proposed Life of Fund The Readiness fund operated until 2022.

In June 2024, the Carbon Fund participants approved an extension of its lifespan to December 2028.
Objectives The FCPF aims to:

  1. Provide financial and technical assistance to:
    • Assist eligible countries with their REDD+ efforts to achieve emission reductions from deforestation and/or forest degradation
    • Build recipient country capacity for benefitting from possible future systems with positive incentives for REDD+.
  2. Pilot an emissions reduction performance-based payment system for REDD+ activities, to ensure equitable benefit sharing and promote future large-scale positive incentives for REDD+
  3. Test ways within the REDD+ approach to conserve biodiversity and sustain or enhance livelihoods of local communities
  4. Disseminate the knowledge gained through the development and implementation of the FCPF and related proposals and programmes for readiness and emissions reductions.
Financial inputs and fund size In total the FCPF amounts to over USD 1.4 billion pledged and deposited:

  • The Readiness Fund: USD 472 million
  • The Carbon Fund: USD 947 million.

The FCPF is supported by a diverse group of entities, including governments, non-governmental organisations (NGOs), and private companies. Private companies are required to make a minimum financial contribution of USD 5 million to participate.

Readiness Fund Contributors:
European Commission, Australia, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Switzerland, UK and USA.

Carbon Fund Contributors:
European Commission, Australia, Canada, France, Germany, Norway, Switzerland, UK, USA, BP Technology Ventures Inc., The Nature Conservancy.

All financial inputs can be attributed as official development assistance (ODA).
Activities Supported Activities supported by the FCPF:

  • • The Readiness Fund, operating until 2022, helped prepare developing countries for participation in a large-scale, system of positive incentives for REDD+. This included support for:
    • Developing national reference scenarios for REDD+
    • Adopting a national REDD+ strategy that reduces emissions, conserves biodiversity and enhances the livelihoods of forest-dependent Indigenous Peoples and other forest dwellers
    • Designing and implementing accurate measurements, monitoring and verification systems to enable reporting on emissions from deforestation and forest degradation.
  • The Carbon Fund provides payments for verified emission reductions from REDD+ programmes in countries that have made considerable progress towards REDD+ readiness. By the end of 2024, eight partner countries of the FCPF Carbon Fund have received results-based payments, totaling USD 164 million. Assistance is divided into four main categories:
    • General Economic Policies and Regulations (taxation, subsidies, rural credit, certification, law enforcement)
    • Forest Policies and Regulations (taxation, subsidies, certification, concession regimes, securing land tenure and land rights, forest law, governance and enforcement, zoning, protected areas, payments for environmental services (PES))
    • Forest Management (forest fires, reduced impact logging, reforestation)
    • Rural Development (community development, rural electrification, community forestry).

Administrating Organization

Secretariat or Administrative Unit The World Bank provides secretariat services through a Facility Management Team. The team has three core functions:

  1. Administering the Funds: The World Bank, as the trustee of the FCPF’s Readiness Fund and Carbon Fund, manages day-to-day operations, including fund management and administration
  2. Supporting Governance Bodies: The FMT prepares proposals for approval by the FCPF’s governing bodies, such as the Participants Committee and the Carbon Fund governance, facilitating decision-making processes
  3. Providing Technical and Methodological Support: The FMT offers technical assistance to REDD+ countries, including overseeing validation and verification processes to ensure compliance with World Bank Group policies and Carbon Fund requirements.

Additionally, the FMT manages the Carbon Asset Trading System (CATS), the FCPF’s transaction registry, and ensures that all operations comply with applicable policies in areas such as safeguards, procurement, and financial management.
Trustee The World Bank is the permanent trustee.

Fund Finance and Access Modalities

Conditions and Eligibility Requirements Only developing countries that are members of the World Bank can participate in the FCPF. Eligibility for accessing the FCPF is not restricted to ODA countries. Currently, the FCPF has 47 country participants.

Conditions for participation in the Readiness Fund

  1. REDD+ Country eligibility
    • An eligible REDD+ country is:
      1. A borrowing member state of the IBRD or IDA; and
      2. Located in the tropical area or sub-tropical area
  2. Relevance of Country in the REDD+ context
    • Priority should be given to countries with the following characteristics:
      1. Significant forest area and carbon stock;
      2. High importance of forests in the national economy; and
      3. High current or projected deforestation or forest degradation

Conditions for participation in the Carbon Fund
Countries that successfully participated in the Readiness Fund could then be selected, on a voluntary basis, to participate in the Carbon Fund.
Accessing the Fund
Access Modalities – The following criteria are considered:

  1. The extent of programme ownership by the government and relevant stakeholders, coherence with national or sectoral strategies, and feasibility to reduce deforestation and forest degradation
  2. The need to balance experiences and learning across different continents and across the world’s main forest biomes
  3. The approaches that can contribute to the learning objective of the FCPF.
Financial Instruments – The Readiness Fund was fully grant-based. Within the Carbon Fund, funds are delivered in exchange for emission reductions as results-based finance. As of late 2024, eight partner countries of the FCPF Carbon Fund have received results-based payments, totaling USD 164 million.
Accreditation process – There is no formal accreditation process for implementing partners. An eligible country can directly authorise an entity to act on its behalf in submitting a proposal for funding support.

Approved readiness support services are provided to countries through delivery partners (the World Bank, the United Nations Development Programme (UNDP), and the Inter-American Development Bank (IDB)).

Participation in the Readiness Fund

  1. An Eligible REDD+ Country submits through its authorised representative or by another entity authorised to act on its behalf, a Readiness Preparation Proposal Idea Note to the Facility Management Team.
  2. Upon approval by the Participants Committee, the Eligible REDD+ Country enters into a REDD+ Country Participation Agreement with the Trustee of the Readiness Fund.
  3. The Trustee of the Readiness Fund may enter into one or more grant agreements to fund a Readiness Preparation Proposal (RPP) by a REDD+ Country Participant.

The milestones of Readiness are available at: https://www.forestcarbonpartnership.org/sites/fcp/files/2020/Feb/RF.JPG

Participation in the Carbon Fund
A few countries that have successfully participated in the Readiness Fund were then selected, on a voluntary basis, to participate in the Carbon Fund. Countries that have made considerable progress towards REDD+ readiness submit programme proposals that are assessed according to the following criteria:

  • Potential for generating high quality sustainable emissions reductions and social and environmental benefits
  • Scale of implementation
  • Consistency with emerging compliance standards under the UNFCCC and other regimes
  • Potential to generate learning value for the FCPF and other participants
  • Clear and transparent ‘benefit sharing’ mechanisms with broad community support
  • Transparent stakeholder consultations.

Summary of the Carbon Fund process is available at: https://www.forestcarbonpartnership.org/sites/fcp/files/2020/Feb/CF.JPG
Overview of implementing entities – The implementing entities include national government agencies (e.g. Indonesian Ministry of Forestry, Nicaraguan Ministry of the Environment and Natural Resources) and the IBRD.

The list of actual implementing entities is not available.

The World Bank, the Inter-American Development Bank (IDB) and the United Nations Development Programme (UNDP) are delivery partners under the Readiness Fund and responsible for providing REDD+ readiness support to distinct countries.
Nature of recipient country involvement – The FCPF respects recipient countries’ national policies and sovereign rights to manage their own natural resources. Recipient countries’ determine specific strategy options and the manner in which to use the Readiness Mechanism (to prepare for REDD) or the Carbon Mechanism (to reduce GHG emissions). The countries are given autonomy to individually prepare and submit proposals to the Facility under both mechanisms.
Allocation criteria – N/A
Safeguards, Gender and Indigenous Peoples
Safeguards – The FCPF Readiness Fund delivery partners are expected to follow the World Bank’s overarching safeguard policies, which fall under the following relevant categories: environmental assessments; natural habitats; forests; physical cultural resources, involuntary resettlement; and Indigenous Peoples.

The FCPF Readiness Fund has adopted a so-called ‘Common Approach‘ for addressing social and environmental safeguards which provides a common platform for risk management and quality assurance for the REDD+ readiness preparation process among multiple delivery partners. The approach is fully aligned with the World Bank’s applicable policies and procedures on environmental and social safeguards, disclosure of information, and accountability mechanisms.

The FCPF has produced joint ‘Programme Guidelines on Stakeholder Engagement in REDD+’ with the UN-REDD programme, and also requires adherence to its guidance on disclosure of information.

The safeguards that are put in place aim to ensure that REDD+ activities take into account a range of policies and rights relevant to conservation, stakeholders, and their access to sustainable livelihoods. These safeguards include a Safeguard Information System, a Strategic Environment and Social Assessment and an Environmental and Social Management Framework.
Gender – The World Bank’s gender strategy applies. The FCPF is committed to implement programmes that “seek to establish pathways that enhance and recognise women as transformational agents in the management and conservation of forests.” To achieve this goal, the fund works with countries to design and implement REDD+ readiness programmes that ensure women are partners in all activities related to climate finance. In addition, FCPF activities aim to strengthen reporting on the gender components of initiatives. The FCPF supports three areas of gender-focused activities:

  1. Designing programmes with gender awareness,
  2. Gender-responsive forest pilots,
  3. Building evidence, data and knowledge on gender awareness.

In 2020, the FCPF conducted several studies to support women’s engagement in REDD+, including a review of gender mainstreaming in benefit-sharing plans. In addition, the FCPF has developed several gender guidance documents, including a gender integration brief, resulting for example in an action plan for gender integration in Carbon Fund Emissions-Reduction Programmes (ER-P) in Lao PDR, with corresponding gender action plans in several additional countries including Costa Rica, Ghana, Nepal, and Uganda.
Indigenous Peoples – The FCPF follows the World Bank’s Environmental and Social Standards, which include:

  • ESS7: Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities: This standard emphasises the need for meaningful consultation with Indigenous Peoples to ensure their participation in projects affecting them
  • ESS10: Stakeholder Engagement and Information Disclosure: This standard requires effective engagement with all stakeholders, including Indigenous Peoples, throughout the project lifecycle.

By adhering to these standards, the FCPF ensures that Indigenous Peoples and local communities are actively involved in decision-making processes related to REDD+ activities.
The FCPF acknowledges that forests managed by Indigenous Peoples tend to be better protected. This recognition underscores the importance of securing land rights for Indigenous communities as a cost-effective strategy for forest conservation and carbon sequestration.
Capacity Building Programme for Forest-Dependent Indigenous Peoples and Southern Civil Society Organisations (CBP):
The FCPF has established the CBP to enhance the understanding and engagement of forest-dependent communities in REDD+ processes. The programme focuses on:

  • National Capacity Building and Awareness Raising: Particularly targeting women and youth to ensure inclusive participation
  • • Regional Exchange and Sharing of Lessons Learned: Facilitating knowledge exchange among communities across different regions.

Launched in 2008, the CBP has undergone three phases, with a total funding of just under $10 million.

Fund Governance

Decision Making Structure The FCPF is characterised by a governance structure that gives equal weight to developing and industrialised countries.
Prior to 2022, the FCPF governance structure consisted of a:

  • Participants Committee;
  • Participants Assembly:
  • Carbon Fund Participants Committee;
  • Facility Management Team;
  • Trustee of the Readiness Fund;
  • Trustee of the Carbon Fund; and
  • One or more Ad Hoc Technical Advisory Panels.

Participants Committee
The Participants Committee was the managerial body responsible for overseeing and facilitating operations of the FCPF. It met twice a year to review submissions and select new participant countries, as well as approve funding allocations, rules of procedure, budgets and new methodologies. The Committee consisted of 28 members (14 REDD+ Country Participants and 14 members collectively from Donor Participants and Carbon Fund Participants) and each member was entitled to one vote. Decisions were made by consensus but should efforts to reach consensus fail, a two thirds majority of members present and voting will suffice.
Participants Assembly
The Participants Assembly met annually to elect the Participants Committee and provided oversight and guidance to the Participants Committee. Primarily a forum for information exchange and knowledge sharing, it was attended by participants from the Carbon Fund, eligible REDD+ countries and donor countries. To overturn decisions of the Participants Committee, a minimum of two-thirds majority from REDD+ Country Participants and two-thirds collective majority from Donor Participants and Carbon Fund Participants was required.
The Carbon Fund Participants Committee
The Carbon Fund Participants Committee makes decisions on specific carbon transactions.
Facility Management Team
The Facility Management Team is responsible for the day-to-day operations of the FCPF.
Ad Hoc Technical Advisory Panels
One or more Ad Hoc Technical Advisory Panels may be established by FCPF’s governance bodies (Participants Committee or the Facility Management Team, etc.) for the purpose of securing technical advice and information. Each Ad Hoc Technical Advisory Panel is independent and impartial.
Post-2022, the governance structure of the FCPF underwent significant changes due to the closure of the Readiness Fund on December 31, 2022. This closure led to the dissolution of key governance bodies associated with the Readiness Fund, notably the Participants Assembly and the Participants Committee. Consequently, the FCPF’s governance framework now centers exclusively around the Carbon Fund and its associated participants.
Accountability Mechanisms The FCPF utilised the Readiness Fund Dashboard to monitor and provide detailed overviews of the implementation status and related issues of its programmes until its closure in 2022. The FCPF continues to use the Carbon Fund Dashboard to regularly update stakeholders on the progress of its emission reduction programmes, offering detailed insights into implementation statuses and any pertinent issues.
In May 2019, the FCPF adopted an updated programme-level Monitoring and Evaluation (M&E) Framework. This framework includes:

  1. a revised FCPF results framework (revised impact, outcome and output statements, and revised indicators)
  2. an indicator-by-indicator overview and reporting guidance (rationale for indicators, data sources, measurement approaches, reporting responsibilities)
  3. a revised progress reporting templates
  4. an outline of options for future FCPF evaluations.

Independent Evaluations
FCPF programmes have been evaluated in 2011, 2016 and 2023. The first independent programme evaluation was commissioned by the Participants Committee of the FPCF and was conducted by the Nordic Agency for Development and Ecology in 2011. They found that “since its inception in 2008, FCPF has made significant progress in meeting the first and last objectives (building in-country capacity and disseminating lessons learned in readiness), but less progress has been made on the two other objectives as would be expected at this early stage (piloting a performance-based system of payments; enhancing livelihoods & conserving biodiversity)”.
The second independent evaluation was led by Indufor Team in 2016. The main findings on relevance were:

  • “The FCPF continued to add value to REDD Countries through its common readiness framework and structured approach to REDD Readiness,
  • In some countries, the FCPF Delivery Partners had not integrated REDD+ agenda into their country engagement strategies even if they supported REDD+ through the FCPF,
  • Most Financial Contributors had common strategic priorities to which the FCPF had responded appropriately”.

In April 2023, the FCPF commissioned its third independent evaluation to assess the programme’s achievements, challenges, and lessons learned. The findings from this evaluation were published in June 2024 and highlighted the following:

  • While the FCPF has contributed to biodiversity conservation and improved livelihoods in participating countries, the evaluation highlighted the need for more robust monitoring and reporting mechanisms for these non-carbon benefits
  • By developing readiness capacities and piloting results-based payments, the programme has facilitated countries’ entry into carbon markets, thereby promoting sustainable forest management practices
  • The establishment of 68 partnerships with the private sector has been instrumental in advancing REDD+ initiatives.

Complaint mechanisms
The World Bank’s applicable policies and procedures on grievance and accountability mechanisms apply through the ‘Common Approach’ for FCPF Readiness Fund delivery partners and regulate the establishment of FCPF related grievance and redress mechanisms. FCPF has a country/programme feedback and grievance redress mechanism. Stakeholders (including geographically, culturally or economically-isolated or excluded groups) can use this mechanism during the preparation phase and the operation stage to address their grievances.

In addition, affected communities can file complaints to the World Bank Inspection Panel when they feel that FCPF programmes cause harm to people or the environment.
Participation of Observers and Stakeholders During the operational phase of the Readiness Fund, stakeholders actively participated in the governance process as observers in both the Participants Committee and the Participants Assembly. Observers included representatives from international organisations, non-governmental organisations, forest-dependent Indigenous Peoples and forest dwellers, and private sector entities. While these observers did not hold voting rights, they were able to engage in discussions and express their views on issues under consideration.
In the current Carbon Fund governance structure, stakeholders continue to be engaged through observer roles. Observers are invited to Carbon Fund meetings and remain essential contributors to transparency and inclusivity in decision-making. Their participation reflects the FCPF’s ongoing commitment to multi-stakeholder engagement, even in its streamlined governance phase.
The full list of official observers can be found at: https://www.forestcarbonpartnership.org/official-observers
Transparency and Information Disclosure The Readiness Fund and each of the tranches of the Carbon Fund had separate records and ledger accounts. The Funds’ Trustee provides the participants with all financial information relating to receipts, disbursements and fund balance via the World Bank’s Trust Funds Donor Centre secure website. Disbursement information is also made available in the FCPF Annual Report and on the FCPF website.
In-depth details about individual funded projects are publicly available at: https://www.forestcarbonpartnership.org/countries Before the closure of the Readiness Fund, the Facility Management Team provided annual progress reports to participants regarding the activities of the Facility for the previous Fiscal Year before each Annual Meeting of the Participants Assembly. However, with the closure of the Readiness Fund and the subsequent cessation of the Participants Assembly and Participants Committee, this specific reporting practice has been discontinued. Despite these structural changes, the FCPF continues to uphold transparency and accountability through the publication of Annual Reports. These reports offer comprehensive insights into the Facility’s activities, achievements, and financials for each fiscal year.
Additionally, detailed guidance notes on information disclosure for FCPF documents existed separately for the Readiness Fund and the Carbon Fund. They stipulated for the Facility Management Team to make numerous documents available to the Participants and to the public, including:

  • Readiness Fund Grant Agreements, reports on implementation of Grant Agreements and any other information submitted by REDD+ Country Participants;
  • Reports and conclusions of the Participants Committee;
  • Information on Emission Reductions Programmes selected by the Carbon Fund Participants;
  • Where appropriate, findings and advice from the Ad Hoc Technical Advisory Panels;
  • Information on good practices and lessons of experience learned through operation of the Facility; and
  • Any other information as deemed appropriate by the Facility Management Team.
Other Issues Raised Non-government Stakeholder Consultation and Participation The FCPF was criticised for its failure to adequately consult non-government stakeholders prior to its public launch in 2007. It responded to these criticisms (see above) however failure to facilitate full consultation and participation of Indigenous and Local Peoples has been a recurring criticism.
Human Rights, Indigenous Rights and Traditional/Customary Rights In a report by the Forest Peoples Programme and FERN, the World Bank was criticised for failing to uphold commitments on human rights. The FCPF Charter failed to include any safeguards for indigenous rights, and there are concerns that the process and content of FCPF ignores traditional and customary rights, implying that all control of forest lands rests with governments.
Project/Programme Failings Civil society groups, including Rainforest Foundation and Global Witness criticised the Peru R-PP for presenting an incomplete picture of the drivers of deforestation and governance issues, specifically in relation to the on-going conflicts between indigenous groups and industrial logging companies and mining concessionaires. The FCPF process in Cameroon sparked similar concerns, glossing over critical land tenure, carbon rights, and benefit sharing issues.
FCPF’s Safeguard Approach The Centre for International Environmental Law (CIEL) advocates a human rights-based approach to REDD+ safeguards that is consistent with international human rights obligations and centred on a “do no harm” approach to interventions. It criticised the FCPF’s safeguard approach for not being sufficiently rights-based, because the World Bank’s policies and procedures do not fully reflect existing human rights obligations. On the other hand, CIEL welcomed the FCPF’s explicit recognition of the need for a grievance and redress mechanism for instances when REDD+ activities have unintended negative consequences on local stakeholders.