Request for Proposal
CDP is developing the world’s first sustainable finance reporting framework covering both Climate Change and forest metrics. The framework aims to help banks assess and improve their management of forest related risks within their lending portfolios through the establishment of annual reporting. CDP seeks a third party to deliver a policy brief on supporting the integration of forest risk into bank regulatory models, with focus on increased probability of defaults (PDs) and loss given defaults (LGDs). The target audience for this research is Indonesian regulators & policymakers. The high-quality research and findings from this study will provide unique insights for regulators, helping them identify key intervention points that would facilitate a shift to a sustainable commodity production system, ensuring lending does not drive deforestation.
Indonesia as the third largest tropical forest country and has the highest deforestation rate in the world. Between 2001-2018 approximately 24 million hectares of rainforest were lost, the rate reaching 1.2 million ha/ year. The main drivers of deforestation are production of the palm oil, pulp and paper, including conversion of the natural forest to plantations, forest fire and unsustainable peatland operation.
What is not known with any level of certainty is who precisely is financing deforestation, how financial capital flows travel through banking systems from developed to emerging markets and how the financial sector contributes to deforestation. In response to this, CDP is delivering an ambitious project that aims to increase transparency with Southeast Asian banks to stop financing deforestation. By the end of the project targeted Nordic, European and SEA financial institutions will have the necessary evidence to shift capital away from destructive practices and towards more sustainable commodity production systems.
Forest risk in conjunction with the climate change risk have the potential to increase substantially in the future. There is a need to test the resilience of the current business models of financial institutions to the physical climate-related events that damage property, reduce productivity and disrupt trade and, to transition risks arising from moving to a lower-carbon economy risks, in relation to forests.
CDP is a global non-profit that focuses investors, companies, cities and governments to disclose and act on their environmental impacts. This network of over 515 investors and 125 purchasing companies representing over $106 trillion in assets and purchasing power, along with policymakers and NGOs around the world, uses CDP data and insights to make better-informed decisions to shift capital towards a low-carbon economy. Our disclosure platform collects data annually from over 8,400 companies on their business operations related to climate change, water security, and deforestation, as well as reporting from over 920 cities, states and regions on mitigation and adaption efforts. The result of this disclosure across sectors and geographies is the world’s most comprehensive collection of accessible, comparable and self-reported environmental data that is used to drive action by public and private actors.
The research project will be carried out over a period of three months (from 1 June to 28 August 2020). The consultant will be responsible for the development of the following outputs and deliverables:
Task/output 1 - Develop research method: tasks should include but not be limited to stakeholder mapping, identifying information and literature sources, identifying institutions and individuals for interviews, developing interview questions to obtain insight into forming recommendations.
Task/output 2 - Research, evaluation and recommendations: analysis and recommendations should be presented as a high-quality policy brief. The suggested outline for the brief is:
Task/output 3- Document containing the final policy brief (Word format): The final version of Output 2, incorporating a minimum two rounds of feedback from CDP, formatted annexes including references, data sets, interview transcriptions and any other reference documents developed to support the study. The final products should be in English and Bahasa Indonesia versions.
The supplier should send the documents listed below to [email protected]. The subject line should be titled: Building capacity with Southeast Asia Banks to report on forest and climate risk. Clarification questions should be sent to [email protected].
Deadline for submission: 7 June 2020
Timeframes: June – August 2020