By Abiodun Salako
Introduction
Global temperatures have climbed around 1.3°C above pre-industrial levels, mainly due to fossil fuel combustion and land-use changes such as deforestation. This warming has unleashed fiercer storms, wildfires, droughts, and other climate extremes. Natural carbon sinks such as forests, soils, and oceans, absorb roughly half of human-caused CO2, slowing warming while sustaining ecosystems, regulating water, and supporting communities. Forests, in particular, absorb nearly 16 billion metric tonnes of carbon dioxide per year, and currently hold 861 gigatonnes of carbon in their branches, leaves, roots, and soils, according to analysis by the World Resources Institute (WRI, 2021). As a result, this makes them a valuable global carbon sink, and preserving and maintaining healthy forests an indispensable strategy in combating climate change. Forests are not merely conservation assets. These natural assets are among the most powerful tools for both climate mitigation and adaptation. They mitigate emissions, regulate water cycles, stabilise soils, cool cities and shield coastlines. While we are keen on mechanical ‘Direct Air Capture’ solutions, we are underfunding the natural infrastructure that already performs this task at scale. To stay well on track of the 1.5°C pathway, it requires an expansive lens in how we value, fund, and protect the world’s most efficient carbon technology.
Now, why is funding global forest an uphill battle?
The financial reality of nature conservation is seen through the lens of capital misalignment. According to the UNEP (2026) State of Finance for Nature, for every USD 1 invested in protecting nature, USD 30 is still spent on activities that destroy it. This USD 7.3 trillion flow into ‘nature-negative’ activities reveals a global ineptitude to see forests as critical natural infrastructure. The report revealed that annual forest investments must more than triple from USD 84 billion in 2023 to USD 300 billion by 2030 and reach USD 498 billion by 2050 to meet global climate, biodiversity, and land degradation targets. The forest finance gap requiring closure is USD 216 billion per year by 2030.
Forestry sits at the unique intersection of mitigation (storing carbon) and adaptation (regulating water cycles and cooling the planet). Although sectors like agriculture contribute to these goals, forests offer the most significant impact on both. Notwithstanding this dual role, they receive a negligible portion of global climate investment. Forestry projects demand high capital and decades for tree maturation, delaying returns. Nature-based returns, be it from timber, ecosystem services, or carbon credits, rarely satisfy private capital’s short-term expectations, as a 20-year return challenges typical fund structures.
In many high-sequestration biomes, particularly across Sub-Saharan Africa and Southeast Asia, land tenure is a chaotic overlay of customary rights and statutory laws. For investors, the lack of clear, formal land titles creates immense legal risk. Without secure tenure, the risk of “stranded assets”, whereby a project is stalled by ownership disputes, remains a primary deterrent for private capital.
Furthermore, banks and institutional investors suffer from a ‘Trust Deficit’ regarding MRV (Monitoring, Reporting, and Verification). There is a persistent worry about the permanence of these sinks: how much carbon is captured, for how long, and whether the claims are reliable. This uncertainty makes them more cautious compared to simpler, more predictable projects like solar or wind.
Senior consultant at E Co, William Lynam says, ‘’Given that the forest sector presents such a critical tool for climate mitigation and adaptation, among other co-benefits like biodiversity that come with Nature-based solutions, along with improving MRV systems (and capacity-building within countries to build and maintain those MRV systems), well-designed forest sector projects are getting funded by both private and public sectors, though there is room for growth.’’
From grants to blended finance for forestry projects
Achieving the Paris Agreement targets requires a transition from pure grant reliance to blended finance. This is where public/concessional funds (like those from the GCF or GEF) are used to absorb early-stage risks, thereby crowding in private, commercial investment. When first loss capital from donors is used to buffer private investors, forest restoration becomes an investable asset class. Moreover, the use of grants, often to fund early-stage development, technical assistance, or capacity building where no commercial return is possible is vital.
In our work, we have seen how grant-supported projects lay the groundwork for future blended finance opportunities. These projects build the ‘Infrastructure of Trust’, the MRV systems, legal frameworks, and community agreements, all of which can eventually allow a blended finance structure to thrive. For instance, E Co. supported the development of the GEF-funded full-sized project, Mesoamerica Critical Forest Biome IP Regional Coordination, Knowledge Sharing and Support Project. This initiative in Guatemala, El Salvador, and Honduras aims to conserve Mesoamerican primary forests by strengthening governance, protection, restoration, regional cooperation, and mobilising stable long-term funding, ensuring a sustainable flow of ecosystem services for people and the planet.
Likewise, E Co. assisted in the project in Armenia that sought to advance forest infrastructure and creating sustainable jobs for rural communities, showing our technical rigour through designing the full Funding Proposal (FP) package under the Simplified Approval Process (approved as SAP059 at B.43), ensuring the project met the GCF’s stringent investment criteria through comprehensive feasibility studies, stakeholder trust and environmental and social safeguards. The project aims to strengthen the resilience of Armenia’s forest ecosystems and rural economies by restoring degraded landscapes, diversifying livelihoods, and modernising forest management systems. By introducing digital MRV and investment platforms, the project positions Armenia to access emerging forest carbon markets and attract diversified private sector investment to strengthen long-term financial sustainability.
On the private sector side, we supported the Rovuma Belt Sustainable Development Project by developing a full Project Description for VERRA carbon certification. This project focuses on generating carbon credits with high environmental and social value. Our work included verifying compliance with VERRA standards, applying the new ‘VM0047 Afforestation, Reforestation, and Revegetation’ methodology, drafting the project description, calculating estimated GHG reductions, and preparing documentation for VERRA clarifications.
E Co’s approach to turning forest into fundable impact
E Co. excels in developing nature-based solutions projects, from early-stage to securing funding from major climate funds (GCF, Adaptation Fund, GEF). For forest cover projects, we design funding proposals that integrate MRV processes aligned with national standards and FRL/FREL measurement. Our Armenia project, for instance, implemented digital MRV and investment platforms, enabling access to forest carbon markets and attracting private sector investment for long-term sustainability. We calculate estimated mitigation and adaptation impacts by modelling projected emissions reductions against national FRL/FREL baselines, quantifying expected carbon sequestration over time, and assessing measurable resilience outcomes such as improved ecosystem stability, reduced climate risk exposure, and strengthened community livelihoods.
For years, we have understood the changing terrain and know how to translate ‘biodiversity language’ as well as ‘mitigation language’ and ‘adaptation language’, even with the complexities described above into donor language. We have mastery of finance from both public and private sectors, including blended finance E Co. has a breadth of community focused understanding in order to tailor carbon sink solutions appropriately, a vital element tied to local stakeholder engagement during the project’s development. A forest is only as permanent as the community that guards it.
Senior consultant, William Lynam explains the complexities and appeal in such undertakings: ‘’There are a number of complexities involved in designing forest-related projects, from figuring out how best to fund such projects, to estimating the impacts on carbon fluxes, biodiversity, and communities, to figuring out how to monitor, report, and verify these impacts in natural systems, to figuring out how to sustain those impacts beyond the lifetime of the projects, which involves a lot of work with local communities. But those complexities are what make designing such projects interesting and exciting.’’
Conclusion
By 2030, the world needs to triple NbS funding to USD 542 billion annually to meet Paris Agreement targets. The current trajectory, which is moving trillions into ‘nature-negative’ activities, could push our systems toward deep stress and instability. The wheel need not be reinvented as the ‘technology’ to cool the planet and stabilise our atmosphere has existed for millions of years. It is self-replicating, solar-powered, and provides the very air we breathe. Simply put, we just need to fund it more. The cheapest way to cool the planet is to let it breathe. At E Co., we have the entrenched expertise in designing the projects that align the global financial system to pump in funds to expand scale into the earth’s natural cleaning technology as seen in our footprint with major multilateral climate funds and private sector.
