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Annual Review - Summary Sheet

Title: Partnerships for Forests (P4F), part of the wider FCDO programme Investments in Forests and Sustainable Land Use

Programme Value (full life): £35.5m (plus £84.4m from FCDO) Review Date: Jan 2021

Programme Code: GB-GOV-13-ICF-0018-P4F

Start Date: Nov 2017 End Date: Nov 2023

Summary of Programme Performance

Year 2018 2019 2020 2021 2022 2023Overall Output Score A+ A+ A+Risk Rating Moderate Moderate Moderate

Link to Business Case: Business case for initial programme ( 2018-2020) Business case for programme extension (2021-2023)

Link to results framework: Logframe

Link to previous Annual Review (if appropriate)

Annual Review 2019

A. SUMMARY AND OVERVIEW

Description of programme

The Partnerships for Forests programme (P4F) aims to increase private investment in forestry, ‘reduced-deforestation’ agriculture and agroforestry systems, which will lead to reduced deforestation, reduced greenhouse gas emissions and conservation of biodiversity. This should also deliver impact on economic growth, improved livelihoods and reduced poverty. P4F supports investment models in which the private sector, public sector and communities can achieve shared value from forests and sustainable land use. It aims to add value to standing forests by incubating new investments in agroforestry and non-timber forest products, and helping local and indigenous community enterprises, smallholder farmers and larger businesses connect to new markets and scale up production. For example, it is supporting a community cooperative in Brazil to improve its processing and marketing of Brazil nut products, increasing sales and revenues. It can also target commodities that have traditionally driven large-scale deforestation, facilitating multi-stakeholder approaches and solutions which support transitions to sustainable production models to fulfil zero-deforestation supply-chain commitments. An example of this approach is P4F’s support to the Responsible Commodities Facility, which is a financing facility and commodity exchange for sustainable soya production.

FCDO (then DFID) established Partnerships for Forests in 2015 and funds its activities in Africa and South-East Asia. BEIS is the sole donor to P4F Latin America, in which it invested an initial £19.3m in 2017. The programme is contracted to Palladium, which employs Systemiq and Efeca as subcontractors.

P4F deploys technical assistance and grants to project developers (whether groups of smallholders, indigenous communities, civil society organisations, entrepreneurs or established companies), supporting three types of intervention:

a. Incubating forest partnerships and other types of innovative sustainable businesses.

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https://science-and-innovation-network.s3.eu-west-2.amazonaws.com/BEIS+ICF/P4F/P4F+Annual+Review+2019.pdf

https://science-and-innovation-network.s3.eu-west-2.amazonaws.com/BEIS+ICF/P4F/P4F+Logframe.xlsx

https://science-and-innovation-network.s3.eu-west-2.amazonaws.com/BEIS+ICF/P4F/P4F+Extension+Business+Case.docx

https://aidstream.org/files/documents/P4F-Business-Case-20180727100716.pdf

b. Enabling conditions to support reforms in partner countries to unlock local market barriers and facilitate greater private investment in forests and sustainable land use.

c. Demand-side measures to enhance markets for sustainably produced products through the extension of public and private commitments to source sustainable timber and agricultural commodities.

P4F is now supporting 24 projects in its Latin America portfolio, at a range of maturity stages. Fifteen of these are Forest Partnerships, with five Enabling Conditions and four Demand-Side Measures projects. The programme operates in Brazil (thirteen projects), Colombia (six projects) and Peru (two projects). There are also three international Demand-Side Measures projects run out of the Bristol P4F headquarters. These 24 projects have been selected to cluster around restoration/silviculture and specific forest risk sectors including cattle farming, soya, and non-timber forest products (such as fruit, seeds and nuts) to enable the projects to work together to deliver transformative shifts in supply chains.

Summary of progress and lessons learnt since last review

The Partnerships for Forests (P4F) Latin America programme is progressing well overall. In 2020, the programme received a time and cost extension of £16.3m to 2023, allowing the programme to take a longer-term view of its portfolio, and begin building towards greater impact. The programme has begun approving many new projects to run through its extension phase to 2023 and will continue to approve new projects through 2021. The programme is also now fully operational in three countries, having expanded from Brazil and Colombia into Peru this year, approving two new projects.

Like so much else this year, the programme has been substantially disrupted by the COVID-19 pandemic. The programme took an adaptive management approach to the ongoing disruption, extending most project timelines by several months. If the programme had ended in 2020 this would have had a serious impact on delivery of outcomes, but thanks to the extension the outcomes are still likely to be delivered. Despite the impact of COVID-19 the risk profile is unchanged, because the additional risks linked to COVID-19 have been so well-managed, and are offset by the greater maturity of the Latin America portfolio now giving greater underlying delivery confidence.

The P4F Latin America programme has a strong portfolio of projects across the three types of interventions: Demand Side Measures (DSM), Enabling Conditions (EC) and Forest Partnerships (FP).

- This year, 5 projects progressed in the pipeline – one to having a business plan, another one ‘prepared for pilot’ and three projects to being ‘prepared for scale up’.

- 7 new projects have been added to the portfolio this year (1 DSM, 2 EC and 4 FP)

The programme is on track and has scored A+ for moderately exceeding expectations in terms of output level milestones, and with a moderate risk level unchanged from the business case.

In 2021, we expect to see more projects reaching higher levels of commercial maturity, which should start to deliver results at the outcome level in much bigger numbers in Latin America. Outcome level targets for this programme are set at the global level, so outcome level success is defined in these terms (Latin America and three other regions worldwide). Globally, P4F’s interventions have already had a direct contribution to £244m of private investment mobilised (133% of 2023 target), 1.2m ha of land under sustainable land management (95% of the programme target to 2023), and has supported 50,350 beneficiaries (63% of 2023 target).

This gives a high level of confidence that overall programme outcomes will be achieved compared to last year, and a high confidence that the Latin America region will achieve similar results at the outcome level. Given this high confidence in outcome-level performance, the programme’s focus should broaden

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to considering how best it can contribute to transformational change through its portfolio. The Latin America portfolio has so far had a moderate contribution to these outcome-level results, due to its later start than the other regions. Uncertainties remain around ongoing economic and operational impacts of COVID-19, and the changing political context in the region.

Summary of recommendations for the next year

Specific programme recommendations from 2019 have all been delivered as far as possible – see below for detail.

Recommendations from 2019 Annual Review Response

P4F to identify specific opportunities during 2020 where it can engage with Governments of major emerging consumer markets (e.g. China) and emerging producer-consumer markets (e.g. Brazil), to highlight relevant examples of Demand-Side Measures work, and agree an approach with UK Government to using these opportunities (by end of March 2020).

Partially delivered – several strong examples of this engagement in 2020. Covid-19 reduced opportunities for this collaboration so it is also partially carried over to 2021.

P4F to identify further opportunities for complementarity and collaboration between Enabling Conditions projects and Forest Partnerships (by end April 2020).

Delivered – multiple EC projects on restoration delivered building on links several FP projects.

P4F to revise Forest Partnerships logframe milestones for 2020 where targets have already been exceeded (by end April 2020)

Delivered.

P4F to develop an overarching communications strategy with specific priority audiences and objectives, to ensure that its global outreach and learning activity is structured to be as impactful as possible, taking advantage of opportunities where parties are convened under the UK co-presidency of COP26 and other relevant global events (by end of March 2020).

Delivered – but again Covid-19-related delays to COP26 and other events mean that planning how communications activity can support COP26 in 2021 is important.

The recommendations for 2021, in the order in which they appear below, are:

- P4F to update its logframe to add a new output on legacy and transformational change, to drive and monitor activity to replicate models P4F has supported and deliver transformational change (by end January 2021).

- P4F to continue to identify opportunities to communicate and build cooperation with significant agri-commodity markets on the demand side, such as the US and East Asia, including through COP26, to shift global markets towards sustainable practices (throughout 2021).

- By April 2021, carry out a light-touch strategy review for the Forest Partnerships portfolio in Latin America, including to ensure the programme strategy reflects the outcomes that are targeted under P4F Latin America’s extension to 2023.

- P4F to work with HMG, TFA and other stakeholders to develop a communications plan for 2021 to ensure all activities maximise impact by aligning with other work (by end February 2021).

- P4F to provide an update to BEIS on its responses to the recommendations made in the 2020 Latin America Evaluative Report (by end March 2021).

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We also recommend that BEIS review the extent to which different elements of the portfolio are complementary of each other and of UK Government’s other activity in the relevant countries, to maximise synergies between activities and enhance impact.

B: PERFORMANCE AND CONCLUSIONS

Annual outcome assessment

Outcome Indicators Result CommentLevel of Private Investment Mobilised (to date)

£6,023,785 This private investment was mobilised from three projects – Ecoflora, PECSA (both in 2020), and the Kahai project (from 2019).

Area of land under improved (sustainable land use) management

4,222 ha This land area comes from the Ecoflora project, which reached ‘ready for scale-up’ stage in 2020, receiving £2.9m of investment and supporting 102 beneficiaries.

Beneficiaries 202 These are the beneficiaries supported by both the Ecoflora and PECSA projects.

It is positive that the portfolio is delivering outcomes across several projects in 2020. Part of the case for the programme extension was that it would take longer than initially envisaged to deliver outcomes (beyond 2020) because much of the anticipated business growth takes place in the years after P4F’s intervention, so it is in line with expectations that outcome results are relatively modest at this stage.

However, we have good evidence that the programme is on track to continue delivering outcome-level results. Specifically, there are several further outcome level results across 6 projects that have been delivered but not yet formally verified, which will be formally reported in 2021. In total, these add up to £1.4m additional private investment, over 900,000 ha of land area, and 1,275 beneficiaries supported by the projects.

Outcome level targets for this programme are set at the global level, so outcome level success is defined in these terms (Latin America and three other regions worldwide). At the global portfolio level, P4F have already achieved £244m of private investment mobilised (133% of 2023 target), 1.2m ha of land under sustainable land management (95% of the programme target to 2023) and has supported 50,350 beneficiaries (63% of 2023 target). In Latin America, the programme is projecting 2.1m ha of land under sustainable land management, and £46.5m of private investment.

This gives very good confidence that the programme as a whole will deliver or exceed its outcome targets, and that the Latin America portfolio will continue to deliver strong outcomes within that. There are number of risks in the portfolio, but variety across geographies, sectors and project types has been built in to mitigate the impact of any issues. Further information can be found in the FCDO Annual Review for its Investments in Forests and Sustainable Land Use (IFSLU) programme, of which P4F is part.

Overall output score and description

Score CommentsOutput 1: Demand Side Measures A Achieved all milestones

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Output 2: Enabling Conditions A+ Surpassed one milestone, and achieved one milestone.

Output 3: Forest Partnerships A Achieved all milestones

Output 4: Leadership, Collaboration & Learning

A+ Surpassed one milestone, and achieved three milestones.

Overall Output Score A+ Strong programme performance including exceeding two milestones.

The programme scored a mixture of A and A+ for its outputs. While the total weighting of A+-rated outputs is only 30%, the decision to award an A+ for the programme overall was felt to be appropriate for two reasons:

a. The programme outcomes overall (including Latin America and other regions) are exceeding the logframe targets, 3 years before the programme is due to close. This shows that the programme performance overall is exceeding expectations, both outputs and outcomes.

b. The circumstances this year have been unprecedentedly challenging, particularly in Brazil and for a programme working with remote communities, as P4F does. Exceeding outputs narrowly in a year like this is equivalent to exceeding strongly in a typical year.

Has the logframe been updated since the last review?The logframe was updated in October 2020, to reflect changes made for these reasons:

a. To populate the extension to 2023 with the expected additional results at output level. This included the addition of a new maturity level for Forest Partnerships, to scale up investment in businesses that have already reached ‘ready for scale-up level’ but would benefit from further input.

b. To increase output indicators that were exceeded in 2019 (a recommendation of the 2019 AR).

c. To reflect disruption due to COVID-19, two case-study-based results were deferred from 2020 to 2021, as travel restrictions meant that the necessary fieldwork was undeliverable.

As part of this Annual Report, the delivery partner proposed a further set of logframe updates for the next results year (2021). These will be reviewed and implemented by January 31st 2021. The purpose of these logframe updates is to add an output on transformational change and legacy, to motivate and monitor P4F’s activities to replicate its initiatives and deliver greater transformational change.

As the programme is overall on track to overachieve on its outcome targets and has three years of further activities, it is now increasing its strategic focus on achieving transformational change. This is likely to include further additions to the logframe in due course, as indicators are added to reflect the extent to which transformational change is being delivered.

C: DETAILED OUTPUT SCORING

Output Title

Demand-side measures: An enhanced market for sustainably sourced products through public and private commitments to sustainable sourcing.

Output number per LF 1 Output Score A

Risk rating (Minor, Moderate, Major or Severe)

Minor Impact weighting (%): 10%

Risk revised since last AR?

N Impact weighting % revised since last AR?

N

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Indicator(s) Milestones from Logframe Progress 1.1 # and description of cases where P4F has supported demand-side policy change and development, at public (sub-national, national orinternational) or multi-corporate platform level, that enhance forests and sustainable land use investment.1

1 case by 20202 cases by 2022

Achieved: 1 case by 2020

1.2 # and description of cases where P4F has supported demand-side policy change and development at the individual corporate level thatenhances forests and sustainable land use investment.

1 case by 20192 cases by 20205 cases by 2023

Achieved: 2 cases by 2020

1.3 # and description of cases where P4F has contributed to value or commodity chain change with regards to enhanced forests andsustainable land use, through supporting market linkages within or for FPs.

1 case by 20202 cases by 20223 cases by 2023

Achieved: 1 case in 2020

Key PointsThis output is focused on building stronger markets for sustainably produced commodities. A relatively modest share of the programme budget is attached to this output (£0.8m), reflecting the fact that funds are used in ways that catalyse effort by others. Milestones are based on case studies which capture the support provided and the changes and outcomes brought about by that support.

1 The ‘description[s] of cases’ cited in the indicators are provided to BEIS as separate case study documents.6

The portfolio of three Demand-Side Measures has delivered well in 2020, and particularly through strong collaboration with Government, where the initiatives are helping shape UK Government and businesses’ thinking and action on forests. This was demonstrated particularly effectively through the substantial impact of the Global Resource Initiative, which led to the UK Government legislating to introduce a requirement on UK businesses to undertake due diligence on forest risk commodities in their supply chains.

The three Demand-Side Measures projects are:

- The Global Resource Initiative (Global, managed from UK)The Global Resource Initiative Taskforce (comprising representatives from leading businesses and environmental groups) published recommendations in March on the role the UK can play, building on global and domestic initiatives, to grow the international trade of sustainably produced commodities in order to protect and restore the global environment. In November, the UK Government published its response to the recommendations report, announcing actions including a new requirement on businesses in the UK that use forest risk commodities to undertake due diligence in their supply chains. P4F will support ongoing work of the GRI Taskforce over 2021 to implement its recommendations, particularly those related to finance, before the 26th Conference of the Parties of the United Nations Framework Convention on Climate Change (COP26) in November 2021.

- UK Roundtable on Sustainable Soya (Global, managed from UK)This initiative responds to growing support for action on sustainable soya within governments and the private sector in many European countries, including in the UK. It draws together retailers, agricultural industries and traders under a commitment to source soya that is ‘legal and cultivated in a way that protects against conversion of forests and valuable native vegetation’. In 2020, we have achieved significant progress towards this commitment:

o Over 90% of UK supermarkets now have concrete timebound sourcing commitments for deforestation and conversion-free soy.

o The proportion of soy coming into the UK that is sustainable and certified has doubled from 15% to 32% - meaning that 67% of UK soy imports are now low risk or certified sustainable.

o The UK now has monitoring systems in place to understand where UK soy imports are sourced from, allowing targeting of action to the 33% of exports sourced from high risk areas.

- Accountable Beef Value chain (Brazil)This programme aims to provide full traceability of suppliers of the Brazilian cattle chain using official data, to test the system at the jurisdictional level, and to test the market incentives for voluntary adherence to the platform. This includes a requirement for the farms to implement best practice programmes in line with the stringent, but often not fully enforced, forest legislation of Brazil. This Demand-Side Measure is complementary with other cattle projects in Brazil – the PECSA Forest Partnership and the Responsible Beef Partnership (an Enabling Condition).

Summary of responses to issues raised in previous annual reviews The 2019 Annual Review recommended that P4F ensure effective engagement with China, Brazil and other emerging economies. This was delivered to the extent possible in 2019 (given COVID-19 related restrictions on engagement), particularly in reference to work with Brazil, China and Peru. Given that

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COP26 has been postponed to 2021, there are likely to be further opportunities to build co-operation with other emerging economies, so this year’s recommendation reflects that.

Recommendations

- P4F to continue to identify opportunities to communicate and build cooperation with significant agri-commodity markets on the demand side, such as the US and emerging economies including in East Asia, including through COP26, to shift global markets towards sustainable practices (throughout 2021).

Output Title

Enabling Conditions: Improved business environment for investments in forests and sustainable land use

Output number per LF 2 Output Score A+





N

Indicator(s) Milestones from Logframe

Progress

2.1 # and description of cases where P4F has supported organisational change or national/international initiatives designed to enable private investment in forests and sustainable land use.2

1 case by 20192 cases by 20203 cases by 20224 cases by 2023


2.2 # and description of cases of Forest Partnerships that have benefitted from an enabled business environment as a result of P4F support.


Surpassed: 3 cases in 2020

Key PointsThis output is focused on creating the conditions required to enable private investment in forests and sustainable land use. Support is provided to address barriers to investment, such as the development of standards, provision of finance and policy and regulatory reform. Milestones are based on case studies

2 The ‘description[s] of cases’ cited in the indicators are provided to BEIS as separate case study documents.8

which describe the support provided, the resulting change and present evidence describing the role of the programme in securing the result achieved.

The portfolio of three Enabling Conditions projects continues to perform well and has been well-designed to align with specific Forest Partnerships to deliver benefits to both sides, and a greater likelihood of transformational change. A specific example of this synergy is on how Cocoa Agroforestry Restoration Forest Partnership was supported by the Seed Paths Initiative, which promotes the use of a more effective forest restoration technique, and uses seeds gathered from standing forests to do it. The Seed Paths Initiative is also receiving a second phase of support, to implement the actions identified in Phase 1 to unlock the potential of this approach in Brazil.

The three Enabling Conditions projects are:

- The Seed Paths Initiative (Muvuca) (Brazil)Muvuca is a forest restoration technique that uses a mix of seeds for natural forest regeneration that is significantly cheaper, more efficient, and has higher impact results than alternative approaches. But the technique isn’t widely used: many restoration practitioners are unaware of it, there are few published scientific papers reporting on it, and it is not part of the basic menu of restoration techniques offered by states and Public Prosecutor offices to producers needing to reforest. Support is focused on addressing barriers to forest restoration to unlock the potential of the Muvuca approach.

- Responsible Beef Partnership (Brazil)Cattle farming is a primary driver of deforestation in the Amazon, so it has always been a priority for P4F to work in this sector. The central aim of the initiative is to implement a traceability platform allowing cattle monitoring from birth (hence including indirect suppliers into beef supply chains). A voluntary sustainability protocol to be signed by producers and slaughterhouses, where they commit to share their production data to be included in the platform in response to positive incentives is also a key component of the project.

- Unleashing Non-Timber Forest Products (NTFPs) (Colombia)The Colombian Ministry of Environment plans to publish a Decree to regulate the management and use of NTFPs (such as fruit, nuts and seeds) as there is currently no clear legal framework which has been a bottleneck for the development of forest-friendly NTFP businesses. This project supports the consultation phase of this Decree’s development, ensuring stakeholders have a voice in the process and can access advice from international experts. P4F has a number of NTFP projects in Colombia, and this project should help to enable their expansion and replication. This project is likely to conclude in early 2021. The draft regulatory decree was published in July, and the final decree is about to receive Presidential approval. This will create a much more attractive environment for investors, companies and communities to develop NTFP-based businesses in Colombia.

Two new Enabling Conditions projects were added to the portfolio in 2020:

- Restoration for Water This project aims at creating a cost-benefit analysis and regulatory framework to support the creation of an additional charge in the water tariff to invest in reservoir and water course restoration in Sao Paulo, enabling finance to flow to restoration based on its benefits for downstream water quality.

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- Online Judicial Restoration Hub This project aims to develop a platform for reforestation-related judicial processes in Brazil. The platform will deliver real-time information through an online and public database, and act as a one-stop-shop for landholders to implement their restoration liabilities more cheaply and easily. The platform should significantly accelerate and stimulate the market for reforestation investments, related businesses and service development.

Summary of responses to issues raised in previous annual reviews The 2019 Annual Review recommended that P4F seek further opportunities for complementarity between Enabling Conditions and Forest Partnerships. Complementarity was identified between the Seed Paths Initiative and two different Forest Partnerships (as mentioned above), and two more restoration-related Enabling Conditions have been added to the portfolio, which are likely to also support Forest Partnerships such as the Xingu Seeds Network.

Recommendations

- None

Output Title

Partnerships and investments: Partnerships between private sector, public sector and communities that seek to deliver investment in forests and sustainable land use

Output number per LF 3 Output Score A





N

Indicator(s) Milestones from Logframe Progress 3.1 # and description of concept notes that are accepted into the programme maturity funnel following pre-funnel assessment and due diligence checks (entry).3

4 cases by 201811 cases by 201915 cases by 202019 cases by 2021


3.2 # and description of partnerships with a partnership agreement as a result of P4F support (Decision gate 1).



3.3 # and description of partnerships with a business plan as a result of P4F support (Decision gate 2).

3 cases by 20195 cases by 20218 cases by 2022


3.4 # and description of partnerships ready and prepared for a pilot or trial as a result of P4F support (Decision gate 3).



3 The ‘description[s]’ cited in the indicators are provided to BEIS as separate project overview documents.4 The previous Annual Review erroneously stated that there were 8 cases achieved by 2019. The correct scoring was (and remains) 7 cases.

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3.5 # and description of partnerships ready and prepared for commercial scale-up as a result of P4F support (Decision gate 4).



3.8 # and description of FPs scaling-up investment and operations as a result of P4F support. Subject to demand, quality control and commercial viability assessment. [Decision gate 5]

2 cases by 2023 Not due to report yet

3.6 # and description of DSMs, ECs or FPs with new or enhanced stakeholder engagement planning (including gender and socialinclusion) as a result of P4F support.



3.7 # and description of DSMs, ECs or FPs that have contributed to greater gender equality (supported by relevant sex-disaggregated data) as a result of P4F support.

1 case by 20212 cases by 2023

Not due to report yet

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Key PointsThis output is focused on supporting public-private partnerships, termed Forest Partnerships (FPs). Grant funding and technical assistance is provided to support partnerships which have commercial potential and deliver strong climate and development benefits to achieve commercial maturity. This journey to commercial maturity and scale-up is visualised as a journey through a set of ‘decision gates’ within the ‘Forest Partnerships Maturity Funnel’ (FPMF) which starts at the agreement of an MoU (Memorandum of Understanding) between parties (known as Decision Gate 1 or DG1), moving to the development of a business plan (DG2), pilot testing (DG3) and on to commercial scale-up and mobilisation of private investment (DG4).

When the logframe was updated in 2020 to reflect the programme’s extension, a new stage of support was added to support scaling up investment. Forest Partnerships which go through this new ‘decision gate’ are already ready for commercial investment and operations, but with P4F support can accelerate their scaling and mobilise greater investment. This is called Decision Gate 5 or DG5.

Since the programme’s inception in May 2018, 15 Forest Partnerships have been supported, seven of them from the earliest stage in the FPMF (DG1). In 2020, the Xingu Seeds Network became the third Latin America project to reach DG3 (prepared for a pilot or trial), and three additional projects reached DG4 (readiness for commercial scale-up). These three projects were:

- Ecoflora This project has successfully developed a patented process to produce the world’s first stable natural blue food colouring, from the jagua fruit (a native Amazonian tree, widespread in primary rainforest). Ecoflora is expecting FDA approval for Nov 2020 which will open the doors to export to the USA. P4F is supporting Ecoflora to combine jagua sourcing scale-up with forest protection mechanisms, such that the commercialization of jagua could provide incentives for cattle ranchers to protect forested areas on their lands, some of which are used for wild jaguar production.

- Producing Right Platform (PRP) The Producing Right Platform (PRP) is a database of rural properties which supports stakeholders all along supply chains to improve sustainability. Through the database, consumers and companies can monitor rural producers regarding their environmental and social performance, and it provides technical assistance to producers to implement best practices on responsible production. In November 2020, PRP achieved DG4. P4F provided support to improve PRP’s digital platform and develop its Sales & Marketing plan, while investments in the platform reduced operational costs. This S&M strategy supported PRP to effectively implement the new business model and position the PRP in the market. P4F has also supported PRP to develop a Business Plan, established the strategy for the next 3 years and designed a financial projection. So far, thanks to P4F support, the area monitored by the platform has increased by 800,000 hectares, while mobilizing £455,494 in match funding and £209,000 in PRP revenues.

- Planeta: Sustainable Heart of Palm Planeta is a company that buys palm hearts from local farmers, and transforms it into a product that can be sold commercially. In October 2020, Planeta achieved DG4. P4F provided support in 4 main areas: (1) enhancing the product quality by upgrading the processing plant and obtaining

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the INVIMA certifications; (2) achieving operational excellence by hiring a business plan consultancy to identify and solve the existing gaps in the model; (3) diversifying the client portfolio of Planeta; and (4) strengthening the forest protection narrative by actively engaging beneficiaries in monitoring and conservation activities that would also serve the business and its value proposal. So far, thanks to P4F support Planeta expect to bring 29k ha of land under sustainable management, while mobilizing £1m of private capital from increased revenues and sales.

In 2020, the programme also approved four new Forest Partnerships, including two in Peru. These projects are:

- Superfoods for Forest Protection (Peru) The project aims to scale up the supply chain of forest fruits for a multinational company called AJE. The project focuses on the Amazon region of Loreto, where 22 communities have been scoped to develop wild collection mechanisms of Aguaje and Camu camu fruit for their sales to AJE and other market actors. The main goal is to empower communities to develop fruit harvest and production businesses, bringing economic benefits and increasing the economic value of standing forests and incentives to manage them sustainably.

- Form International (Peru) This company aims to create a forest business for value-added timber products based on fast-growing commercial species native to Peru based on a commercial tree plantation, and a community outgrower program on leased degraded forest lands in the department of San Martín. P4F support will help Form to complete a technical and economic feasibility study, complete a business plan, and understand the timber market in Peru.

- Irupe Creditech (Brazil): This business aims to provide working capital credit lines to farmers with interest rates discounts linked to measurable forest and environmental conservation. The Irupé strategy aims to offer positive incentives for farmers who adhere to environmental guidelines, providing institutional investors a scalable impact opportunity. P4F will help Irupé to set-up the operations and support the organisation on raising funds from investors.

- Bancolombia (Colombia): The aim of this FP is to promote sustainable cattle production investments. The bank has a Sustainable Credit Line, which offers a lower interest rate, for cattle ranchers to transition to more intensive production systems. However, technical assistance is needed for producers to make these types of production changes. P4F will help Bancolombia develop a sustainable model of providing technical assistance alongside its financing.

In the programme’s extension phase, it will have to support substantially more projects to maturity, including five more at DG3, three more at DG4, and two projects at DG5. The programme is actively planning how to deliver this, even with ongoing COVID-19 disruption, and is building its pipeline. To ensure the extension phase of the programme delivers as impactfully as possible and given the shifting strategic context globally and the ongoing programme lessons, it would be useful to carry out a light-touch strategy review exercise for the Forest Partnerships portfolio in Latin America. This will help the programme to ensure it is focused on outcomes for 2023, rather than automatically continuing the strategy developed for a 2020 timeline. Overall, given success to date, there is good confidence that the programme will be able to deliver these future milestones in 2021 and beyond.

Summary of responses to issues raised in previous annual reviews

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The previous annual review recommended that P4F revise the logframe to reflect milestones that were surpassed in 2019, to avoid ‘automatic’ surpassing in 2020. This has been completed, and new ambitious milestones have also been added to the logframe for the additional years of programme life.

Recommendations

- By April 2021, carry out a light-touch strategy review for the Forest Partnerships portfolio in Latin America, including to ensure the programme strategy reflects the outcomes that are targeted under P4F Latin America’s extension to 2023.

Output Title

Leadership, Collaboration and Learning: Models, learning and leadership that support collaboration and investment in forests and sustainable land use

Output number per LF 4 Output Score A+




Y Impact weighting % revised since last AR?

N

Key PointsThis output is focused on working with and informing a wider community of stakeholders, with the aim of accelerating the replication and scaling-up of sustainable business models. The programme theory of change makes critical assumptions about the replication and scaling up of successful business models. Advocacy, communication, learning and collaboration are vital to ensure that takes place.

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Indicator(s) Milestones from Logframe Progress 4.1 Annual report demonstrating understanding of portfolio dynamics; patterns and reasons for pass / fail / return of FPs to each decision gate.

1 case by 20182 cases by 20193 cases by 20204 cases by 20215 cases by 2022


4.2 # and description of P4F knowledge products published and communicated

3 cases by 20196 cases by 20208 cases by 202110 cases by 202212 cases by 2023


4.3 # and description of initiatives with enhanced or high value collaboration from P4F

1 case by 20192 cases by 20203 cases by 20214 cases by 20225 cases by 2023


4.4 # and description of events with a distinct contribution from P4F

2 cases by 20186 cases by 20199 cases by 202012 cases by 202115 cases by 202218 cases by 2023

Surpassed: 11 cases by 2020

Due to COVID-19 and the resulting postponement of COP26, 2020 was not the global ‘climate super year’ that was expected, and as a result did not have the hoped-for opportunities for P4F communications. But the programme has adapted well to virtual engagement, hosting a series of targeted interactive webinars instead of the in-person Annual Learning Event.

Learning, collaboration and leadership highlights in 2020 included the publication of useful knowledge products to help others working in this sector:

- Strengthening sustainability commitments in the Brazilian beef sector This report explores how key partners in the Brazilian beef sector – and slaughterhouses in particular – are taking action to support the conservation of one the most iconic and biodiverse biomes in the world, and induce an effective and sustainable value-chain for eliminating illegal deforestation in the Amazon. These solutions, with support from P4F, have the potential to be transformational for the sector. They aim to improve bottlenecks such as traceability mechanisms and transparency and monitoring commitments made by slaughterhouses and retailers with the Federal Public Prosecutors.

- How de-risking strategies can help to mobilise private investment for businesses that deliver social, environmental and economic benefits This report provides examples of strategies and approaches applied by P4F to mobilise private investments and change attitudes to risk for those working or interested in working with sustainable businesses in forest regions. The report presents case studies where private capital has been mobilised into sustainable businesses, and how business income streams have been strengthened and uncertainties reduced in the long term, improving financial sustainability. The report serves as a useful guide for investors and project developers on how P4F has achieved significant results through its approach to helping immature businesses overcome challenges in their local contexts.

- Real Demand for Restoration: An assessment of legal processes involving restoration of forests in BrazilDespite its huge potential, it is unclear how much actual private sector demand for forest restoration there is in Brazil. This knowledge product compiles the results of a study commissioned by P4F and the Brazilian Coalition for Climate, Forests and Agriculture that assessed the size of the Brazilian legal obligations for forests restoration at the Judiciary and Executive levels. The study reveals recommendations of how to improve legal mechanisms to induce greater restoration by the private sector and will serve as guidelines for an Enabling Conditions project on the subject.

As the UNFCCC COP26 and UN Convention on Biological Diversity (CBD) COP15 are taking place in 2021 rather than 2020, 2021 should present many of the opportunities we had anticipated in 2020. As a result, P4F should plan its communications for 2021 to maximise alignment with relevant UK Government and international COP26 activities.

Summary of responses to issues raised in previous annual reviews The 2018 Annual Review recommended that P4F develop an overarching communications strategy, highlighting audiences and goals. This was delivered and helpfully structured communications into three major themes, allowing clear assessment of the balance of communications activities across these areas.

Recommendations

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- P4F to work with HMG, TFA and other stakeholders to develop a communications plan for 2021 to ensure all activities maximise impact by aligning with other work (by end February 2021).

E: VALUE FOR MONEY & FINANCIAL PERFORMANCE

Key cost drivers and performance EconomyThe main cost driver in P4F is the need to engage the specialist expertise required to work effectively with partners, and design and structure innovative public-private partnerships. Specialist expertise is provided directly through the programme or through third parties, and costs relating to the former are managed through an output-based contract for the programme and competitive procurement for externally sourced expertise.

The original business case highlighted a potential weakness of this approach to providing technical assistance – the ability to provide quality inputs at an acceptable administrative cost. As highlighted in the previous annual review, building off the existing FCDO-funded P4F programme provides economies of scale thanks to its greater scale and existing management experience, as compared to a stand-alone vehicle. The administrative costs have stayed the same this year, so still represent good value.

The multiple project delays due to COVID-19 could have resulted in increased fixed costs on projects (e.g. keeping staff employed for longer, office space) but favourable exchanges rates this year have offset those costs, giving a cost profile consistent with the business case.

EfficiencyBy building the programme on an existing FCDO-funded programme, the business case envisaged that the Latin America programme would be more efficient than the other regional programmes in the portfolio, which has now been demonstrated.

In April 2020, P4F rolled out a range of management and governance changes in response to feedback from its evaluation manager, regional teams and project partners. These changes were impactful – the approval time for projects has decreased by 35%, allowing projects to receive funding sooner and reach impact more quickly than they would have done under the old system, improving efficiency.

The extension of the logframe to reflect programme activity until 2020 also represents an improvement in programme efficiency. This reflects that, for the majority of indicators, the output numbers are increasing by a greater proportion than the funding increase. The programme is also shifting its emphasis to more mature Forest Partnership projects, with the addition of the ‘scaling up investment’ phase and a substantially bigger proportional increase in Forest Partnerships that are ‘ready for scale-up’. These more mature projects are more time-intensive to support as they are more complex. They are also more likely to deliver impact as they are closer to receiving investment, so this shift represents improved programme efficiency.

The programme asks the projects it funds to match fund at least 25% of project costs, and in practice projects mobilise an even higher proportion of match funding. Across the global programme (both FCDO and BEIS funded), approximately 50% of project funding is match funded (same as in previous years). This means that P4F is delivering more than expected with the same initial investment.

Effectiveness

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The strong outcomes of the global programme (i.e. Latin America and the other three regions) that have been delivered to date demonstrate that the programme is very likely to exceed all of its outcome targets. The private investment mobilised by P4F has already exceeded its target by a third, and the land area under sustainable management is at 95% of the target. Within that, it makes sense that the Latin America portfolio is only delivering a modest proportion of those outcomes, as it was set up several years after the rest of the programme.

However, the three projects that have already begun to deliver outcome results in Latin America provide confidence that the other projects will also be able to deliver outcomes as they reach greater maturity. The Ecoflora project, with P4F’s support, reached ‘Ready for Commercial Scale-Up’ stage in August 2020, mobilising £2.9m in private investment, securing 4,222ha of land under sustainable management, and supporting 102 beneficiaries. There are substantially more outcome-level results across 6 projects which are expected to be verified early next year. In total, these add up to £1.4m additional private investment, over 900,000 ha of land area, and 1,275 beneficiaries supported delivered by the projects supported by P4F.

EquityGender and social assessments were conducted as part of the programme’s business case and identified that the programme has the potential to have significant social and gender benefits (sustainable job creation, poverty alleviation, improved tenure security) alongside a number of risks. To address these, a Gender and Social Inclusion Strategy (GSIS) was created, mandating that P4F will only support projects which result in sustainable forest and land use and adhere to the gender and social inclusion criteria specified in the GSIS.

This year, the programme continues to find new ways to improve gender equality and social inclusion both within the delivery teams and programme delivery and programme outcomes and impact. In 2020, this activity was delivered by a set of trainings that were delivered across all regions back in June which aimed to be responsive to the needs of the team and deliver new concepts and approaches.

The development of the training has set in motion other discussions related to gender equality and diversity within the delivery team as well as through the projects being supported. This includes: greater diversity considerations as part of recruitment processes; reframing of GESI guidance for partners next year; revisiting of P4F’s GESI tool created to measure projects’ impacts as aligned with ICF standards: and; sharing training materials with downstream delivery partners on diversity and inclusion, child protection, prevention of sexual exploitation and abuse and sexual harassment, code of conduct, and whistleblowing.

VfM performance compared to the original VfM proposition in the business case Overall, based on the evidence above, P4F is on track to deliver value for money performance in line with (and in some cases better than) the value for money proposition in the original business case.

Assessment of whether the programme continues to represent value for moneyBased on the evidence above, the programme does continue to present good value for money. It is delivering in line with the business case or better, so it is still a good use of funds.

Quality of financial managementThe P4F annual audit was conducted by an independent assessor (Milsted Langdon), covering the period April 2019 - March 2020. The audit review process was designed to determine whether activities conducted were in accordance with the contractual requirements for the P4F programme. There were

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two recommendations made, one on ensuring that payments to suppliers were made within 30 days, and the other on reporting on performance against the 30 day performance standard.

Date of last narrative financial report October 2020Date of last audited annual statement 31 March 2020

F: RISK

Overall risk rating: Moderate

Overview of programme risk

Risk Mitigation RatingDelivery: Further outbreaks of COVID-19 in target countries cause further disruption and delays to programme activities, reducing the outcomes that the programme is able to deliver with its time and resources.

This risk is mitigated by new projects building in mitigations and contingencies against new lockdown measures and resurgences in COVID-19 cases, such as working with partners already on location, and establishing virtual communication approaches. The programme has also established a rapid process for replanning delayed projects and adjusting contracts, which allows them to manage this disruption with minimal impact.

Moderate

Delivery: Programme fails to have the desired impact of reducing deforestation, perhaps because interventions shift deforestation to other geographies, or because supporting agricultural intensification creates more funds for producers to reinvest leading to expansion of activities and further deforestation pressure.

Leakage is a risk with all investments in climate change mitigation and reducing deforestation. Reducing leakage is part of a long-term transformation and there is little choice but to tackle the problem jurisdiction by jurisdiction. The risk will be partially managed by encouraging a broad-based transformation of supply chains through P4F’s enabling conditions work at jurisdictional level and by nesting support for partnerships within state-level sustainable development plans and related results-based payments.

Moderate

Delivery: Projects do not receive follow on development or private capital, perhaps because of reduced investment appetite linked to COVID-19 and recession, or if the projects are unattractive to investors.

The economic impacts of the COVID-19 pandemic are likely to lead to reduced investment appetite, presumably on a time-limited basis. The results framework explicitly states that P4F is not expected to be able to overcome these external circumstances, so failure to mobilise finance linked to these changed circumstances would not be judged as a programme failure.All projects in the Latin America portfolio will continue to seek investor input into project development, and projects are encouraged to diversify beyond sectors most affected by the pandemic (e.g. hospitality). The programme will maximise learning from other parts of the P4F portfolio where substantial private investment has been successfully secured.

Moderate

External context: Changes in political/regulatory/economic environment in focus countries reduce incentives for promotion of sustainable practices at national level or introduces difficulties with operating in the country (perhaps due to specific

The strategy will focus on building political dialogue with partner governments and sub-national leaders to support proactive regulatory reform, building on existing BEIS and UK Government relationships. The focus on supporting private sector-led solutions reduces the risks from political changes. The programme works in a diverse range of jurisdictions across three countries to mitigate the portfolio risk, meaning that support can be redirected between focus countries and regions should issues emerge.

Moderate

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emerging sensitivities in political environment).

Safeguarding risks in this programme are largely due to the risk of conflict or violence in some of the project’s operating areas.

P4F has comprehensive procedures for political risk review and management, including close liaison with the Foreign and Commonwealth Office. Scrutiny of partnerships, detailed due diligence, close monitoring of risks, interventions to mitigate risks identified in specific partnerships. Downstream mapping of the supply chain has taken place for Tier 2 and Tier 3 partners, most recently updated in October 2019. In 2020, an SEAH-related safeguarding issue did arise, and was effectively and quickly managed by the programme delivery partners, in co-ordination with FCDO’s Safeguarding team.

Low

Reputation: Unnecessary over-subsidising of private sector bodies or negative publicity on projects funded by P4F leads to risk of media criticism and reputational damage.

The programme has engaged a reputational risk manager, reputational risk training, establishment of crisis management protocols and procedures. Additionality criteria have been defined and applied consistently to ensure that all P4F investments are demonstrably adding value.

Low

G: COMMERCIAL CONSIDERATIONS

Delivery against planned timeframe

The programme is on track. All deliverables during this period were of high quality and submitted either on time or ahead of schedule.

Performance of partnerships

The programme is contracted to Palladium, which employs Systemiq and Efeca as subcontractors. The Latin America regional office was previously been staffed by a mix of Palladium and McKinsey staff, but McKinsey exited the contract in 2020, and its activities in Latin America were either ended or transferred to Palladium and Systemiq. Efeca’s role in the consortium is as a provider of specialised advice to governments and companies on demand-side policies.

A strong and collaborative working relationship has been established between FCDO, BEIS and the P4F management team, including through strategy workshops, regular management meetings, joint outreach and engagement with partners, and field visits. BEIS, FCDO and P4F are working collectively to share P4F’s experience and encourage others to work in this space.

Asset monitoring and control

The most recent independent financial audit of P4F (concluded in October 2020) found that Palladium is compliant with its contractual conditions. The report states “our testing has found that the organisation is substantively in compliance with the terms and conditions of the contract”, including in regards to funds being expended in accordance with the terms of the contract, and goods and service being procured in accordance with contract guidelines. H: MONITORING & EVALUATION

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Evidence and evaluation

The evidence used in this Annual Review is primarily drawn from the programme’s formal annual report summarising all cumulative results delivered up until 30 November 2020. This is complemented by evidence presented in the fortnightly regional management calls, the weekly portfolio overviews provided by the programme team to the senior leadership team (SLT) and HMG, and quarterly SLT meetings.

Efforts to learn from programme activities and strengthen the evidence base are supported by the Independent Evaluation and Learning Manager. The Independent Evaluation and Learning Manager (ELM) is conducting learning and evaluation around three broad types of interventions supported by P4F: produce-protect initiatives in forest landscapes; businesses which create value through forest restoration; and high-value low-intensity value chains, which extract and sell forest products on a sustainable and small-scale basis.

In 2020, the ELM carried out baseline thematic studies across several regions to assess projects starting to receive support from P4F. These will be complemented by studies carried out next year, to assess how projects have changed thanks to P4F support. In Latin America, the baseline study focused on nine Non-Timber Forest Product projects in Colombia and Brazil. Due to COVID-19, the field work was carried out virtually rather than in person, but the evaluators were confident in their assessments thanks to being able engage virtually with a wide range of stakeholders.

Overall, the evaluation noted that ‘the 9 projects covered by this study are generally well set-up, organised and professionally implemented ensuring positive progress at output level’. They also noted that ‘additionality is mostly strong: P4F inputs are well targeted and strategically focused.’ This provides confidence, from an independent perspective, that projects in the P4F Latin America portfolio are not only well-organised to deliver outputs, but strategically aligned for delivering outcomes and impact. The evaluators also particularly commended the adaptability and flexibility displayed by the P4F team managing the disruption due to COVID-19.

Monitoring progress throughout the review period

Monitoring is focused on implementation of processes and systems, including assessing ideas and proposals for inclusion in the programme, criteria for moving through decision gates, modelling and risk-weighting of project and portfolio outcomes, tracking change and attribution, supporting individual projects to develop results frameworks and theories of change. Project management systems generate good data which enables portfolio analysis and adaptive management of the programme. Portfolio-level monitoring has also been used to focus resources efficiently, such as prioritising projects which contribute the greatest potential results or offer strategic value to the programme.

Learning

The evaluative study carried out in Latin America in 2020 identified several recommendations for the programme, which included:

- Encouraging consideration of ‘fairness’ in the establishment of new value chain arrangements to ensure that benefits are realised by local producers and especially collectors.

- Ensuring that for the projects where territorial planning, Produce-Protect sanctions, traceability, and monitoring systems are not yet fully developed, adequate support is provided to ensure that intensification does not lead to unintended negative environmental outcomes

- Close monitoring is needed of whether economic incentives are catalysing behaviour changes on a sufficient scale so that the appropriate corrections can be introduced.

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- Increased support for market-building initiatives, such as provenance-story building, consumer campaigns for consumer-oriented products, engaging NTFP platforms and industry fairs, facilitating buyer partnerships and engaging profile supporters should be considered. As well as supporting new direct producer-consumer business model innovations.

- P4F Latin America team to re-review all the NTFP projects and check whether there are opportunities/needs to strengthen landscape governance through multi-stakeholder landscape partnerships to identify a business case and funding sources etc.

To reflect on these recommendations, a workshop was held in October where the P4F Latin America team presented their responses to each of these recommendations in turn to the BEIS SRO. The independent evaluation team attended this workshop and provided their feedback on the proposed responses, and next steps were agreed. To ensure progress is made with these responses, it is recommended that P4F provide an update to BEIS on all of these recommendations (by end March 2021).

The evaluative report also included recommendations for the UK Government and BEIS – most of which have been actioned or are underway.

I: TRANSFORMATIONAL CHANGE

Rating

2 – Some early evidence suggests Transformational Change judged likely.

Evidence and evaluation

The programme team produced an annual KPI15 report as a knowledge product in February 2020, which set out how and to what extent P4F has achieved transformational change. The methodology was developed in collaboration with the external evaluation contractor to align with central ICF guidelines. To maximise efficiency in reporting, the methodology’s inputs are indicators which P4F already measure elsewhere in the results framework.

Since the Transformational Change assessment that was carried out in February 2020, the independent evaluative report written on the Non-Timber Forest Product portfolio broadly confirmed this assessment:

- “Our analysis using the Transformative Change Framework and scale, suggests that the projects are generally well-designed, considering systemic issues and play to P4F’s strengths. However, the effectiveness of the conditional incentives and associated behavioural assumptions need to be tested to see if they reach a critical mass of producers to achieve forest goals. More attention may be required on (i) landscape governance as the guiding context in which the projects are implemented and if this can be funded, and (ii) increased investment in building market demand. We find that across the projects there is either ‘good’ or ‘some’ potential for transformative change, but that evidence of Transformative Change occurring still remains limited given the nascent state of many of the portfolio projects and the need to still test key value chain and landscape governance assumptions.”

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