CASE STUDY
Securing clarity on forest project’s
scalability and stages of development
Objectives
Solicit an independent assessment of a forest project for clarity to decide whether to progress to ERPA negotiation
Augment the due diligence team due to a lack of in-house resources and the necessary tools and data
Mitigate reputation risks
Results
Uncovered unclarity between current project stage and project vision, which caused confusion between project and our client - creating false expectations and complicating resource planning
Uncovered incomplete land access for the entire carbon crediting period, with unresolved legal and Free, Prior and Informed Consent (FPIC) issues with Indigenous Peoples
Interaction with project team showed that the team had underestimated risks related to political instability, corruption, unclear governance, and tensions with the palm oil industry, with no mitigation plans in place.
Xilva’s Risks & Recommendations were translated into a checklist for the client's next due diligence step, which involves a field visit.
THE CASE
Client W was a non-profit organization which invested in community projects for impact. They were interested to invest in a project looking to transform grassland and cropland into forest plantations of mahogany and cedar to secure carbon credits, implement sustainable forestry practices, and improve the livelihoods of the local communities.
Due to a lack of in-house expertise on forestry and community projects, W contracted Xilva to conduct an independent due diligence on the project and draw insights on the project before moving on to a site visit.
WHAT XILVA GRADE UNCOVERED
Xilva GRADE revealed significant gaps and risks:
Misalignment in project documents and interviews highlighted confusion about the project's immediate and long-term goals.
National law checks and land title deed reviews exposed the inadequacy of legal land access for the proposed project's duration.
Interviews with forestry auditors and press consultations indicated unaddressed risks and lack of comprehensive risk mitigation strategies.
Financial plan assessments challenged the benefit-sharing model, revealing high non-permanence risks without secured long-term community engagement.
HOW WE DID IT
As part of the Xilva GRADE framework assessing “Leadership & Team”, Xilva team conducted detailed interviews with the project developer team which led to the discovery of project team’s inexperience in community projects which showed in their inadequacy in estimating project risks related to political and social situations.
We also checked and reviewed national laws and land title deeds, and challenged the financial viability and sustainability of the benefit-sharing model.
WHY IT IS IMPORTANT
For the client, identifying these risks helped avoid a potential reputational disaster and provided clarity on the project's scalability and stages of development. For the project developer, our assessment highlighted the need for securing legal land access, long-term community engagement, and effective risk mitigation plans. These insights are vital for ensuring sustainable forestry practices and achieving the project's long-term goals.
Learn more about Xilva GRADE, the framework and methodology. Contact us for a free consultation today.