How to generate private financing flows for conservation outcomes

 

“We don’t need 50 deals, we need 50,000 deals” was one of the main messages from the recent IUCN-PANORAMA webinar exploring how to generate private financing for conservation outcomes.

Currently, an estimated US $200-300 billion a year is needed to attain global conservation goals. To reach this amount, public funding would need to double, while private financing – which offers the most potential – would need to increase 20-30 times more than present levels. Therefore, to attract this type of funding, experts say conservation projects have to become more “investment-ready” and learn how to:

  • Communicate risk to attract investors;
  • Set-up organised structures that investors can use as entry points for engagement; and
  • Foster unique partnerships to connect innovative business cases with funders.

Following is a summary of the presentations made during the 5th in a series of webinars examining how civil society organisations are engaging business on biodiversity conservation and sustainable development.  

Blueprints for blended financing

The Director of the IUCN Washington office, Frank Hawkins, outlined some of the solutions that are addressing the obstacles to conservation finance. Investors find it difficult to discover investment-ready conservation projects and often perceive them as too risky to generate returns for their shareholders. Conservation projects need to generate returns, have an insurance mechanism to reassure risk-averse investors, and ensure they are large enough to attract financial institutions (FI) that are willing to invest hundreds of millions of dollars on average.

Established in 2016, the Coalition for Private Investment in Conservation (CPIC) is designed to create the right conditions to increase investment for conservation. It now has more than 70 conservation and financial organisations members, working to develop and standardise blueprints for projects with both income generation and conservation impact components.

Using the blueprints, sector-specific working groups train project developers to create market-and-investment-ready conservation projects that integrate blended finance. This can include grant funding with no expectation of return, concessional finance from international FIs like the World Bank with a low expectation of return, impact investment with some expectation of return, and finally, private finance which requires returns around market rates.

To date, about 10 out of 50 projects have been converted into blueprints focussed on priority areas, such as coastal resilience and sustainable agriculture. IUCN serves on the CPIC Steering Committee and helps ensure that the projects can have a positive impact on conservation.

Connecting small conservation NGOs to international financial flows

Romie Goedicke from the IUCN National Committee of the Netherlands (IUCN NL) presented lessons learned from creating a pipeline of conservation projects in several countries in Asia and Africa, and convincing risk-averse investors to direct financial flows towards conservation. IUCN NL sought to understand the “missing link” between small conservation NGOs and international financial flows. As a connector, IUCN NL builds the capacity and knowledge of local partners, and equally, works with investors to show them that smaller projects are also profitable.

Through its Green Finance Academy, IUCN NL trained local conservation organisations on how to "pitch" their business cases to investors. In another example, the Mobilizing More for Climate (MoMo) competition, launched in Vietnam in 2018, saw companies with a climate adaptation and mitigation business case compete for a prize package that included coaching, access to business networks and seed money.

In all of these experiences, Romie noted four crucial lessons:

  1. Involve financial institutions from the beginning of a project to collaboratively develop ideas;
  2. Create unique partnerships to direct financing flows into conservation;
  3. Be open to learning about tools like blended finance even if they appear complicated at first; and
  4. Always be accompanied by a legal entity to enhance the structure of your project.  

Mobilising shea value chains and empowering communities for sustainable resource management

Daryl Bosu from A Rocha Ghana, a conservation NGO based in Ghana, presented a case study that involved mobilising shea value chains. A critical factor in its success was that it used a national policy tool to empower communities in sustainable resource management, and facilitated a partnership around a traditional commodity for conservation and improved livelihoods.

In 2005, A Rocha Ghana and IUCN NL had initiated a governance and management framework in a community living around Mole National Park, Ghana’s largest protected area, to incentivise communities and mobilise them around sustainable resource management.

To demonstrate the benefits that can come as a result of nature protection, A Rocha Ghana used shea nuts, which are collected by women's groups in the community, as an example.  This required them to identify a food company that would buy and develop the potential of expanding the collection of shea nuts. Savannah Foods Company Ltd. (SFC) agreed to pay "good" premiums to the women for their shea nuts and contribute to a fund for conservation activities in the area.

According to Daryl, the partnership worked for three reasons: SFC was reassured by the organisations’ presence and the existing structure derived from the framework; the company was interested in sustainable trade, so it saw that the community’s conservation goals aligned with its own; and, finally, the people trusted SFC because it showed interest in helping them achieve their conservation objectives.

This success has since attracted other organisations interested in developing financing flows for conservation in other value chains, such as honey, and using the premiums to increase funds for conservation.  Having an existing structure that facilitated the partner company’s engagement with the community was critical, Daryl concluded.   

More PANORAMA Solutions on financing for conservation

In addition to the examples featured in the webinar -- Mobilizing More for Climate competition, and the Shea Value Chain Case Study from A Rocha Ghana – other inspiring examples can be found on the PANORAMA platform, including:

For more information, listen to the webinar recording here.  To share your own experience in leveraging finance for conservation, visit the PANORAMA platform. 

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