The conservation of nature is key – but are we investing enough? - BNP Paribas CIB
 
Tuesday 12 November 2019

Investing in nature could be the most cost-effective solution to the climate crisis, but why have we ignored it – and could blended finance solve it?


Half a trillion dollars a year is currently invested in sustainability-related finance. But is the allocation of this capital efficient? According to Jennifer Morris, Conservation International President, it is not – because of systemic underinvestment in the conservation of nature, such as protecting forests to increase the sequestering of carbon. At the Paris One Planet Summit in October 2019, she discussed the scaling up of blended finance – and why and how it should be part of the solution.

Hello Jennifer! You are a fierce advocate of the conservation of nature. Can you explain why it is critical in climate mitigation?
Jennifer Morris: We have only about 10 years to avoid the worst impacts of climate change. We must act now and act fast. One solution we often overlook is right in front of us. Perfected by the evolution of our planet for over four billion years, one of the best and most cost-effective ways we have to sequester carbon is nature herself – and she is ready for investment now.

Science tells us that nature is more than 30% of the solution to climate change yet it receives just 2% of the finance. In fact, $500 billion are invested annually in mitigation and adaptation finance, yet only 2%, or $10 billion, are channelled towards natural climate solutions. If nature is 30% of the solution, shouldn't we be investing 30% of the financing – that is about $150 billion annually.

What is causing this investment gap?
J.M.: Part of the reason is because until recently, nature-based solutions have been financed primarily through pure grant philanthropy or corporate social responsibility. This funding is limited and limiting. To scale, we need business models for nature-based solutions that attract private capital with a positive financial ROI for private investors that also still delivers on social and environmental returns.
" If the top three pension funds in the United States invested just 5% of their total assets in nature-based solutions, we would reach our $150 billion goal globally and close the financing gap. "

However, if this were a perfect, functioning market, it would already be working at scale. At this stage in the markets' evolution, investing in nature-based solutions will require patient, long-term capital, with return expectations that do not undermine local communities' ability to make a living from conserving nature rather than destroying it.

We are seeing a historic change in private investors' interest in investing in nature. From large multinational companies being pressured by their investors, to pension funds who have very long time horizons and whose customers want to know that their future pensions will not be paid from profits earned from the destruction of the planet. But we need investable models that are de-risked for corporates to engage at scale and use funding from treasury budgets instead of limited foundation or corporate sustainability budgets.

How can nature-based investments be de-risked to attract private capital?
J.M.: This is where the Green Climate Fund (GCF) has a critical role to play in what we call blended finance: by investing capital in nature-based solutions, GCF contributes to de-risking these projects and to unlocking investments from private actors.

At Conservation International, we are being approached almost weekly by companies and institutions seeking investable nature-based projects. The term of investments is often not the problem. Pension funds for example, have return horizons of several decades. This is potential funding at scale. In fact, if the top three pension funds in the United States invested just 5% of their total assets in nature-based solutions, we would reach our $150 billion goal globally and close the financing gap.

Large companies sitting on lots of cash with limited returns in traditional fixed income instruments seek better options that have a return for nature – but of course have concerns about risk compared to these instruments, which provide stable, predictable returns. As GCF enters into its next cycle, for example I would encourage us to look for these opportunities to de-risk private investments and to demonstrate and realise the total value of nature-based solutions.

What are the missing elements that would allow us to properly invest in nature?
J.M.: We need to align investments and incentives, committed public finance, a thriving carbon market and real, demonstrable examples of success on the ground combining production, protection and governance in one place. There is no better investment we can make for climate, for biodiversity and for people than investing in nature."

About Jennifer Morris
As President of Conservation International, Jennifer Morris oversees all of the organisation's programmes across 31 countries and more than 600 million hectares of protected land. She leads the more than 1,000 scientists, policy experts and conservation professionals implementing cutting-edge initiatives and working with more than 2,000 diverse partners – from indigenous communities to multinational corporations. She also serves on the boards of several organisations including the Conservation Strategy Fund, Natural Capital Coalition and Nia Tero, an organisation working to secure indigenous guardianship of vital ecosystems around the world.

About Conservation International

Conservation International uses science, policy and partnerships to protect the nature that people rely on for food, fresh water and livelihoods. Founded in 1987, Conservation International works in more than 30 countries on six continents to ensure a healthy, prosperous planet that supports us all.




Rate this article :
1
1
2
1
 
 

Give us your feedback

Please validate CAPTCHA.

RELATED ARTICLES
using-finance-to-help-power-coffee-farmers-out-of-poverty-nkg-bloom

Thousands of coffee farmers live in poverty. But Neumann Gruppe's $25m sustainable sourcing loan seeks to deploy the power of finance to sustain long-term, economic and ecological viability. Here's how.

bnp-paribas-top-5-takeaways-from-climate-week-nyc-2019
BNP Paribas' top takeaways from Climate Week NYC 2019 from UNEP PRBs, sustainable and environmental finance...
BNP Paribas' top takeaways from Climate Week NYC 2019 from UNEP PRBs, sustainable and environmental finance,...
investment-in-sustainable-infrastructure-what-needs-to-happen-
Partnerships between development institutions and the private sector are vital for investment in sustainable...
Partnerships between development institutions and the private sector are vital for investment in sustainable infrastructure...
propelling-the-taiwanese-green-bond-market
Renewable energy Ørsted A/S becomes the first foreign corporate to issue a green bond on the Taiwanese...
Renewable energy Ørsted A/S becomes the first foreign corporate to issue a green bond on the Taiwanese market.
the-glass-is-greener-first-u-s-industrial-hy-green-bond
BNP Paribas supported glass manufacturer Owens-Illinois (O-I) in becoming the first U.S. high yield industrial...
BNP Paribas supported glass manufacturer Owens-Illinois (O-I) in becoming the first U.S. high yield industrial green bond...
close
{POPUP_CONTENT}