Conservation Finance: Moving beyond donor funding toward an investor-driven approach

Last modified: 
July 25, 2017 - 10:25am
Tags: 
Type: Report
Year of publication: 2014
Date published: 01/2014
Authoring organizations: WWF, McKinsey & Company
Publishing institution: WWF

Valuable ecosystems are today undergoing rapid degradation and depletion in many parts of the world. Natural capital and the services that ecosystems provide are still poorly understood and rarely monitored. Unlike in the case of traditional commodities, the value of these natural resources is not recognized by today’s markets. It is, however, crucial that we understand the interrelationship between environmental quality and economic profitability. This information needs to be integrated into macroeconomic analysis and included in decision-making processes in the areas of financing and investment.

To preserve the health of natural ecosystems, a significantly larger amount of capital investment is required than the sums currently being allocated to conservation. Private sector investment is needed, not to replace but to supplement traditional sources of conservation capital such as public funding or philanthropy, which have been impacted by the global economic downturn. Against this backdrop, WWF and Credit Suisse have joined forces in the area of conservation finance to identify the conditions needed to attract and redirect private capital toward conservation.

This report shows that there are many unexploited private sector investment opportunities to increase conservation finance and deliver maximum conservation impacts while, at the same time, generating returns for investors. In order to develop appropriate financing structures and ensure that private sector conservation finance results in measurable conservation outcomes, financial institutions and non-governmental organizations must experiment and define their respective roles and approaches. If both sides concentrate on their main areas of expertise – with banks focusing on the alignment of capital resources, risks, and maturities, while NGOs identify measures to protect the natural environment – we can create a new opportunity for collaboration that will help to preserve natural capital for future generations. Provided it delivers measurable results, investor-driven conservation finance can create powerful incentives for truly sustainable development.

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