Conservation: A new investment opportunity

The report, Conservation Finance: From Niche to Mainstream: The Building of an Institutional Asset Class, released in January 2016 by Credit Suisse and the McKinsey Center for Business and Environment, identifies new investment products that can help meet the world’s most pressing environmental challenges. The report also explains what is driving growth in this emerging investment sector.

Collaboration between the conservation and financial communities is critical for developing innovative solutions that will protect biodiversity and natural resources.

“The continuing disappearance of Earth’s last healthy ecosystems is, sadly, no longer news,” said Tidjane Thiam, Chief Executive Officer of Credit Suisse. “What is news is that saving these ecosystems is not only affordable, but profitable. Nature must not be turned into a commodity, but rather into an asset treasured by the mainstream investment market.”

Conservation finance – enabling investments into land, water, and resource conservation projects - has captured the attention of investors looking for products offering attractive financial returns, which also make a favourable impact on the environment.

Driving this new market for conservation finance products is the opportunity for better returns in a low yielding environment, more familiarity with impact investments, developments such as the 2015 Paris Climate Agreement, and the emergence of standards such as the IUCN Green List of Protected and Conserved Areas.   

“Currently, there is a lack of conservation deals available at the scale required to meet the world’s environmental challenges and investors’ interest,” said Gerard Bos, Director of IUCN’s Business and Biodiversity Programme.  “IUCN has an interest in ensuring these deals are ‘fit-for-purpose’ to deliver a good return on investment for biodiversity and conservation."

In order to fill this gap and establish conservation finance as a mainstream asset class, the report makes a number of suggestions aimed at making conservation projects more accessible to investors, and also suggests new products including marine protected area bonds or insurance payments for risk mitigation.

The report was supported by IUCN, the Gordon and Betty Moore Foundation and the Rockefeller Foundation.

Funding conservation is also one of the themes that will be explored at the IUCN World Conservation Congress 2016, taking place from 1-10 September in Honolulu, Hawai’i.  Join us to discuss the developments in this exciting new area of conservation work.