The objective of this report is to identify financial product structures that have the potential to establish conservation finance in mainstream investment markets. As in our prior report (Credit Suisse, WWF, and McKinsey, 2014), we understand conservation finance as a mechanism through which an indirect or a direct financial investment is made to conserve the values of an ecosystem for the long term. In this report, we focus on investment mechanisms that activate one or more cash flows generated by the sustainable management of an ecosystem, which in part remain within the ecosystem to enable its conservation, and in part are returned to investors. The report emphasizes the need to match existing conservation finance project strategies with appropriate financial vehicles and available investable funds with the long-term intent of creating a conservation finance asset class. While important for conservation, this report does not focus on related topics such as the improvement of industry supply chains (unless directly related to conservation, such as agriculture and fishing), commodity finance, or carbon/climate finance. Furthermore, the report does not take a normative approach to the question of what conservation finance is or should be. Its approach is based on mainstream definitions such as those provided by the Global Canopy Programme (2012) and WWF (2009). This report is primarily targeted at mainstream investors – that is, institutional investors, (U)HNWI, and retail investors – who are interested in learning more about investment structures that provide a market-rate return and a positive conservation impact. The report should also help conservation project developers better understand the possible funding options provided to them by the private investment sector. It is targeted at those who are willing to take the plunge into the “financialization” of conservation finance projects in order to try to tap into those deeper capital pools.
Conservation finance from niche to mainstream: The building of an institutional asset class
Year: 2016
