The International Union for Conservation of Nature, Mirova Natural Capital, and the Global Environment Facility have teamed up to launch the world’s first conservation accelerator fund, an investment vehicle designed to help channel private sector funding into cutting-edge initiatives with the potential to benefit both nature and investors.
The new Nature+ Accelerator Fund is a blended finance vehicle that aims to bring together a roster of scalable, measurable, nature-based projects intended to provide both conservation benefits and financial returns, offering investors a pipeline of vetted projects to back. It stems from the Coalition of Private Investment in Conservation, a global multi-stakeholder group focused on enabling conditions that support a material increase in return-seeking investment in conservation.
“We believe the Nature+ Accelerator Fund can help incubate and accelerate conservation investments in developing countries that will ultimately create a track record of bankable projects, that perhaps, one day, if we dream far enough, will not require any additional donor support,” Gustavo Fonseca, Director of Programs at the GEF, told a webinar convened to launch the Fund, which will be managed by Mirova Natural Capital in London.
The Fund will take projects that meet selection criteria from seed funding through to early venture, venture, and finally growth phase, with investors providing an ever-greater portion of the backing and assuming more of the risk. Investors will be offered 30% “first loss” protection to mitigate early stage risk, with $8 million already secured by the GEF as the Fund’s anchor investor. Its target size is $50 million, with a first quarter 2021 target of $10 million.
Stewart Maginnis, Global Director of the Nature-based Solutions Group at IUCN, told the launch call that the trio of crises that have commanded the world’s attention this year show how critical it is for mankind to heal its relationship with nature.
“We see the convergence of three crises that, in one shape or form, have had some links to the environment—some explicitly, some less. The one that is most immediate is the public health crisis and the aftermath of the public health crisis. And there is the climate crisis, and there is the biodiversity crisis,” he said.
Environmental damage is no longer “just about undermining a species or making endangered species disappear. It is actually eating away at the fabric of our societies, our culture, and our wealth creation.”
To date, conservation has been less accessible to investors than more measurable green economy sectors like sustainable energy. Many nature-related projects had long lead times, offered limited early cash flow, and posed risks and uncertainties new to the investment community. Even those investors who were interested often found it difficult to find options to finance, since there was no pipeline of vetted projects for the private sector to back.
As a result, funds flowing into environmentally harmful initiatives dwarf those channelled into beneficial ones despite growing investor interest in conservation, leading to a large funding gap.
According to a recent report from The Paulson Institute, The Nature Conservancy, and the Cornell Atkinson Center for Sustainability, current annual spending on conservation is $598 billion to $824 billion short of what is required. Bridging this gap will require help from the private sector and from investors.
Several efforts are afoot to make investment in nature easier and more impactful.
Avril Benchimol, a Senior Financial Specialist at the GEF, said the Global Environment Facility was aiming with its Blended Finance work program to leverage investors’ interest in environmental areas that are challenging and often overlapping. “We are seeing more and more projects that are designed to actually have benefits for not only climate change mitigation, but together with land degradation, and also biodiversity,” she said.
Other recent efforts include IUCN’s set of global standards for nature-based solutions that are designed to make it easier to gauge project progress, and work by the Task Force for Nature-related Financial Disclosures to help financial institutions understand the impact their investments have on conservation and biodiversity. The Nature+ Accelerator Fund will apply the IUCN’s Global Standard for Nature-based Solutions and the Species Threat Abatement and Recovery (STAR) metric within its investment portfolio.
Edit Kiss, Director of Development and Portfolio Management at Mirova Natural Capital, said the Nature+ Accelerator Fund is ready to start taking investor commitments, and is starting to build the first cohort of projects that will be ready to receive funding after the first close.
Projects will fall under four main pillars, around ecosystem conservation and restoration; smallholder production systems and sustainable agriculture; marine conservation, coastal protection, and resilience; and innovation in services, finance, and technology. “Returns should be scalable and replicable,” she said, noting the Fund will “help create a market in this space.”