Climate and Landscape Finance Get the Spotlight at World Conservation Congress

by | October 18, 2021 | Events, Finance and Economics

This article is the third part of our series covering happenings at the IUCN’s World Conservation Congress. See the first installment on how landscapes are vital to addressing climate change and biodiversity loss here. To learn about the need for a new vision for economics and land use that was discussed at the WCC, read our second installment here.

 

The rapidly growing field of conservation finance was on display during September’s International Union for Conservation of Nature (IUCN) World Conservation Congress (WCC). In part two of our event recap, we look at conservation and finance actors’ perspectives, insights and ideas for innovation.

Several core finance-related themes emerged over the four-day global conference, some familiar and others new to the conversation. For example, challenges include the need to:

  • Transition to financial incentives that provide positive impacts on nature
  • Provide capital where and when it’s most needed
  • Bundle conservation projects to attract more investors
  • Secure land tenure rights to ensure benefits are delivered to local farmers
  • Identify a central and impactful set of metrics to meet investor demand

Adopting a landscape and multisector approach instead of a siloed one

Throughout the WCC, speakers conveyed the need to think beyond project boundaries and adopt a more expansive landscape-level view. For example, Birdlife International set up a landscape-oriented business incubator to incorporate a landscape approach with business and finance, said Bryna Griffin, the organization’s head of forests programs.

Other speakers agreed with that perspective.

“A landscape [view] is a good way to home in on precisely where we can see the consequences of the choices we made,” said Achim Steiner, the administrator of the United Nations Development Programme.

Cristelle Pratt, the assistant secretary-general of environment and climate action at the Organisation of African, Caribbean and Pacific States, emphasized the need to ensure collaboration and cooperation while embracing holistic, integrated approaches that address transboundary problems.

Change the financial incentives for actors

Carlos Manuel Rodriguez, CEO and chairperson of the Global Environment Facility, questioned why society’s investments in activities that destroy nature dwarf those that protect it—including through subsidies. He called for governments to address this market failure by changing financial incentives.

Andre Huffman, president of the MAVA Foundation, echoed Rodriguez’s comments. “The only way to think past the short term is to change the incentives,” Huffman said. Endorsing this idea was IUCN Director General Bruno Oberle, who announced the creation of an IUCN task force whose mission will be to change perverse incentives with unintended, unwanted consequences (such as reversing financial incentives underpinning unsustainable livestock farming).

Some conversations explored solutions at farmer, project and landscape levels. One tool presented was impact, or sustainability-linked, loans, where the interest rate charged to farmers or small producers is dependent on effects. Other suggestions included bundling services and tools to help farmers transition to regenerative agriculture and efforts to secure land tenure for small farmers.

The need for open-ended funding, pre-financing and aggregating investment

Farmers and suppliers are frequently unable to access capital at the right time, disrupting their operations. Furthermore, banks often ask suppliers for significant collateral. Pre-financing, which involves providing capital to farmers and suppliers in advance of delivery, was offered as one solution.

Bettina Prato, the senior coordinator for the Smallholder and Agri-SME Finance and Investment Network, shared one of the more in-depth talks regarding investment aggregation. She emphasized the importance of the increased provision of resources, tools and small-scale loans for small farmers.

Improve metrics

WCC speakers frequently referenced a need to measure the nature impacts of investments. The performance metrics and private valuation models found in the investment world generally don’t match what small businesses in developing countries can offer, in part due to limited collateral and lack of a track record, according to Urs Dieterich, the managing director of the Landscape Resilience Fund at investment collaborator and project developer South Pole.

A specific concern was a lot of “impact” investment doesn’t measure conservation impact very well. This measurement issue extends beyond ecological factors. Panelists in several sessions pointed out the field generally doesn’t have external and reliable measures for a broad range of topics, including social issues such as nutritional and vulnerability impacts.

The costs involved with collecting impact metrics also drew attention. Patrick Bigger, a lead researcher and consultant for the Biodiversity Capital Collective, explained there’s no way around paying for measurement that meets investor standards. Fellow panelist Prato added there’s also a need to demonstrate that portfolios of conservation projects, which integrate both social and environmental impacts, can do so in ways that do not reduce return or increase transaction costs.

Other financial-related potential solutions discussed during the WCC included:

More than a dozen sessions at the WCC focused on financial topics, including challenges and innovations surrounding investment level, lowering the cost of capital and ensuring benefits are delivered to farmers, smallholders and all stakeholders. We expect investment-related conversations to continue to build, particularly those involving integrated landscape finance.

 

Author

  • David Hecht is a finance intern at EcoAgriculture Partners. He supports research on innovative landscape finance mechanisms and the work of the 1000 Landscapes for 1 Billion People Finance Accelerator team.