Social Impact Investing and the changing face of conservation finance Olmsted, Paige
A consistent and significant challenge facing the conservation of natural resources is where the money will come from, and what new sources will arise as trusted sources dry up? While roughly US$30B is spent on conservation efforts globally per annum, the annual need to maintain critical ecosystem functions in the long term is estimated to be ten times higher. In an era where public support is increasingly insufficient, social impact investing is one funding strategy garnering attention in the policy sphere. Social impact investing directs capital to organizations, funds, and projects that generate both social and financial returns. Banks and investment firms, along with foundations and governments, are increasingly interested in the potential for novel financial arrangements to direct more funding toward critical social challenges, including environmental and conservation issues. Existing impact funds and initiatives demonstrate how billions can be leveraged to support projects ranging from healthcare to poverty alleviation to infrastructure, and highlight the opportunity for similar models to generate financial support for conservation objectives without undermining fundamental ecological goals. Ecological conservation has not yet been a focal point in the impact investing space, but current research and reporting suggests there is available capital as well as a substantial need for funding. While several billion dollars are currently invested as impact capital in conservation-related programs, in the next decade dramatic increases in this area are anticipated. The extent of this expansion, and the effectiveness of these funds in achieving real conservation gains, will rely upon appropriate investment vehicles being available and, importantly on the engagement of conservation community. Both will require education, coordination, and leadership on the part of conservation organizations, investors, and organizations serving intermediary roles. Not all conservation programs are appropriate for this type of financing. Here we provide an explanation of current actors in the conservation impact arena as well as critical features and requisite data to consider feasibility. Though conservation receives a relatively small percentage of philanthropic giving as compared to health and poverty related social causes, there are challenges unique to the practice of natural resources conservation that may explain in part why conservation thus far represents a small percentage of overall impact investing as compared to other sectors. These challenges include reliable risk assessment, consistent and comparable impact measurement, and (where applicable) generating competitive economic returns. To address these challenges, ... key recommendations [are proposed].
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