Scaling finance for nature: lessons from a IUCN/CPIC panel at New York Climate Week

Oct 10, 2022

Written by Martin Stadelmann, Executive Director, Climate Investments, and Juliette Baralon, Manager, Climate Investments, South Pole

Two weeks ago, leaders from governments, business, and the climate community gathered in New York for the fourteenth Climate Week, under the theme of Getting It Done. On the sidelines, IUCN and the Coalition for Private Investment in Conservation (CPIC) organised a high-level dialogue titled “Scaling Finance for Nature: Forging Philanthropy-Finance-Government Partnerships”. Martin Stadelmann, Executive Director, Climate Investments, presented South Pole’s experience to representatives from leading conservation NGOs, philanthropies, financial institutions and corporates, gathered to take stock of the current state of conservation finance and discuss successful initiatives for investing in nature.  Here are some key takeaways from the discussions: 

1. Scaling finance for nature-based solutions will require simplicity and credibility.

Adopting a jurisdictional (versus project-by-project) approach can help achieve this scale, but it must not be done at the expense of the quality of investments. 

2. Philanthropists and private investors must take more risk.

Philanthropic funding is the ultimate source of risk capital, and should be used to back experimentation and support the development of new markets and instruments. Private investors in the nature-based solutions space must also recognize that risks are inherent to the sector, and deploy additional risk-tolerant capital. 

3. We need a stronger pipeline of bankable NbS projects.

The lack of investable projects is a major obstacle to scaling private investment in conservation. Bringing more projects to the investability stage requires addressing a range of existing barriers, as a South Pole team recently found in a report developed for WWF and HSBC. Our suggested solutions to address some of those barriers include: 

  1. Strengthening local capacity for project development. Significant expertise and track record of project developers is a prerequisite for any private investment, and philanthropies and governments have a key role to play in providing early-stage technical assistance. 
  2. Securing predictable revenue streams and valuing a wider range ecosystem services. The carbon market provides an established and credible framework to drive conservation investment, but monetizing additional ecosystem services can strengthen the business case of many nature-based solutions projects. One innovative approach of ecosystem service valuation has been the partnership between the Intrinsic Exchange Group and NY Stock Exchange to establish Natural Asset Companies (NACs)

4. Traditional financial instruments can be used for innovation.

Large-scale financing of marine ecosystem protection can be financed through debt swaps. Implemented in the Seychelles and Belize, it involves the issuance of blue bonds to retire outstanding debt at a significant discount, with a sizeable portion of fiscal savings set aside in a dedicated vehicle for managing investment in marine protected areas.

5. We need a “Paris Agreement for Nature”.

After two years of delays, the expectations for what the CBD COP 15 can deliver are high. Setting clear, measurable targets through a post-2020 framework for biodiversity can inform public and private actions through 2030, setting nature on a path to recovery.

We are excited to continue working with our partners within CPIC and beyond, to move from learnings to true impact for nature – and we are currently developing a range of nature-based investment funds and project accelerators to do just that.

South Pole is an award-winning project developer and leading advisor on climate action solutions. South Pole also acts as the Platform coordinator for CPIC.