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Nature + Accelerator Fund is a novel financial mechanism to bring the private sector into conservation actions

  • Published at 01:43 pm January 25th, 2021
IUCN
IUCN

It will create evidence of a suite of nature-based solutions (NbS) aligned with the IUCN Global Standard for Nature-based Solutions 


The natural world is facing profound challenges. Human exploitation places intense stress on the capacity of habitats to support biodiversity and to provide ecosystem services. In the name of short-term financial gain, mankind consumes 'natural capital,' consigning future generations to a planet that is greatly degraded due to the destruction of biodiversity. Despite the fact that most states are a party to the Convention on Biological Diversity (CBD) and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), efforts by governments, NGOs and donor agencies to reverse these trends have been falling short to match the global demand for food, timber, energy and other commodities, and the needs of growing populations. 

The contribution of nature to the global economy is worth more than $125 trillion annually, according to the European Union, and building conservation and nature-based solutions into projects present a massive opportunity: from reducing operational costs to unlocking new revenue streams, increasing customer engagement and provisioning of public environmental goods. Several attempts have been made to quantify this gap between the available conservation funding and the required environmental protection and restoration finance. 

The financial gap for nature’s conservation is estimated to be $600-800 billion per year, according to the International Union for Conservation of Nature (IUCN). A recent report from The Paulson Institute, The Nature Conservancy, and the Cornell Atkinson Center for Sustainability estimated that the current annual conservation spending is $598 billion to $824 billion short of what is required. Bridging this gap will require help from the private sector and investors. 

Since the majority of the nature-related projects had long lead times, offered limited early cash flows, and posed risks and uncertainties to the new investment community, it has often been difficult for investors who are interested to find financing options as there is no pipeline of vetted projects for the private sector to step in. Therefore, there has been a pressing need for an innovative fund to widen the opportunity for the private sector to finance nature’s conservation. 

The Nature+ Accelerator Fund is a first-of-its-kind private sector-focused financing mechanism, which provides measurable conservation and social benefits while providing investors with financial returns. It combines an unique set of expertise and platforms of leading public and private institutions to address the conservation gap. This is a blended finance mechanism that aims to address a critical gap in early-stage venture support for regenerative businesses that need to scale. 


“The contribution of nature to the global economy is worth more than $125 trillion annually, according to the European Union”


The fund is a collaboration between IUCN, Mirova Natural Capital and the Coalition of Private Investment in Conservation (CPIC). The Global Environment Facility (GEF) is the fund’s anchor investor, providing $8 million for the first loss investor, while Mirova aims to raise additional investment to create a $200 million portfolio of projects ranging from the seed investment phase through to the sustainable growth phase.

Stewart Maginnis, Global Director of the Nature-based Solutions Group at IUCN, told at the launching of Nature+ Accelerator Fund that the trio of crises that have commanded the world’s attention in 2020 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 most immediate one is the public health crisis and the aftermath of the crisis, and there is the climate crisis, and finally, there is the biodiversity crisis. 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.”

This Fund is scheduled to be launched in early 2021 and invests in nature-based solutions including the following areas: Marine conservation and coastal resilience; smallholder production systems and sustainable agriculture; ecosystem conservation and restoration; and innovation in services, finance, and technology. The Accelerator will offer investment in three complementary investment windows: Seed, Early Venture (together defined as the incubation period) and, Venture windows. It will support the early stage pilots and project ideas, impact enterprises with high potential for scalability, complemented by technical assistance and capacity building. This Fund will also offer investors a 30% “first loss” protection to mitigate early-stage risk. The Fund will deploy grants, debt and equity through three windows:

  • Seed: $5 million (approx. $100,000 per 50 projects) in repayable grants or convertible notes 
  • Early venture: Debt and equity of $15 million (approximately $1 million per 15 projects)
  • Venture: Debt and equity of $20 million (approx. $5 million in 4 projects)


The expected outcomes of the Fund, which will be commercially operated, are ambitious. A portfolio of up to 70 successful investment deals will be developed, attracting co-investment of up to $160 million beyond the financing of the Nature+ Accelerator Fund. 

It will create evidence of a suite of nature-based solutions (NbS) aligned with the IUCN Global Standard for Nature-based Solutions while creating significant impact on biodiversity and ecosystem conservation, reducing the risk of extinction of species as per the IUCN Red List and contributing to national and global objectives including the CBD post-2020 Global Biodiversity Framework, Sustainable Development Goals (SDGs), the UN Decade on Ecosystem Restoration and the UNFCCC Paris Agreement.

With more than half of the world's GDP generated by industries that are dependent on nature and its services, the private sector is increasingly realizing that this is not just an ecological crisis we need to tackle, but also an economic one. Since IUCN Nature-based Solutions Criterion 4 emphasizes considering a portfolio of market-based resourcing options, the next step is thus for forward-thinking private sector leaders to support this novel financial mechanism of Nature+ Accelerator Fund and contribute in meeting the gap of conservation finance in protecting, sustainably using, managing and restoring natural or modified ecosystems to address societal challenges as well as to provide human well-being and biodiversity benefits. 

Farah Anzum is working in IUCN Bangladesh as a Programme Assistant. Her research interest lies in the field of research and policy advocacy on conservation finance, conservation policy and ecosystem services and management. Can be reached at [email protected] 

Dr Khalid Hossain is working as Programme Coordinator at IUCN Bangladesh. He has diverse professional experience in programme management, policy advocacy, research and teaching in the areas of climate action, environmental conservation, resilience, economic justice, humanitarian action, and private sector engagement. He can be reached at [email protected]


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