Scaling up ecosystem restoration finance
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Emerging solutions include: Private sectors growing interest: corporate investments in resilient supply chains, institutional investors net zero and sustainability goals, impact, and philanthropic investors focus on paying for the impact. Innovative financial instruments and blended finance approaches can align different sectors incentives: equity, debt, insurance, concessional finance, carbon markets, & PES programs/ markets. Partnerships and platforms to connect global investors to locally-led initiatives.
Scaling up ecosystem restoration finance
- 1. Scaling up Ecosystem Restoration Finance A Stock Take Report GLF Climate - Unlocking Solutions to Finance Ecosystem Restoration, November 11, 2022
- 2. Objectives and audience Overview of opportunities and obstacles to scaling up public and private investment in restoration Define a pathway to overcome obstacles to scaling up investment Main target audiences: governments, donors, the financial sector, and real-sector companies
- 3. Reconciling the restoration investment rationale and the financing gap Public, private, and philanthropic investors have different but overlapping and often synergistic investment rationales. To close the large financing gap, actions are needed to: Strengthen the investment case for public and private sector actors Develop a supportive enabling environment via policies and regulations Facilitate investments in a range of restoration activities that appeal to different sectors Restorative continuum
- 4. Emerging solutions Private sectors growing interest: corporate investments in resilient supply chains, institutional investors net zero and sustainability goals, impact and philanthropic investors focus on paying for impact Innovative financial instruments and blended finance approaches can align different sectors incentives: equity, debt, insurance, concessional finance, carbon markets, & PES programs/ markets Partnerships and platforms to connect global investors to locally- led initiatives
- 5. Pillars of the Finance Task Force Roadmap 1) Government and Sectoral Policy Levers Disseminate partners work on subsidy reform, PES programs/ markets, landscape management, & land tenure 2) Knowledge, Data and Tools Develop restoration taxonomy; restoration cost/ benefit database, analytics, tools, trainings; & trade- offs assessment guide 3) Financial Sector Regulations / Initiatives Review of financial sector regulation, guidance, and tools to ensure restoration is accounted for (i.e., taxonomies, credit rating methodologies, risk assessment approaches, etc.) 4) Financial Markets / Investments Templates for replicable or scalable investment structures, assessment of MRV cost reduction trends and barriers
- 6. Thanks!
Editor's Notes
- #4: Restoration activities along the continuum Costa Rica example, structural changes in the economy Key drivers of underinvestment include: insufficient awareness about the critical role of ecosystem services in the economy and society; lack of a taxonomy of restoration activities and standardized frameworks and institutions for managing a portfolio of restoration projects; inadequate knowledge and data on the costs and benefits of restoration; the structure and timing of the costs and benefits of restoration, which make the risk-return profiles of investments less competitive than other types of investments; lack of knowledge about bankable business models for restoration projects; difficulty monetizing the benefits of some types of restoration; taxes and subsidies that drive degradation and fail to incentivize restoration; lack of sectoral and financial policy and regulation that incentivize private sector investment in restoration; and land and sea tenure uncertainty or insecurity and unequal distribution of derived benefits, preventing sound governance and management of the natural assets.
- #5: Once these steps are complete, public, private, and non-profit actors can collaborate to link investment needs and opportunities with appropriate funding sources. For example: Corporations represent an important potential source for restoration finance through investment in resilient supply chains for food and fiber-based products, (Bancilhon et al., 2018). Institutional investors are looking for opportunities with market returns that are compatible with or contribute to their net zero and sustainability goals and commitments. Impact investors and philanthropic finance weight environmental and social impacts more highly than traditional investors, and may be willing to pay for impact. Public and concessional finance can be blended with the sources detailed above to de-risk or credit enhance.