New Products Attract Investors to the Conservation Finance Marketplace

We’re still waiting for the sharp inflection point in conservation financing. That’s when the scale of deals could go from less than $2 billion a year now to the $300 billion to $400 billion experts say is needed to conserve the earth’s large landscapes, ecosystem services and precious biodiversity.

The annual Conservation Finance conference, convening tomorrow at Credit Suisse’s New York offices, is a good place to track the development of the marketplace. For four years, the conference has brought together conservation practitioners with bankers and other financiers looking for investable opportunities in wildlife habitats, wetlands, water, forestry and sustainable agriculture. (Materials from past conferences can be found here.)

“Our clients are looking for these opportunities, and we are learning from and are encouraged by the innovation and measurable market growth,” Camilla Seth, executive director of JPMorgan Chase & Co.’s sustainable finance unit, said in a statement.

A couple years ago, environmentalists were excited that $5.1 billion had been invested in conservation efforts since 2004. That cumulative total has now grown to $8.2 billion, a 62 percent jump, according to the most recent tally by Forest Trends, backed by JPMorgan and The Nature Conservancy. The report found that investors committed $1.6 billion in capital from 2014 to 2015, double the annual commitments between 2009 and 2013.

The report also found at least $3.1 billion in committed capital still sitting on the sidelines, looking for attractive deals in food and agriculture, habitat protection, clean water initiatives and other conservation projects. Still, most investors are still planning to raise or reallocate more capital for such investments in the next three years than in the previous three.

This year’s conference will round up progress in scaling up conservation investments. The conference organizers themselves have taken the lead. Peter Stein of Lyme Timber will lead the discussion of institutional interest in conservation. Lyme’s portfolio has grown to 650,000 acres; its $250 million fourth fund includes for the first time a public employee pension fund.

Equilibrium Capital, led by Dave Chen, has attracted institutional capital both to its permanent-crops sustainable agriculture fund and to its Wastewater Opportunity Fund, which locate biodigesters near to industrial and agricultural operations and municipal wastewater plants to generate both energy and fertilizer. Equilibrium is working with the Calvert Foundation to adapt Calvert’s Community Notes for conservation projects (see, “The Case for Owning and Operating Sustainable Real Assets”).

Credit Suisse, which has hosted the conference the past two years, has worked to make conservation investments available to its high- and ultra-high net worth clients. The bank is making a $15 million investment in Althelia Ecosphere’s Sustainable Ocean Fund and will offer the investment to to clients as smaller “ocean conservation notes. The model is similar to the conservation notes Credit Suisse introduced for an earlier Althelia fund (see ‘Nature Conservation Notes’ Bring Individual Investors into Climate Fund”). Credit Suisse hosts materials from this and past year's conferences here

The conference organizing committee also included Pat Coady of Seal and Associates, John Tobin of Cornell University's Institute for Public Affairs and Leigh Whelpton of the Conservation Finance Network.

Photo credit: Teddy Kelley

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