Invest in Success: Innovative Finance for 30X30

Options for increasing investment through innovative financial mechanisms to achieve the post-2020 global biodiversity framework’s (GBF) Target 3, on protecting 30% of the world's terrestrial and marine habitats by 2030 (the 30X30 goal), were the focus of this side event, held during the UN Biodiversity Conference. 

Moderator James Hardcastle, IUCN, on behalf of Bobur Makhmudov, Uzbek State Committee for Ecology and Environmental Protection (who was supposed to moderate the event, but was not able to make it), noted the aim to present many innovative ideas to give countries confidence in investing towards the 30X30 goal. He described the IUCN Green List of Protected and Conserved Areas, setting standards for good governance, sound planning design, effective management, and conservation outcomes. He noted over 600 protected areas (PAs) meet the standards worldwide. He highlighted Uzbekistan’s ambition to conserve 12% of its biodiversity by 2028 through sovereign sustainability-linked bonds (SSLBs) to support implementation of its commitments through establishing and managing PAs, saying every country’s contribution counts.

Alexander Wiese, Bankers without Boundaries (BwB), shared examples of SSLBs linked to performance targets, such as on annual greenhouse gas (GHG) emissions, from Chile and from Uruguay. He noted that in Uruguay investors accept risk of loss if its key performance indicators (KPIs) are not met. He said their experiences have attracted market attention, although innovation is needed for quantifying achievements in protecting nature and biodiversity. He then compared sustainability-linked Islamic Sukuks favorably to SSLBs, by:

• being compliant with Shariah law, which safeguards the investor by being secured by partial ownership of an asset rather than an unsecured bond, meaning the performance of the underlying asset affects the rewards gained by the investor;
• being asset backed, which increases investor confidence;
• being easily liquidated in secondary markets;
• increasing diversification of investor groups; and
• being Islamic financial instruments whose purpose is to contribute toward development goals.

He cited a new proposal to combine Sukuks with SSLBs to target investments toward specific developments, linked to strong biodiversity-related KPIs and safeguards.

Chris Gordon, Conservation Alpha, elucidated on KPI, noting that assessment of the 2015-2020 biodiversity framework found only 20% of PAs globally conducted a management assessment and PA quality was degrading even in these. He advocated for primary indicators such as the percentage of territory under PA status, and secondary indicators on effectiveness of PA management, such as IUCN Green List status. He commended Uzbekistan’s regional leadership and its work on its SSLBs, expressing optimism that it can deliver a positive impact on biodiversity.

In the ensuing discussion, Hardcastle said while bonds can be issued quickly, developing KPIs is challenging, especially for capturing qualitative social aspects. One participant urged changing regulatory frameworks to facilitate Sukuk investments. Hardcastle agreed with a suggestion to hold IUCN accountable on rights, saying PA popularity is declining in favor of conserved areas that provide more safeguards for Indigenous Peoples and local community (IPLC) rights.

Maria DiGiano, Gordon and Betty Moore Foundation, detailed her foundation’s work to augment public financing for expansion of PAs in Brazil, Peru, and Colombia. She explained this is done by brokering private finance for permanence through ambitious deals established with agreement by all parties on conditions that will trigger the financing and ensure the flow of resources has an impact.

James Lewis, Rainforest Trust, detailed his organization’s work to finance PAs mainly through land tenure projects for IPLCs or including IPLC participation in PA governance. He urged consideration of the nexus between land tenure, biodiversity, and species protection and said his organization has made a USD 500 billion commitment to 30X30, with half being IPLC-managed projects.

Candice Stevens, Africa’s Sustainable Finance Coalition, South Africa, described South Africa’s innovative finance from project incubation to piloting to scale by providing an enabling environment from concept development through expert advice on the building blocks needed to make it implementable and thus allow finance flows to increase its impact and move to scale. She cited examples of tax deductions for all management costs incurred in fulfilling biodiversity management agreements for critically endangered ecosystems and for the full value of privately or community owned and managed PAs.

In closing, Hardcastle, on behalf of Roman Eyholzer, Porini Foundation, who was unable to attend, gave examples of the Foundation’s linking collectible, tradable digital assets, such as non-fungible tokens (NFTs), bitcoin, and blockchain, to support IUCN’s work. He said it currently supports work in Peru using the IUCN Green List Standard, with the local community receiving funding from the purchase of the digital assets.

Organised by: IUCN | BMZ | GEF | KfW | Uzbekistan | Chile | Peru | Seychelles | Morocco | Zambia | Namibia | Maldives | Moore Foundation | IUCN WCPA EGG

Contact: James Hardcastle <James.HARDCASTLE@iucn.org>

For more information: https://www.iucn.org/events/iucn-event/invest-post-2020-success-innovative-and-outcome-based-finance-and-investment-post