Credit Suisse and the Climate Bonds Initiative announced they will be working to unlock the power of the capital markets to accelerate the transition to a sustainable and low-carbon economy by promoting a "Sustainable Transition Bond" market.
This two-part article series explores the challenges of and opportunities for incorporating conservation finance into traditional investment portfolios. In Part 1, various current and former investment advisors with deep knowledge of impact finance discuss the challenges of integrating conservation investments into traditional investment portfolios.
In September, The Conservation Fund announced the closing of its $150 million green bond. The environmental nonprofit offered the 10-year notes in order to expand its Working Forest Fund. CFN spoke to Conservation Fund CEO Larry Selzer about how the organization will use bond funds, the experience of offering a bond as a nonprofit, and the significance of the project for the conservation finance field.
Last month, Iroquois Valley Farmland began offering shares in the firm's 12-year-old real estate investment trust to investors with as little as $10,000, via a direct public offering. Previously, only wealthy individuals, foundations and family offices – so-called accredited investors – were eligible to invest.
When Marfrig floated the idea of doing its first-ever green bond earlier this year, the company’s bankers knew the deal would be a difficult sell. But the bankers had an idea. Why not re-label the transaction? Instead of calling it a green bond, which would mean having to comply with industry-wide standards and risk drawing the ire of the ESG community, bankers suggested rebranding the trade as a “sustainable transition bond,” a made-up term that they thought would reflect Marfrig’s efforts to clean up its supply chain.
Komaza, a “microforestry” startup in Kenya that pays farmers to raise tiny plots of trees for wood, isn’t the type of business that can easily get traditional investment. But the nonprofit Conservation International saw it as a perfect fit for its new investment fund, which will provide $200 million in funding over the next decade to businesses that are designed to help protect natural areas by changing local economies.
The Conservation Fund (TCF) announced today that it is commencing an offering of taxable Green Bonds of approximately $100 to $150 million. The Bonds will be issued by TCF and Sustainable Conservation, Inc., a wholly-owned subsidiary as co-issuer. Proceeds from the offering will be used primarily to increase the scale of its "Working Forest Fund" conservation initiative, dedicated to mitigating climate change, strengthening rural economies and protecting natural ecosystems by the permanent conservation of at-risk forest landscapes.
Poorer rural people are not excluded from the carbon credit scheme because of their lack of formal land rights, but there are also risks to the approach, which gives state officials power to define what activities are incentivized.
“Generation Blue’s vision of a regenerative economy aligns ideally with a core use for Radpay’s patent-pending payment token,” said Radpay’s co-founder and CEO, Dana Love, PhD. “Our novel method for tokenized rewards empowers anyone to invest in the protection of vital ecosystems through funding Natural Capital projects such as the Thor Heyerdahl Climate Park mangrove restoration project in Myanmar.”
The public and private sectors can incentivize sustainable land use and forest conservation. While still only one part of the solution, there are encouraging signs of new efforts to finance sustainable agribusiness.