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$16m Invested in Fixed-Income Conservation Note

Since its initial offering in April 2012, environmental charity the Nature Conservancy’s investment-grade “Conservation Note” has seen investments totaling $16 million to support conservation projects around the world.

The Conservation Note is a fixed-income investment product that channels capital to conservation-critical lands and waters around the globe, helping the conservancy to finance high-priority conservation projects. It is one of the first products of its kind, the Nature Conservancy says.

For example, note proceeds may be used to help a group of ranching families purchase an adjacent ranch to enlarge their properties, or allow for the protection of a critical water supply that provides clean drinking water to an entire region or town, the charity says.

The charity says that it has realized that traditional funding sources – such as donations – aren’t enough to protect important places around the globe, and that there is a need to lead the way in establishing a nature-based economy via innovative financing mechanisms. The note “allows investors to put their money where their values are,” and to invest directly in conservation for a return on their investment, the charity says.

The Conservation Note is rated Aa2 by Moody’s. Individual and institutional investors can select an interest rate of between 0 percent and 2 percent, depending on whether the investor chooses a one-, three- or five-year term. Environmental returns are measured in acres protected, landscapes preserved, and habitat restored.

In August, the CEOs of 37 major financial institutions announced that they would be integrating natural capital considerations into their products and services as a result of their commitment to the UN backed Natural Capital Declaration.

Laurent Smart, executive director of Trucost, says natural capital is “the value of the resources and flows of goods and services that ecosystems provide (e.g. water, climate regulation, and resources to produce food) which are essential for economic growth but have traditionally been undervalued or worse still, left unvalued.”

In a column for Environmental Leader, Smart wrote that Natural Capital is increasingly relevant to banks as natural resources become increasingly scarce.

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