ESG innovation of the year (funds and portfolios): Global Fund for Coral Reefs

The Global Fund for Coral Reefs (GFCR) is a coalition that was set up in September 2020 to strengthen the resilience of reefs and reef-dependent communities.

As the first UN-supported and large-scale blended finance fund dedicated to the UN’s Sustainable Development Goal on marine conservation, the strategy aims to mobilise $625 million. This figure will be split between a $500 million investment fund managed by Pegasus Capital Advisors and a $125 million UN-managed grant fund.

The GFCR’s blended finance structure brings together two complementary funds deploying a variety of instruments – the investment fund and the grant fund. Working collaboratively, the two funds facilitate the efficient use of capital as well as the sharing of expertise and resources. They can develop programmes of complementary interventions to tackle the causes of reef degradation.

“The fund seeks to de-risk investments in coral reefs and coastal communities in emerging markets, demonstrate the viability of reef-positive business models, and create positive momentum in protection and restoration of the world’s reefs,” Pegasus said.

By de-risking investment, the blended finance structure helps mobilise private sector investment in coral reefs. In doing so, the fund unlocks additional capital and secures private sector expertise.

The Green Climate Fund, established within the framework of the UN Framework Convention on Climate Change, has committed up to $125 million to the investment fund.

“The GFCR has a critical role to play in proving and building the wider sustainable blue economy by demonstrating investments that are commercially viable and support coastal ecosystems and communities for system change, and in helping create a step change in the way policymakers view, value and manage marine ecosystems,” Pegasus said.