Amazon fires cast spotlight on finance for natural capital

Channels: Debt, ESG, Equity, Investment

Companies: Credit Suisse, McKinsey, Althelia, Mirova

The current squabbling between G7 countries and Brazil about how to tackle the thousands of fires raging through the Amazon rainforest is a tragic, but timely, reminder of the need for a sharp increase in finance for projects that protect or enhance natural capital assets.

The $22 million offered by the G7 heads of state – and rejected by Brazil – has also been dismissed as inadequate by Greenpeace France.

Indeed, it is a drop in the ocean compared with the $300 billion to $400 billion/year needed to preserve healthy ecosystems on land and in the oceans, according to a landmark study by Credit Suisse and McKinsey in 2016. At that time, conservation financing was estimated to be running at about $52 billion/year, primarily from the public sector and charities.

If finance is to be raised at the scale needed to protect the planet's critical, at-risk ecosystems, investment must also come from large, mainstream investors, according to environmental investment manager Althelia.

The company, now part of French asset manager Mirova, has also noted that the potential benefits far outweigh the costs, pointing to research showing that the cost of lost ecosystem services from land degradation and desertification are in the region of $6.3 trillion to $10.6 trillion/year.

A survey into the private sector's appetite for investments in natural capital is now underway by Environmental Finance in partnership with The Nature Conservancy. Environmental Finance readers are invited to participate in the survey, which should take no more than five minutes to complete.

To have your say, please click here.

The results will feed into a report that will be officially released at the Natural Capital Investment conference on 25 November.

Graham Cooper