Conservation

COP16 - Coalition formed to scale global 'debt-for-nature' funding

The conversion of sovereign debt for nature conservancy has been tipped as the 'most effective means' to generate the $700 billion a year required to hit global climate and biodiversity targets.

30/10/2024
Words by Rob Hutchins
Photography by Benjamin L Jones
Additional photography by Milos Prelevic

Six international conservation groups including The Nature Conservancy and The Pew Charitable Trusts have come together to form a new coalition to scale global climate and conservation outcomes through the use of sovereign debt conversions.

Announced on Tuesday this week at COP16 in Cali, Colombia, the coalition wants to develop a “pipeline of shared projects” that will better put nations on the pathway to unlocking finances to the required level if biodiversity goals are to be met.

Amid the calls for urgent action to address the current biodiversity crisis, the topic of finances has long been a thorny one. It was agreed at COP15, in 2022, that to hit targets to protect and restore 30% of land and water ecosystems and habitats by 2030, the global community would need to mobilise at least $200 billion in additional funding for nature conservation and restoration each year until 2030.

Experts stressed that this, however, is just a starting figure. It’s been underscored that $700 billion a year in finance for nature will need to be generated to sustainably maintain and manage biodiversity and halt the destruction of ecosystems and species beyond that. This figure includes all financing – from the private sector, non-profits, NGOs, and governments.

While richer nations around the globe have promised to contribute $20 billion a year of public funds to poorer countries by 2025, those funds have proven painstakingly slow to materialise. The matter is, no one knows where this crucial funding will come from.

On Monday this week, eight countries, including the UK, Germany, France, and Norway announced $163 million in new pledges.

Members of the new Coalition – which also includes Re:wild, The Wildlife Conservation Society, and World Wildlife Fund in the US – believe that sovereign debt conversions are, therefore, “one of the largest potential sources of funding to help achieve the global climate and nature goals.”

Scaling sovereign debt conversions has the potential to unlock up to $100 billion in climate and nature financing, according to Coalition estimates.

“Furthermore, debt conversions result in a win-win for governments, local communities, and nature by reducing a country’s overall debt burden, providing resources for economic development for local communities and unlocking funding to conserve a country’s most vital ecosystems,” said Robb Menzi, interim president and CEO at the Wildlife Conservation Society.

As part of this debt conversion project, governments will work with an NGO and other stakeholders to develop a set of ambitious climate and conservation commitments that are paid for through savings made from refinancing externally held commercial sovereign debt. These projects have been dubbed a ‘win-win’ for governments, local communities, and nature as they provide financial and economic advantages to Global South governments while creating resources for sustainable development for local communities.

Since The Nature Conservancy announced the first modern debt conversion for nature and climate in the Seychelles in 2016, it has since reached financial close on projects in Belize in 2021, Barbados in 2022, and Gabon in 2023. The largest debt conversion to-date was led by Pew Bertarelli Ocean Legacy to conserve 60,000 square kilometres of ocean in Ecuador and closed in late 2023.

Collectively, these five projects have refinanced more than $2.5 billion in sovereign debt and unlocked more than $850 million in funding in support of commitments to conserve around two million square kilometres of critical ocean habitats.

Along with a diverse panel of leading financial, legal, and environmental experts, members of the Coalition are developing practice standards for sovereign debt conversions for nature and climate, which is expected to be published in early 2025.

It will also develop a joint pipeline of potential debt conversion projects and work alongside governments, local communities, and civil society to finance and achieve durable conservation and climate outcomes.

“We need to mobilise finance at the scale required to curb the slow-motion catastrophe of nature loss and climate change,” said Carter Roberts, president and CEO of the World Wildlife Fund in the US. “The Coalition throws a grabbling hook into market-based mechanisms and financial vehicles that will transform sovereign debt into funding for conservation.

“Key to our success is partnership and accountability – this Coalition designs for both with a focus on improving the lives of local communities.”

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Words by Rob Hutchins
Photography by Benjamin L Jones
Additional photography by Milos Prelevic

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