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Credit Suisse Sustainability Week

By miltongroup, July 30, 2021

Credit Suisse Sustainability Week was a five-day event of inspiring panel discussions with entrepreneurs, business leaders, investors and industry experts – sharing insights and innovative ideas to drive forward sustainable solutions and ultimately create a positive impact on our world.

Despite the importance of nature for a functioning planet and the economy, we are losing biodiversity at an alarming rate. Additionally, the acceleration of biodiversity loss is stalling the progress of many of the UN’s Sustainable Development Goals (SDGs). While investor interest in sustainable investments has accelerated in recent years, funding for biodiversity has not kept pace and global biodiversity finance makes up just 0.1% of global GDP. .

Last month, Paul Milton was invited to speak on a panel alongside Avril Benchimol and Professor EJ Milner-Gulland, to discuss how we can solve the biodiversity funding gap and work to deploy capital in this critical sector. 

Oliver Withers, Biodiversity Lead within the Sustainability Strategy, Advisory and Finance Group at Credit Suisse, hosted the panel where each speaker was asked questions touching on interventions and solutions that are delivering impact – based on their own personal experiences within their field. 

Below we have included a couple of the questions addressed to Paul from the discussion. We’d like to thank Credit Suisse for their thought leadership and the opportunity to discuss the importance of private sector investment for Africa’s biodiversity crisis and tourism markets going forward at this pivotal point in time.  

Oliver Withers:

Paul, you have been at the intersection of biodiversity conservation and private capital for decades and your work takes you to the front-line of nature and its value to society. You’ve most certainly acted and successfully mobilized hundreds of $ millions into securing key landscapes for wildlife. How have you managed to achieve this and would you say it’s been successful in terms of biodiversity impact alongside other sustainable development impact and financial returns?

Paul Milton:  

Yes, we have been successful in attracting capital to help positively impact biodiversity. Of course, there have been many successes, but many lessons learned along the way! Today, we are committed to Africa’s future with a variety of long-term investment platforms. 

Our experiences over the past 25 years in attracting private capital have shown that articulating and executing sustainable development-based business plans requires outcome-based thinking to guide well-managed and feasible implementation strategies that vitally focus on the ‘quality’ not ‘quantity’ of the product; authenticity is key. Forethought, debate, research and real data on outcomes desired has proven crucial. 

An integral part of ensuring the long-term resilience and outcome-based nature of our projects has been through the adoption of natural and social capital methodologies, which measure, analyse, and inform all future decision making. This approach allows us to measure asset value, and demonstrably achieve sustainable outcomes. 

Meanwhile, the collapse in global tourism is already impacting the critical communities in Africa on whom conservation largely depends. According to WTO figures, conservation tourism normally accounts for 80% of international travel to Africa, generating 24 million jobs with annual revenues exceeding $40 billion. 

Tourism has, however, proven to be anything but a silver bullet for financing biodiversity protection – with insufficient regulations in place to prevent abuse and fickle business models which hamper long term impact. The impact of the Covid-19 pandemic on community livelihoods and wellbeing measures could be severe.

The loss of conventional employment in already-impoverished communities on the edge of Protected Areas means that poaching is likely to increase, and Protected Areas will have less money to pay the anti-poaching and security teams to stop it. 

We believe that now is the time to bring in more private capital and institutional investment to this vital cause. To help make this happen in a sustainable way, and to support African governments in taking a more proactive lead on incentivising such investment. 

We have been able to attract private investment in African conservation through working with governments to break down regulatory barriers to investment; coordinating with Protected Areas, NGOs and tourism operators to establish high standards for investment in community livelihoods; collaborating with African business leaders already making progress towards conservation goals and engaging investors and the financial sector in the process of creating a new investment climate and new vehicles for finance. 

Private capital has the potential to play a significant role in safeguarding biodiversity, and we need to see a broader investment mindset within governments regarding how the biodiversity crisis is addressed, as well as an improved investment climate for tourism. 

The problematic dynamic of over-reliance between donors and recipients is dying out and must be replaced with more equal and transparent partnerships. Many African states are now funding support for nature conservation, and there is a fast-growing domestic constituency for conservation. Homegrown initiatives such as the Elephant Protection Initiative, supported by 21 African countries, serve to illustrate how views are changing. 

At present, private sector investment in African tourism is often small-scale, locally financed and poorly regulated in terms of environmental and financial sustainability. Most major international investors still regard the sub-Saharan market as a high-risk investment region. The sector lacks a robust regulatory framework that is globally competitive in attracting investment, particularly in regard to land tenure and development rights on sovereign controlled lands within National Parks, Game Reserves, Protected areas, WMAs and buffer zones. Unfortunately, this all discourages sizable and long-term investment. The industry needs to continue to construct SPVs and investment instruments that are competitive and manage risk. Public/private sector partnerships need to be codified. 

Over the last 20 years, tourism has developed into one of Africa’s greatest revenue sources to support biodiversity, both through government parks as well as private reserves and community-owned lands. The COVID-19 pandemic now, of course, threatens a steep decline in this revenue, particularly at middle and lower tier facilities – shining a spotlight on the dire need for greater integration and diversification in the sector. 

Oliver Withers: 

Paul, do you see a role for blended finance in unlocking more funding for nature? And what are the other main challenges you see in scaling up this funding?

Paul Milton: 

Currently, there are no comprehensive and common and regional best and highest use land zoning models, development guidelines or planning process policies and protocols that bring together necessary infrastructure investments with tourism needs, that are transferable and scalable across international boundaries and wildlife management jurisdictions. A common method of best practice assessment, land use, management and stewardship standards are lacking and not aligned with globally competitive investment frameworks. 

The opportunity exists for governments to reduce impediments to investment, such as revising concession regulations, increasing local private ownership / leasehold of marginal lands adjacent to wilderness areas, importation tariffs, work permit and visa programs, and creating transparent Public / Private Partnerships. These reforms can ensure that the private sector is better incentivised to generate opportunities for jobs and livelihoods within adjacent communities, and that investors see this as fundamental, rather than seen merely as a charitable add-on. It is not easy, and there are too few examples of success. Both communities and investors need help in determining what works and some clear guidelines and standards on what success looks like. 

Creating the conditions with commercial incentives will be an essential part of any potential market positioning to attract investment. 

We believe that success will require better technical innovation, stronger adherence to international guidelines and standards, sharper oversight, and better measurement. Geospatial mapping of human and wildlife conflict, loss of habitat and impact of climate change are tools we believe critical to underwrite large scale land asset management plans. We like to measure our investments using fit for purpose KPI’s, after all you can’t manage what you can’t measure but measuring can be pointless if we don’t attach value and that costs money. 

Overall, tourism is a globally competitive business, and, despite some positive examples of good practice, Africa has been falling behind. To move through the COVID-19 crisis and build back a tourism industry that can provide sustainable livelihoods and deliver desperately needed conservation funding, African tourism must re-conceive its future. 

Creating a truly transparent and welcoming approach towards private sector investment has been the key for the development of tourism industries in Southeast Asia, Central America, the Caribbean and Indian Ocean islands. Africa needs to become a competitive alternative. 

Alternate economies need to emerge to help de-risk investments and integrate at landscape levels providing blended investment opportunities, we think this way and have tourism, agriculture and infrastructure programs working and being measured together. Agriculture in providing food security is one such opportunity, there are others, carbon programs, sustainable forestry, aquaculture all emerging verticals within the marketplace. 

We need to engage private capital in a collaborative approach to set baseline criteria for Natural and Social Capital methods of valuation. There is a growing wealth of expertise, awareness and models in the institutional investment sector and so can we add support to existing impact investing funds or encourage more collective exchanges bringing conservation investment more into ESG frameworks and strategies. We support and encourage the development of outcomes-based financing models which recognise biodiversity as an emerging asset class. Blended finance models are going to be key in helping develop this asset class. Neither the private sector nor the public sector under their own steam can provide all of the capital required.