The Fund will invest in sustainable land use projects that generate demonstrable financial and ecological returns. The assets generated by projects eligible for the Fund include high quality and third party certified agricultural, agroforestry and forest products and innovative environmental assets such as carbon credits and Payments for Ecosystem Services.
To optimise and de-risk investments in these assets, we leverage our strong expertise of blending commercial capital from private sector investors with development capital from public or philanthropic sources.
Combining the individual attributes of each asset and project with innovative and blended finance models generates a powerful solution for nature conservation.
Natural Capital is a non-profit entity. After distributing target returns from the Fund to itsinvestors, any additional returns that the Fund generates will be reinvested back into sustainable land use projects. The Fund will thereby multiply its reach and the succcess of the Fund directly increases its impact: profitable investments open the door to conserving more ecosystems; successful commercial business models are replicated to support more communities; and investors know that by financing a single project they help self-sustain a revolving mechanism that benefits more biodiversity, around the world.
The Fund will co-finance sustainable land use projects that meet our stringent selection criteria, generally by way of loan or equity instruments. Typical projects are administered by NGOs, international organizations or in public-private partnerships, and funded by a consortium of institutional investors similar to a commercial ‘project finance’ model. While we do not administer the projects directly, only projects where we have close relationships with the project administrators and direct oversight of project implementation are eligible for inclusion in the Fund.
The Fund will only finance projects which are specifically structured to provide economic returns to investors, and which provide verifiable and direct habitat and biodiversity conservation outcomes. Accordingly, we do not provide any form of grant or support where we do not expect a return. As part of our risk profile, we will only ever finance as a minority member of a larger lending syndicate.
Similarly, due to the Fund’s aim of catalysing a shift in financing models and incentive structures, individual companies are not eligible for investment, and therefore the Fund will not provide venture capital.
Eligible contributors to the Fund include:
private individuals and family funds
companies seeking to green their investment portfolio or increase their ESG impact
institutional investors, including pension funds and university endowments
charities, as an alternative model to grants
All funds are to be pooled and invested pro rata. Investment decisions are made entirely independently of investors. As the Fund is currently pre-launch, Natural Capital is not currently marketing the Fund or seeking investment for the Fund.
Stage 1: Through our combined decades of experience with multilaterals, NGOs, funds and private sector financial institutions, we have a continual passive pipeline of potential projects. These are then evaluated for suitability according to our screening criteria, which include:
tangible habitat, biodiversity and wildlife conservation
other ecological and social impacts
geographic and sector distribution
Stage 2: If projects meet our preliminary investment criteria, they will be referred to the independent Advisory Board. Taking into account the recommendation of the Advisory Board, the Fund Managers will engage with the project administrators and investor syndicate to conduct further enquiries and formal due diligence. If successful, specific terms of financing, including tenor, security, rate of return, key milestones, and managerial oversight and voting rights will be negotiated, and the Fund will co-finance the project as a minority lender.
Stage 3: our Project Officers will monitor the progress of the investment according to key milestones and engage regularly with the project administrators, and produce a quarterly report.
Stage 4: upon project completion, funds and profits will be distributed to investors or reinvested, and an impact and evaluation report produced.