Private Investors Can Make an Impact on Conservation

Aaron Paul leads Washington Chapter in undertaking innovative financing

Written by Jeanine Stewart, Volunteer Writer

As investing for social and environmental benefit alights more and more fires in the hearts of investors nationwide, we are launching a plan to wrap investors into our fundraising goals in a big way.

We welcome Yale graduate Aaron Paul as our first Conservation Investments Project Director for the Washington chapter of The Nature Conservancy. We’ve set an ambitious goal to raise $200 million in private sector investment for conservation over the next five years. This funding will leverage the gifts and grants that the chapter receives to get more conservation done with existing resources.

The time is right for this new direction. The Conservancy’s global impact investing unit, NatureVest, estimates private investments in conservation will triple over the next five years, as investors around the world make big commitments to generate a positive impact and a financial return with their investment capital.

Impact investors, rather than measuring the attractiveness of an investment solely on the basis of its potential to reap monetary returns, intentionally put money into ventures that have the potential to bring both positive impact and financial returns.

This group is growing worldwide. NatureVest expects investments in conservation to triple over the next five years – from $2 billion in 2015 to $6 billion. Other experts are also seeing growth. Analysis by JP Morgan Chase of 146 impact investors around the world showed that 98 percent of the respondents planned to invest more in 2015 than the year prior, and as a whole the group’s investment plans amounted to $12.2 billion for 2015 – 16 percent more than the $10.6 billion invested in 2014. 

The trend reverberates to major pockets of the global investment community. In the Silicon Valley, it’s becoming so cool for investors to have their name on projects that preserve forests and prevent against human rights abuses that discussions at the Monterey Bay Aquarium’s Sustainable Foods Institute last spring centered around investors steering their focus away from simply chasing return through the tech boom, and into businesses that could be the next big thing in societal problem solving.

Meanwhile, Matthew Bishop, Senior Editor of The Economist Group, expects financial organizations like BlackRock and Bain Capital to continue rolling out impact investment commitments this year as the Ford Foundation’s prior commitments start having impact.

At the national level, the Nature Conservancy already engaged with impact investors in half a dozen key ways last year, CEO and President Mark Tercek noted in a Conservancy Talk blog in January.

All the hype, however, doesn’t exactly equate to an easy sell.

“It’s going to be challenging,” Paul says. “There aren’t precedents set in the area that we’re working on.”

With no formula for monetizing environmental benefits and no traditional structure in place for these types of deals, it’s up to Paul to, virtually invent the conservation impact investing wheel for Washington state.

Now, he’s honing a few ideas to maximize investor and environmental benefits in tandem. For instance – what if there were a way to purchase timberland for conservation while generating revenue? It’s possible investors could through sustainable timber harvests, carbon credit sales, and tax incentives, says Paul.

He’s also working with an idea to enable coastal communities to acquire fishing permits and maintain them in local trusts. This would keep economic development assets local while entrusting the natural resource with conservation-minded managers.  

These are just some pitches Paul may take to investors. When talking to him about the process, it’s clear by his measured explanations that the wheels of his mind are turning quickly around a vast and complex range of innovations.

Regardless of which ideas become reality, Paul seems likely to pour his heart into winning investors over. He, after all, first dreamed of working for the conservancy as an intern while in graduate school for business and environmental management at Yale.

“I always wanted to land here,” he says.