Impact investing in biodiversity conservation with bonds: an analysis of financial and environmental risk

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Impact investments have the dual goals of generating profit and environmental and/or social impact from the same project or enterprise. This article examines recent impact investments in biodiversity conservation—specifically, debt finance in the form of conventional bonds and impact bonds. The proceeds of these bonds finance projects aiming to enhance forest management, sustainable agriculture, endangered species protection, ecosystem service provision, and nature-based solutions to climate change such as REDD+. The article scrutinises whether these dual goals are achievable by evaluating the financial risks and impact risks within each bond's theory of change. Risks stem from projects with vague cashflow forecasts, project sites with low or ambiguous threat statuses, and simplified impact metrics that may measure activities or outputs—rather than impact. Risk mitigation strategies involve using baselines and counterfactuals to establish additionality, and guarantors to protect investors if revenues are insufficient. Implications for biodiversity management and for-profit conservation are discussed.

Original languageEnglish
Pages (from-to)353-368
Number of pages16
JournalBusiness Strategy and the Environment
Issue number1
Publication statusPublished - Jan 2023


  • conservation finance
  • environmental finance
  • green bond
  • hybrid organising
  • institutional logics
  • sustainable finance

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