Six global environmental organizations unite to scale climate and conservation outcomes through sovereign debt conversions

Today, at the 2024 United Nations Biodiversity Conference, Conservation International, The Nature Conservancy, The Pew Charitable Trusts, Re:wild, The Wildlife Conservation Society, and World Wildlife Fund in the US announced the formation of a coalition to scale climate and conservation outcomes through the use of sovereign debt conversions.

The Context

The world is facing dual crises: rapid biodiversity loss and devastating impacts of climate change, both affecting human wellbeing. Protecting nature is key to solving these crises, but solutions are costly, and time is running out. For the first time in human history, more than 200 nations have united around a common goal to conserve 30% of their land and water and reduce emissions by 50% by 2030 as part of the Kunming-Montreal Global Biodiversity Framework and Paris Agreement. But nearly halfway through this critical decade, financing to achieve these goals has fallen short. The global community needs to mobilize at least $200 billion in additional annual funding for nature conservation and restoration by 2030 in order to achieve these targets (Global Biodiversity Framework Target 19). However, some 60% of low-income nations—many of which are the most vulnerable to climate change—are at risk of or in debt distress, limiting their ability to protect their biodiversity and respond to climate threats (World Bank).

Scaling sovereign debt conversions could be part of the solution and has the potential to unlock up to $100 billion in climate and nature finance, according to Coalition estimates. As part of a debt conversion project, a government works with an NGO and other stakeholders to develop a set of ambitious climate and conservation commitments that are paid for through savings that come from refinancing externally held commercial sovereign debt. These projects are a win-win-win for governments, local communities and nature. They provide financial and economic advantages to Global South governments (including improved capital market access, liquidity, and reduced exposure to foreign currency risk) while creating resources for sustainable development for local communities and unlocking the resources needed to conserve a country’s vital ecosystems.

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 three other projects: Belize in 2021, Barbados in 2022, and Gabon in 2023. The largest debt conversion to-date was led by Pew Bertarelli Ocean Legacy 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 ~2 million km² of critical ocean habitats.

The Coalition

The magnitude of the need for sovereign debt conversions requires radical collaboration among NGOs—leveraging the strengths of individual organizations to realize shared climate, nature and people outcomes on a global scale. The Coalition is not exclusive, and founding members look forward to welcoming other like-minded members over time. The Coalition will focus its efforts around four pillars:

1. Creating and maintaining practice standards for sovereign debt conversions for nature and climate;
2. Developing a shared pipeline of potential projects;
3. Working to expand the amount of capital available for credit enhancement; and,
4. Coordinating policy efforts and sharing knowledge and best practices.

Standards: Along with a diverse panel of leading financial, legal, environmental, and other experts, Coalition members are developing practice standards for sovereign debt conversions for nature and climate, expected to be published by early 2025. The standards will guide the Coalition’s efforts and serve as a resource to other stakeholders participating in debt conversion projects. The standards will address the following topics: conservation, climate, and people; governance and operations; financial transaction structuring execution; conservation trust funds; and monitoring, reporting, and verification.

Joint project development and support: Coalition members recognize that radical collaboration on debt conversion projects can lead to better outcomes for climate, conservation, and people. Leveraging the strengths of their individual organizations, the Coalition will develop a joint pipeline of potential debt conversion projects and work together alongside governments, local communities, and civil society to finance and achieve durable conservation and climate outcomes.

Policy: Debt conversion projects rely on the use of credit enhancements (e.g., guarantees, insurance) from development finance institutions (DFIs) and other public/private capital providers to unlock funding in the refinancing process that is redirected towards climate and nature investments. To date, the U.S. International Development Finance Corporation, Inter-American Development Bank, and CAF – Development Bank of Latin America and the Caribbean have played a critical role in providing these credit enhancements, but scaling debt conversions will require increasing the amount of capital available for credit enhancements and number of institutions providing it. The Coalition looks forward to deepening its relationship with the Task Force on Credit Enhancements for Sustainability-Linked Sovereign Financing formed at COP28 last year and engaging with other DFIs in pursuit of shared climate and nature outcomes.

Knowledge sharing: Learning from each other's experiences is vital. The Coalition will serve as a forum for knowledge exchange to continuously improve the effectiveness and ambition of future debt conversion projects and growing its body of best practices.

M. Sanjayan, PhD, CEO, Conservation International: “When Conservation International pioneered the first debt-for-nature swap in 1987, we never imagined what it would one day become. What was once an outside-the-box idea is now a foundational tool for protecting and restoring nature, unlocking billions of dollars for our planet’s most vulnerable ecosystems. As these swaps continue to grow in frequency and ambition, this new guidance will ensure that deals meet today’s needs while meeting to the same rigorous standards of quality that have sustained their success over decades.”

Jennifer Morris, CEO, The Nature Conservancy: “We talk about the dual crises of the climate emergency and the biodiversity crisis but there is a third crisis - the debt crisis.  Too often, those on the front lines of dealing with the adverse effects of a warming planet and nature loss must grapple with the vicious cycle of debt and rebuilding. Too many countries are one storm away from catastrophe. Thankfully, there are tools to help address these needs. The Nature Conservancy and others already have a proven track record of success and now, with the launch of this Coalition, we are building not only the standards and practices, but the ability to go further, faster, together. No one organization can do it alone and we must pave the way and work along side governments, local communities, and civil society to finance and achieve durable conservation and climate outcomes.”

Tom Dillon, Senior Vice President, The Pew Charitable Trusts: “While nations are united behind the 30x30 goal, many countries struggle to fund conservation. Leveraging the power of collaboration, the Coalition can help countries to unlock and scale innovative finance solutions that deliver a healthier, more resilient environment for both people and nature.”

Wes Sechrest, PhD, CEO and Board Chair, Re:wild: “Re:wild is proud to be part of a coalition that is leading an innovative strategy to mobilize funding for conservation. This is critical to help ensure that countries, local communities and Indigenous communities protect the most important places for the planet to the benefit of all life on Earth.”

Robert Menzi, Interim President and CEO, Wildlife Conservation Society: “Sovereign debt conversions are one of the largest potential sources of funding to help achieve the global climate and nature goals outlined in the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework, while also offering unparalleled return on invested philanthropy.  Furthermore, debt conversions result in a win-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 by unlocking funding to conserve a country’s most vital ecosystems.  My congratulations to all those who helped make this Coalition a reality, and my thanks to our partners both in and outside of the Coalition for their support and collaboration on the exciting journey ahead.”

Carter Roberts, President & CEO, World Wildlife Fund in the United States: “We need to mobilize finance at the scale required to curb the slow-motion catastrophe of nature loss and climate change. And we need finance to supercharge other conservation mechanisms like Project Finance for Permanence and provide durability to protected areas worldwide. This Coalition throws a grappling 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.”

Ben Walton, Principal, ZOMA Foundation: “Sovereign debt conversions are one of the best near-term opportunities to mobilize funding towards protecting some of our most vulnerable landscapes while developing sustainable economic opportunities for rural communities—but achieving their full potential will require new and different ways of collaborating. Building on our work with Enduring Earth, the ZOMA Foundation was proud to play a leadership and convening role in bringing together this group of NGOs and is excited to see the results of their work together.”

Coalition members thank the ZOMA Foundation for their leadership and philanthropic support in helping to establish the Coalition. DFIs, potential NGO members, philanthropic partners, and government officials are encouraged to visit the Coalition’s website at www.debtfornature.org or email hello@debtfornature.org.