Rhinos impact bond: advisory board meeting

Rhinos impact bond: advisory board meeting

RHINO IMPACT BOND CHANGING THE CONSERVATION LANDSCAPE With thanks to: Social Finance is authorized and regulated by the Financial Conduct Authority FCA No: 497568 THE CONSERVATION MOVEMENT NEEDS TO CHANGE Realistic global funding levels needed for protected areas are only 2-4% of global military spending, but many governments is disinvesting in protected areas Scaling up conservation funding therefore requires New sources of finance, including harnessing the power of private finance to

drive change in approach to conservation. Implying greater focus on measuring impact. Social Finance and Zoological Society of London 2014 2 ESCALATING POACHING IS LEADING TO A TIPPING POINT Escalating poaching threatens to push rhino populations over a tipping point. The Javan rhino recently went extinct in mainland SE Asia, the last individual was poached Rapid, global response urgently needed. The growing impact investing

market could be a large source of upfront capital to boost sitebased rhino conservation. The project will create a roadmap to reduce poaching, applied first to rhinos, then all high value species. Social Finance and Zoological Society of London 2014 1200 1000 Number of rhinos poached in Africa 800 600 400 200 0

2006 2007 2008 2009 2010 2011 2012 2013 Source: Emslie, R. & Knight, M. 2014. Update on African Rhino Status and Poaching Trends from IUCN SSC African Rhino Specialist Group (AfRSG). Data from IUCN SSC AfRSG, TRAFFIC and CITES Rhino Working Group. 3 4 Social Finance and Zoological Society of London 2014 OUR AIM IS TO LAUNCH A $40-50M IMPACT BOND TO CONSERVE RHINOS GLOBALLY 5 Site data provided by IUCN SSC Rhino Specialist Groups Social Finance and Zoological Society of London 2014 THE RHINO IMPACT BOND IN A NUTSHELL Impact bonds are not

traditional bonds or trust funds They are equity investments where return is pegged more to social returns than maximum profits The rhino impact bond represents a collaboration between investors and donors, such that investors risk their profits and some of their capital to ensure that donor contributions are only used for successful projects Social Finance and Zoological Society of London 2014 6 UNIQUE STRUCTURE OF IMPACT BONDS LENDS ITSELF TO TACKLING THE POACHING PROBLEM Rhino protected areas need: upfront and sustained funding; flexibility to change activities as poaching threat changes.

Impact bonds provide: long-term (c. 10 year) funds; incentives to achieve impact through linking funding to results; service providers (e.g. PA managers) with flexibility in implementation. Social Finance and Zoological Society of London 2014 7 Donor pays for impact achieved, rather than controlling inputs and processes Impact achieved improves as programme is adaptive, client-centred and evidence-based Investors provide up-front capital to, a portfolio manage

service providers in real-time The generic structure of an impact bond RETURN ON INVESTMENT WILL DEPEND ON VERIFIED SUCCESS OF THE PORTFOLIO OF RHINO SITES INVESTORS Upfront capital RHINO IMPACT PARTNERSHIP Capital is spent on site based actions Portfolio management SITE MANAGERS Site-based actions over 8-10 years

DESIRED OUTCOME RHINO POPULATION Return on investment depends on success NO IMPACT X Capital is returned + 5-10% IRR ONLY if impact is achieved OUTCOMES FUNDERS PROS AND CONS 9

For investors For donors Pros Pros Supporting conservation Money not wasted on failed projects With strong measures attached to help make investment decisions as the project progresses Someone else providing oversight Cons If successful, capital back along with some modest profits Cons

Can lose profits, some of capital or at worst all capital Lower profits than traditional Social Finance and Zoological Society of London 2014 investment In the case of a successful project the donor has to pay 510% more to provide return on investment PROJECT WILL ASSESS THE GAPS ACROSS RHINO SITES TO 10 PROVIDE INVESTORS WITH A CLEAR THEORY OF CHANGE Theory of change based to produce on holistic PA intervention for gap management model, analysis by PA framework indicators and managers budget Pillar Element assessed

A: IMPORTANCE AND STATUS B: MANAGEMENT C: COMMUNITY D: TOURISM (optional) E: PROTECTION Generic 1. Social, cultural and biological significance 2. Protected area design 3. Legal status, regulation and compliance 4. Management planning 5. Management plan/system implementation 6. Management processes 7. Staffing (full time and part time) 8. Infrastructure, equipment and facilities

9. Sustainability of financial resources 10. Adaptive management 11. Human-wildlife conflict 12. Community relations 13. Stakeholder relationships 14. Tourism and interpretation 15. Protection Rhino specific 16. Habitat management F: HABITAT MANAGEMENT G: RHINO 17. Rhino population monitoring & POPULATIONS management Social Finance and Zoological Society of London 2014 Developing outcomes indicators is a methodological challenge GEF PROJECT WILL PROVE THE CONCEPT AND BUILD INVESTOR CONFIDENCE OVER 2 YEARS, TO LAUNCH BOND IN 2017

Activities to design the bond and build confidence: Gap analyses in several priority rhino sites Test interventions and performance metrics Aiming to work in: Asia and Africa (East and Southern) Focus on Key1-rated rhino populations Learn lessons for investors Social Finance and Zoological Society of London 2014 11 investor Social Finance and Zoological Society of London 2014 THANK YOU

For more information: Katherine Secoy, Zoological Society of London [email protected] Social Finance and Zoological Society of London 2014 "Impact Bonds stand to improve the efficiency of development assistance in the coming years Elizabeth Littlefield, president of overseas private investment corporation 13 14 Social Finance and Zoological Society of London 2014

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