Nature Needs Investment Bankers

Nature-based investment opportunities are finally getting the attention they deserve—but we have a long way to go to fully realize these opportunities, and time is not on our side. 

There is simply not enough philanthropy and government grant funding for environmental organizations to protect nature at scale. As a former investment banker and previous leader of an environmental organization, I have been routinely impressed with what NGOs can accomplish with generous gifts. But what we need to do now, in Wall Street parlance, is lever up precious donor capital with investor-provided funding: we need investment bankers for nature. 

Pragmatic environmentalists have long argued that we should be “investing in nature” to accelerate conservation progress. One of my heroes, Professor Gretchen Daily, explained in her 2003 book, The New Economy of Nature, that so-called “natural capital” can be viewed as an asset base that provides a range of highly-valuable services to humankind, as well as to nature. Many NGOs have supported this notion too. I joined the fray and co-authored the book Nature’s Fortune: How Business and Society Thrive by Investing in Nature (April 2013) with similar arguments and many business case studies to back it up.

Nature-based investment opportunities are finally getting the attention they deserve—but we have a long way to go to fully realize these opportunities, and time is not on our side. —@MarkTercek

The argument goes like this: of course we enviros want to protect nature because it is the right thing to do, period and full stop. But we also recognize we need more people and more resources on our side to achieve conservation progress at scale. So we turn to additional rationales that can raise more financial resources and support for protecting nature. 

We argue that nature can be viewed as “green infrastructure” that provides critical services to humankind, similar to “gray” (or manmade) infrastructure. The difference? Green infrastructure is often a superior investment opportunity. By protecting, restoring, and enhancing nature, we in turn protect crucial outcomes, like healthy air to breathe; clean water to drink; protection from floods, storms and sea level rise; rich soil to grow our food; and a stable climate in which to exist. 

Further, it turns out, the returns on investments in nature can be very high. Think of a seawall, which provides onshore protection from storm surges, but depreciates in value over time. Compare that to a living oyster reef, which costs about the same as a seawall and can provide matching protection benefits—but does much more by filtering water, attracting more fish, generating oysters to sell and eat, and even appreciating over time. Investing in nature is a very good deal. 

Good news: these green infrastructure arguments are expanding beyond green groups and academics and gaining traction in the ranks of business and government leaders. Everyday we read more about plans to invest in trees to capture carbon, protect wetlands to address flood risk and, restore forests to bolster water quality and quantity. 

The challenge now is to transition well-developed awareness of this opportunity into actionable, large-scale investments. Here, we have a very long way to go. 

Over my next few posts, I will demonstrate how we can draw lessons from the private sector to attract investor-provided capital to the environmental movement and achieve a new scale of conservation progress. 

The above blog is the first in a series on investing in nature.

@MarkTercek is an advisor to companies, start-ups, institutional investors and NGOs on environmental strategies, organizational management, and impact investing. He is the former CEO of The Nature Conservancy (July 2008 - June 2019) and former Partner and Managing Director for Goldman Sachs (1984 - 2008). He believes that business can be a force for good and strives to help organizations realize benefits for both the environment and their bottom line.