Creating New ValueBased on Nature

The IFC approach to biodiversity conservation and sustainable use is

to invest in innovative business models that are protective of nature as

well as socially and economically beneficial. In order to meet this

challenge, IFC partners with industry, NGOs, and other financial

institutions to develop four categories of tools: metrics to measure

biodiversity impact and value; customized services blending

investment and technical assistance targeting nature-based business;

methodology and trading rules for biodiversity offsets; and specific

financial products that conform to the reality of longer term returns.

Combined expertise in finance and biodiversity conservation

Experience of partnering with a wide range of stakeholders (e.g.,

non-governmental organizations, industry forums, international

organizations)

Access to a wide variety of internal and external resources to

support complex or riskier ventures

Presence in the field close to clients who need to deal with areas

with very high biological diversity

What IFC brings

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With the Global Environmental Facility and other donor

support, IFC is able to provide innovative financing solutions

that champion businesses with a biodiversity focus. IFC is

committed to the UN Convention on Biological Diversity,

particularly to its decisions regarding private sector

engagement.

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transforming existing

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conservation or

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A Business Commitment to Biodiversity

1 Developing Standards for Sustainable Supply Chains

How to measure and incorporate the biodiversity value of a product or service? A lack of realistic, simple, and auditable

standards for biodiversity that are globally accepted is hindering further adoption of better business practices. The use of such

standards would not only limit damage to biodiversity, but allow for corporate value to be created through biodiversity

conservation. In the global commodities market, the private sector acknowledges the need for sustainability in their supply

chains, and more companies are demanding specific and efficient standards. IFC’s work in this area includes participating in

industry-led multi-stakeholder initiatives, such as commodity roundtables and investing in building knowledge and practical

tools. IFC supports players individually along the supply chain and the strengthening of the chains themselves, blending

investment with both traditional and innovative technical assistance and advisory services. Approaching issues via the supply

chain – a natural gathering of all relevant stakeholder groups in a given sector – allows a clear view of who wins and who loses,

of gaps and market failures. This approach addresses imbalances and inefficiencies while optimizing value creation from small

producers to large off-takers. By collaborating with all the market players to set, test, and implement standards, with the ultimate

goal of global uptake and mainstreaming, IFC is working to transform the commodity markets.

The Biodiversity and Agricultural Commodities Program (BACP) supports the adoption of nature-friendly

practices at the production level and throughout the supply chain of four tropical agricultural commodities:

palm oil, soy, sugar, and cocoa. These four crops currently cover over 132 million hectares worldwide, much

of it near or in areas of high biological diversity. Simple standards and practices are needed to help producers

minimize their impact on biodiversity, as well as provide social and economic benefits. The BACP also

supports financial institutions to adapt their services to encourage the adoption of biodiversity-friendly

practices by their clients, and supports governmental institutions in their efforts to change or adapt regulation,

in particular concerning land use.

Four Models of Engagement

2 Tapping New Revenue Streams

Conserving nature in its wildest possible state can benefit

communities and be a source of profit to businesses, if one knows

how to wisely the ecosystem services (fresh water that is

abundant and clean) or harvest the non-timber forest products.

IFC has been incubating business models that assist these diverse

nature-based enterprises, providing debt and equity financing with

technical advice. Experimenting with these models has allowed

IFC to fine-tune its services offering to meet the characteristics and

needs of this category of business. They face higher risk due to the

innovative nature of their products; they require the development

of a robust supply chain often based on trained and organized local

communities; new products require sizable research and

development expenditures which constitute a huge cost. An

adequate blend of finance and advisory services increases the

capacity of these enterprises to meet their challenges and will

increase their numbers to constitute a stronger global presence.

Finally, IFC supports the establishment of commercialization

arrangements and trading entities that will allow for small producers

to aggregate their products in the quantities and qualities required

by the market.

harness

IFC is working with partners to help

create a stronger, distinctive, and more

visible global market for native, local,

sustainably harvested natural ingredients

and other non-timber forest products.

These products can be used in food,

such as açai from the Amazon; in

cosmetics, such as exotic oils derived

from seeds of the baobab tree and

others which command a high price in

world markets; or in pharmaceuticals,

such as Devil’s claw. Working with

sustainable producers and other market

players in the sector, IFC helps bring the

value of the natural diversity of tropical

forests to the local stakeholders,

connecting them with the global

marketplace.

3 Piloting Biodiversity Offsets

IFC’s Performance Standards and, in turn, the Equator

Principles require a project that would have a negative

biodiversity impact to avoid, mitigate, or ultimately offset

the damaging impact. IFC works with partners to help

determine the methodology of evaluating ecologically

comparable biodiversity offsets. IFC also actively

prepares for biodiversity offsets trading mechanisms that

will be established internationally or nationally. This

requires working with governments and companies to

enhance the biodiversity components of their regulations

and management systems, and the construction of

market-based mechanisms through pilot initiatives.

4 Adapting Finance to Nature

There is a global need for adequate financial products

and services to satisfy the demand from the growth in

nature-based ventures. IFC is developing new financial

products that address this demand. Biodiversity-friendly

characteristics of financial products can involve adopting

longer term returns for investments that require a longer

timeline, such as in sustainable forestry. IFC has also

supported the development of finance vehicles whose

mechanisms are geared specifically towards biodiversity-

enhancing projects. These biodiversity and ecosystem

finance tools will be necessary for the private sector to

minimize risk when undertaking innovative biodiversity

projects.

IFC supports the Business and Biodiversity Offsets

Program (BBOP), which develops the concept and

methodology of offsets in great detail. BBOP is managed

by a secretariat consisting of Conservation International,

Forest Trends, and Wildlife Conservation Society, and

supports pilot offset projects that demonstrate positive

conservation and livelihood outcomes for the affected areas.

BBOP is a partnership of businesses and NGOs to establish

and disseminate best practices in order to facilitate corporate

and policy decisions that meet conservation and business

objectives.

IFC has contributed directly to biodiversity finance

through a number of means. IFC’s own Environmental

Business Finance Program invested in projects whose

profit model derives from conserving biodiversity. IFC

also supports the EcoEnterprises Fund, run by The

Nature Conservancy, with technical assistance, and

invests in Verde Ventures, run by Conservation

International – two examples of special financial

intermediaries that have made investing in new

biodiversity ventures their specialty.

INTERNATIONAL FINANCE CORPORATION2121 Pennsylvania Avenue, NWWashington, DC 20433 USATel: (202) 473-1000Fax: (202) 974-4404www.ifc.org/enviroEnviro@ifc.org

Cover image: Local farmers in boat transport lepironia grass

across a canal in Vietnam. Image courtesy of Hoa Doan.

Interior images courtesy of Curt Carnemark.

About IFC

At IFC our mandate is to further sustainable economic development

through the private sector. We pursue this goal through innovative

solutions to the challenges of development, as we invest in companies and

financial institutions in emerging markets and as we help build business

skills. We consider positive development impact an integral part of good

business, and we focus much of our effort on the countries with the

greatest need for investment. We recognize that economic growth is

sustainable only if environmentally and socially sound and if it helps

improve the quality of life in developing countries.

Environment and Social Development Department

For general inquiries:

Enviro@ifc.org