Successful roll-out of EUR 400m natural capital initiative supporting conservation across Europe
28 May 2018
EUR 12.5 million new backing for Irish Continuous Cover Forestry initiative
EUR 15m to support biodiversity and climate adaptation in Croatia
Natural Capital Financial Facility supporting initiatives in 12 European countries
EUR 125 million scheme backs EUR 400 million green investment and conservation
Crucial new investment to strengthen green infrastructure, benefit biodiversity and adapt infrastructure to a changing climate has been unlocked by the Natural Capital Financial Facility, a EUR 400 million initiative intended to better protect Europe’s natural capital.
The unique scheme is now looking to expand cooperation with partners across Europe to enhance investment that better supports nature conservation and climate change adaptation.
Launched 3 years ago by the European Investment Bank and by the European Commission, the Natural Capital Financial Facility has backed new investment by nature-focused businesses and is supporting transformational schemes across Europe.
Reaffirmed European political commitment to strengthen nature conservation investment
Details of new initiatives backed by the Natural Capital Financial Facility and opportunities for further financing were outlined in Brussels earlier today to representatives of organisations concerned with investment in nature, as well as environmental, agricultural and political stakeholders.
At the event representatives of both the European Investment Bank and European Commission confirmed support for strengthening innovative financing that improves protection of Europe’s nature and often contributes to strengthening vulnerable regions.
"Nature is essential for daily life and economic activity. The two new operations demonstrate how crucial new investment in nature conservation across Europe can be unlocked by a well-designed financial instrument which makes EU financing go further for nature. The exciting range of projects already supported shows future partners how the joint engagement of the European Commission and European Investment Bank through the Natural Capital Financing Facility can better protect nature and improve economic opportunities said Karmenu Vella, European Commissioner for Environment, Maritime Affairs and Fisheries.
Unique financing available to support nature based investment across Europe
Companies, public authorities and local financial partners can all benefit from dedicated new financing to support nature-based investment.
The first three projects to receive investment from the Natural Capital Financing Facility will support activities in approximately 12 countries. The European Investment Bank is now looking to continue rollout of the Facility to support new projects covering a broad range of nature-focussed investment.
Following the successful roll-out of initial pilot projects under the Natural Capital Financial Facility covering activities in 12 countries. The European Investment Bank is looking to expand the impact of the initiative by supporting new projects covering a broad range of nature focused investment.
“Encouraging investors to realise the business case for nature conservation is crucial for biodiversity and climate change adaptation across Europe. The Natural Capital Financing Facility is demonstrating the diverse benefit of pro-nature commercial investment and helping transformational initiatives in countries including Romania, Ireland and Croatia. The European Investment Bank is committed to supporting conservation finance and looks forward to working with new partners in the years ahead. We call on companies, public bodies and stakeholders considering nature focused investment to get in touch to see how financial support and technical expertise can be obtained.” said Jonathan Taylor, Vice President of the European Investment Bank responsible for climate action and the environment.
First project to encourage Continuous Cover Forestry in Ireland
New investment in sustainable forestry across Ireland will be supported by the latest operation under the Natural Capital Financing Facility. Irish commercial forests are amongst the most productive in the world and the new scheme will enable global institutional investors to support a more sustainable forestry model.
“The European Investment Bank is pleased to work with SLM Silva Fund to improve sustainable practices in Irish forests. The new EUR 12.5 million investment builds on the EIB’s recent support for forestry and agriculture in the country and will demonstrate how best practice in Ireland’s world-class forestry industry can take better account of the need to safeguard biodiversity, soils and landscapes, and help resist the threats associated with climate change.” said Andrew McDowell, Vice President of the European Investment Bank responsible for Ireland.
The SLM Silva Fund will work with commercial forest schemes across Ireland to encourage Continuous Cover Forestry. This provides an alternative to the predominant clear felling model that leaves bare hillsides and focuses on a narrow range of tree species, reducing habitat value and ecosystem health. Continuous Cover Forestry also enables productive forests which are more resilient to pests and diseases, as well as avoiding the negative impacts on soil and water resources of conventional practices.
“Agriculture and forestry play a key role as custodians of natural capital and the agri-food sector is an essential and integral part of any solution to ultimately deliver natural capital imperatives for rural areas and society as a whole. This new forestry investment in Ireland, with participation of the EU’s LIFE Programme and the European Investment Bank, shows how conservation considerations can be combined with commercial activity,” said Phil Hogan, European Commissioner for Agriculture and Rural Development.
Successful partnership with national authorities to protect natural assets and enhance green growth
National financial institutions understand local investment challenges and priorities. A new EUR 15 million cooperation with the Croatian Bank for Reconstruction and Development (HBOR) under the Natural Capital Financing Facility is supporting new investment that will improve conservation of existing biodiversity, improve green infrastructure and strengthen resilience to climate change.
Technical and financial expertise from similar nature conservation focused projects elsewhere in Europe will strengthen investment in Croatia. A dedicated technical assistance programme is currently being rolled out that will ensure that HBOR can better identify natural capital projects with the greatest environmental impact and improve preparation of individual schemes by local businesses and public bodies.
HBOR is the first intermediary to benefit from both financing and technical preparations supported by the Natural Capital Financing Facility. This reflects Croatia’s rich biodiversity and crucial role in nature conservation as one of the most diverse locations for plant diversity anywhere in Europe. 34% of nature areas in the country are protected under Natura 2000.
Croatian companies expected to benefit from new financing include firms engaged in sustainable agriculture, commercial forestry operations and tourism.
Supporting conservation and local companies in 30 projects across Europe
The diverse scope of green investment and nature-based projects that can be supported under the Natural Capital Financing Facility has been highlighted by support for 30 different schemes in partnership with Rewilding Europe Capital (REC), Europe’s first dedicated financier of conservation and rewilding enterprises.
New investment in a diverse range of projects, including flood protection, rainwater recycling, programs to protect forests and reduce water and soil pollution, biodiversity offsets, and eco-tourism have demonstrated the potential for long-term investment by private and public partners in schemes traditionally perceived as too challenging to be commercially viable.
Promoting dedicated investment in nature based solutions in urban areas
Financing backed by the Natural Capital Financing Facility is not restricted to rural regions. Nature-based solutions to address urban heatwaves and flash flooding in built up areas through the integration of green and blue infrastructure elements, such as green roofs, sustainable urban drainage schemes or tree planting are also expected to be supported.
Mobilising public and private investment in natural capital
More than EUR 400 million of new nature conservation investment is expected to be supported by the EUR 125 million Natural Capital Financial Facility by 2021.
The Natural Capital Financial Facility supports both loan financing and equity participation by the European Investment Bank and is expected to mobilise additional investment up to four times of the original financing. The initiative is supported by the European Investment Bank own resources, and a EUR 50m guarantee and a EUR 10m technical assistance from the European Union LIFE Programme.
The EIB and Banque des Territoires will each invest €100 million in an investment platform to finance the energy transition of bus fleets across France. Managed by Banque des Territoires, this platform will offer innovative financing to local and urban mobility authorities looking to green their bus fleets to reduce their climate impact. The Clean Buses Platform is part of Caisse des Dépôts’ recovery plan and environmental transition efforts. The EIB’s investment is guaranteed by the European Fund for Strategic Investments (EFSI), the central pillar of the Investment Plan for Europe.
On 11 January, the EIB issued a new EUR 1.5bn Sustainability Awareness Bond (SAB) due 15 May 2041. On the back of demand in excess of EUR 22.5bn (excl. JLM), the transaction was upsized from initial target size (EUR 1bn) and priced at mid-swaps less 7bp, 2bp tighter than initial guidance. The issue had a re-offer yield of -0.003%, offering a spread of 30.6bp over DBR 4.75% 07/04/40 and 6.3bp below FRTR 4.5% 25/04/41.