News & Updates

Risk Reduction As an Incentive for Climate Solutions

This Impact Alpha podcast explores how some impact investors and environmental organizations are developing risk-reduction schemes as a tool to incentive environmental solutions and preventative practices. Examples include:
  • The “Sustainable Commodity Conservation Mechanism," a financing tactic developed by Lestari Capital, with support from the David and Lucile Packard Foundation, that creates a fund for large-scale forest restoration from the penalties owed by palm oil suppliers who have not met certain environmental standards.
  • The Nature Conservancy's scheme to finance reef restoration using insurance premiums from storm protection paid by hotels along Mexico’s Mayan Riviera. Hotels purchase the insurance policy to fund storm-related damage. Reinsurer Swiss Re pays for repairs to the reef, incentivizing hotel owners to better protect their land.
  • $152 million Forest Bond that offers investors the choice of repayment in either cash or carbon credits, a tradable permit for the right to release one ton of carbon dioxide or equivalent. 

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