LOADING

Type to search

Climate Fund Managers Announces $1.6 Billion Debt-For-Climate Conversion to Protect the Galapagos Islands

Climate Fund Managers Announces $1.6 Billion Debt-For-Climate Conversion to Protect the Galapagos Islands

Landmark transaction will conserve one of the planet’s most valuable ecosystems

Climate Fund Managers (CFM), the leading climate-centric investment firm, announced the financial close of a new debt-for-climate conversion via its marine ecosystem venture, Oceans Finance Company (OFC), that will protect one of the planet’s most important ecosystems: the Galapagos Islands.

The Galapagos conversion, which is the largest in history, exchanged $1.628 billion in Ecuadorian government bonds for a $656 million impact loan. The transaction will generate savings to the Ecuadorian fiscus of $1.126 billion through 2041. In return, Ecuador will direct savings of $323 million by 2041 to the conservation of the Galapagos and establish a new endowment fund maturing to $227 million to finance their preservation thereafter.

CFM, through OFC, was one of the key advisors in the transaction. It developed the concept to fruition, led on the financial structuring and invested $2 million in early-stage development capital via its Climate Investor Two (CI2) Fund, an innovative blended finance vehicle focused on oceans, water and sanitation. CI2, through a complimentary structure is expected to avail an additional $5 million per annum for conservation.

Debt-for-climate conversions are an innovative finance mechanism that exchanges a portion of government debt at more favourable terms, with savings spent on climate-positive action. Situated in a 200,000 km² Marine Protected Area (MPA) off the coast of Ecuador, the Galapagos are a biodiversity hotspot with the highest concentration of endemic species on the planet. Hampered by a lack of funding to enforce its protected status, overfishing combined with pollution and climate change has put the fragile ecosystem and the communities that depend on it at risk.

The conservation funds will protect the 60,000 km² Hermandad Marine Reserve (HMR), providing vital protection for marine life whilst also promoting sustainable fishing and tourism, enhancing ecosystem richness, and building resilience to climate change. Extending to the Cocos Islands, the HMR also provides a safe corridor along a key migratory route for endangered marine species including the Scalloped Hammerhead shark, Oceanic Manta Ray, Blue Whale and several species of marine turtle that move between Ecuador, Colombia and Costa Rica.

See related article: Convergence and CPI Launch $12 Million Catalytic Climate Finance Facility

The funding availed will help physically protect the HMR through traditional methods such as patrolling but also via technology including drone monitoring and satellite imagery. Targeted funding will support community development initiatives including programmes to support sustainable livelihoods, women’s economic empowerment, improved access to sanitation and waste management infrastructure (which will ultimately help to reduce the harmful impacts of pollution on the marine environment), and educational campaigns.

Andrew Johnstone, CEO of CFM said: “Climate Fund Managers’ purpose is to end the climate crisis. We do this by raising and deploying blended finance funds at scale and at pace, working in partnership to deliver sustainable climate solutions. Debt-for-climate swaps are a cutting-edge climate solution that make significant, sustainable impact in a single transaction. The Galapagos conversion sets a new precedent which we are actively looking to replicate across our focus markets of Africa, Asia and Latin America.”

Erik Wandrag, CEO of OFC said: “The Galapagos are one of the most valuable and vulnerable marine ecosystems on the planet and this conversion will conserve them for generations to come. Each debt-for-climate conversion takes us a crucial step closer to achieving the global goals of conserving and managing 30% of the world’s lands and waters by 2030 and limiting global warming to 1.5°C.”

The conversion supports the achievement of OFC’s impact objectives, namely to: conserve 800,000km², protect 20,000 species including 1,000 that are endangered, mobilize $50m funding per conservation area including an endowment fund to continue funding post the arrangement period and improve the lives of 2.5m people.

Topics

Related Articles

LOADING

Type to search

Blog

Global Taskforce Sets Out Plan to Bridge $4 Trillion Sustainability Finance Gap for SMEs
EU Lawmakers Scale Back Sustainability Rules, Raising Thresholds for Corporate Reporting and Due Diligence
Schroders Achieves 100% Renewable Electricity Across Global Operations One Year Ahead of Schedule
Mercedes F1 Nears Net Zero Goal with 99% Biofuel Logistics Coverage Across Europe
Moeve Joins Avelia as First External SAF Supplier
Google to Invest €5 Billion in Belgium to Expand AI and Carbon-Free Infrastructure by 2027
Climate Fund Managers Closes $1.07 Billion Climate Adaptation Fund for Emerging Markets
Mexico Adopts 17 Climate-Aligned Legal Clauses to Advance Sustainable Law Frameworks
EU Launches $6.1M Initiative to Scale Sustainable Algae Farming and Blue Innovation Hubs
India Plans $77B Hydropower Expansion as Strategic Buffer to China’s Upstream Dams
US Pushes Back Against EU Plan to Cut Global Shipping Emissions
Siemens, Airbus Partner to Decarbonize Three UK Manufacturing Sites by 2030
INC Introduces First Global Sustainability Certification for Nut and Dried Fruit Industry
US Delays Wyoming Coal Lease Auction Following Weak Industry Interest in Montana
ESG News Week In Review: 3 October - 12 October
Worldly Acquires GoBlu to Build Unified Sustainability Data Ecosystem for Global Supply Chains
US Declines to Back World Bank Climate Statement Signed by 19 Directors
Highland Spring Partners with Altruistiq to Track Product-Level Carbon Footprints Across UK Operations
Base Power Secures $1B to scale U.S. Home Battery Network
Deep Sky to Build 500,000-Tonne Carbon Removal Facility in Canada
","session_id":"ep-sess-1760935164-Ck5Cj4xt","page_url":"https:\/\/esgnews.com\/climate-fund-managers-announces-1-6-billion-debt-for-climate-conversion-to-protect-the-galapagos-islands\/","post_id":"20226","tracking_enabled":"1","original_referrer":"","has_embedded_content":""}; /* ]]> */