Blue Alliance Marine Protected Areas (BA) and BNP Paribas have launched a Blue Finance impact loan facility to provide up-front and early-stage impact financing to reef-positive businesses (RPBs) that strengthen the Blue Economy within Marine Protected Areas (MPAs). They aim to raise up to USD$35 million from private, impact-focused investors to assist a pipeline MPAs that have already been identified.
MPAs are intended to protect biodiversity and fishing stocks, create areas where important carbon sinks such as seagrass and mangroves can thrive, and offer a place where ecosystems can thrive and replenish without impacts from industries such as drilling or overfishing. But roughly 97% of the world’s 20,000 MPAs struggle to meet minimum management standards, due to piecemeal, insufficient, and short-term funding, most of which comes from public and philanthropy finance.
The Blue Finance impact loans will be available first in Indonesia, the Philippines, Tanzania, and Cabo Verde to support the regeneration of 1.8 million hectares of coral reef ecosystems in 115 MPAs, and to directly improve the livelihoods and food security of some 110,000 local community members.
Businesses that will receive financing will be chosen because they are innovative and reduce specific drivers of coral reef ecosystem degradation, aid in alleviating poverty within vulnerable communities, and contribute financially to MPA management through dividends and/or revenue sharing. The pipeline of businesses includes responsible ecotourism, community-based aquaculture, blue carbon credits, and sustainable fisheries. A critical part of each reef-positive business is the inclusion of communities in participatory management.
The facility covers financing needs for these businesses’ initial working capital and CAPEX. It is structured with a long-term maturity to meet the needs for “patient capital” for social enterprises engaged with natural capital and local communities. The interest rate will vary based on the achievement of specific social and environmental outcomes to incentivize local businesses to maximize their positive impact over the environment and livelihoods of local population.
BNP Paribas will make an initial investment of $2.4 million, through its Impact Investment team, with philanthropic capital provided by long-term partners such as the Global Fund for Coral Reefs (GFCR), co-led by the United Nations Capital Development Fund (UNCDF).
“While the opportunity offered by reef-positive businesses around MPAs is relatively new, lessons are emerging regarding three core ingredients for success,” said Nicolas Pascal, Executive Director of Blue Alliance Marine Protected Areas. “(i) A viable business model is necessary for financial returns; (ii) A multi-stakeholder approach is central to successful project development and management. This should include governments, engaged and experienced NGOs, and partners with skills in social entrepreneurship, financial planning, and marine conservation; (iii) Appropriate performance indicators must be identified—with stakeholder input—to capture key social and environmental impacts.”
“With the fourth mass global bleaching now hitting record-levels, bolstering the effectiveness of Marine Protected Areas (MPAs) is more critical than ever,” said Pradeep Kurukulasuriya, Executive Secretary of UNCDF.
