Rhinos come to the bond market, and other species may follow


The planned sale of a rhino impact bond, aimed at growing the population of the endangered black rhino, is seen by its backers as a test for the creation of a conservation debt market that could be used for everything from protecting species facing extinction to preserving wildlife areas.

The sale next year of the $50m bond, the first financial instrument for species conservation, is being run by the Zoological Society of London and Conservation Capital. The company was founded in Kenya about 15 years ago seeking to create business and investment finance tools for conservation.

Under the program, the five-year bond will cover conservation efforts at five sites in South Africa and Kenya where about 700 black rhinos, or about 12% of the world’s population of the animals, live. Investors will be paid back their capital and a yield if the number of animals increases. The target is to boost the world’s black rhino population by 10%.

“We see this as a shift in the conservation-funding model,” said Oliver Withers, head of conservation finance and enterprise at the Zoological Society of London. “There is huge scope for this to be used for other species. We started out with the framework of ‘can we build an impact bond for conservation’.”

Countable, Charismatic

While the rhino security is a first, so-called “impact bonds” have been used to finance a variety of outcomes from girls education in rural India to sustainable marine and fisheries projects in the Seychelles.

The bond will give investors a chance to “recycle” their capital and buyers are likely to be high net worth individuals with an interest in conservation, as well as impact investment funds, so called ESG - environmental, social and governance - funds and foundations, Glen Jeffries of Conservation Capital said.

Black rhinos were chosen because they are “countable, critically endangered and charismatic,” he said.

There are about 5 500 black rhinos in the wild in Africa, where they are in indigenous species and mostly live in just four countries, down from 65 000 in 1970. That compares with about 20 000 of the larger white rhinos that mostly live in South Africa. They weigh as much as 1.4 metric tons compared with the 2.5 ton white rhino.

Avoiding Poachers

Rhinos in Africa are under threat from poaching, mostly because of demand in Vietnam and China for powder from their horns that is believed to cure cancer and improve virility. In 2018, 769 mainly white rhinos were killed in South Africa. The sites covered by the bond are confidential to avoid attracting poachers.

“Given that we’ve lost so much of our biodiversity already we desperately need to consider new ways of valuing. funding and implementing conservation,” said Dominic Jermey, director general of the Zoological Society of London. “The rhino impact bond model offers a huge opportunity to open up conservation funding and to share the risk of restoring financial diversity.”

The backers of the bond see considerable scope for growth. In just one of the sites there were more than 5 000 black rhinos several decades ago, Withers said. Recipients of the funds will be able to use the money how they choose, provided it’s for conservation.

“What we are really doing is buying into a management team on the ground that can deliver,” Withers said. Those “providing the grants, are not aware of the realities” on the ground, he said.

The project’s funders include the Global Environment Facility and the UK government. It is also receiving assistance from Credit Suisse Group AG and DLA Piper LLP. The plans for the Rhino bond were first reported by the Financial Times.

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