Investing in biodiversity: The conundrum faced by institutional investors

Abstract

69% of the world’s plant and animal populations has been lost since 1970, with one of the main reasons being chronic underfunding. There is a huge need to match biodiversity conservation projects to appropriate capital suppliers in order to fill the ‘nature finance gap’, and institutional investors have the potential to do so. This paper aims to explore how feasible the biodiversity conservation market is for institutional investors. To answer this question, various biodiversity impact funds are compared to non-biodiversity impact funds, in terms of funding stage and size. To measure this, a one-way ANOVA test is conducted and shows that biodiversity funds do not significantly differ from non-biodiversity funds. In addition, a text analysis finds that the level of biodiversity conservation awareness is lacking among biodiversity fund managers. This means that additional measures, such as further research and increased educational initiatives, are necessary before institutional capital can be unlocked for biodiversity conservation.