Here’s how it works: Investors buy into the bond, and the money is drawn as needed for forest restoration work. This includes thinning, strategic backfires and other rehabilitation. In this first case, it was a $4 million bond with money from CSAA Insurance, Maryland-based investment firm Calvert Impact Capital, The Rockefeller Foundation, and the Gordon and Betty Moore Foundation.
The investors are paid back over five years, with 4% interest, by those who benefit from the work and have contracted with Blue Forest, like the U.S. Forest Service and state agencies. In this case, payments will come from the Yuba Water Agency, whose reservoirs receive water from the forest and the California Department of Forestry and Fire Protection.
And the bond couldn’t come at a better time in the investor community, as an increasingly popular trend of socially conscious investing is taking off. It’s called ESG, which stands for environmental, social and corporate governance. It focuses on investing for the greater good; in this case, buying into the health of the forest but still making money.
It is exactly the kind of investment Jennifer Pryce, CEO of Calvert Impact Capital, says her clients want.
“Our investors are looking for an impact and a financial return, and this is off the charts when you look at what it’s giving back,” said Pryce, who polls investors each year to see how they want to align their capital with their values. “Fighting climate change is No. 1.”
She admits this one was a difficult sell because it is designed to prevent fires, rather than fight them. Still, once the possibilities and savings were made clear, the investors were in.
It’s not exactly “fighting climate change” either. I wonder what else might get lost in translation, and would the “environmental” investors necessarily like the “other rehabilitation” that the Forest Service decides to fund with their money, and whether there are any restrictions on what an agency could use the funds for. An interesting concept though …