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Bloomberg Jumps Into the Ocean — and Impact Investing

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Former New York Mayor Michael Bloomberg made a big splash in the oceans world recently with a $53 million commitment that put him among the top five funders of ocean restoration and sustainable seafood.

No less significantly, the grant also makes Mr. Bloomberg one of the biggest supporters of impact investing. Attracting private capital to sustainable fisheries is key to the five-year effort to develop innovative strategies for large-scale conservation in Brazil, Chile and the Philippines.

The partners in Bloomberg’s Vibrant Oceans Initiative include EKO Asset Management Partners, which will develop investment blueprints to bring private capital to local fishermen and women and industrial fleets that adopt sustainable fishing practices.

Fisheries are a quintessentially renewable resource. Most of the world’s oceans are seriously overfished, but recent research suggests that better management could restore fish abundance by more then 50 percent even while boosting yields — and fishing incomes — by between 8 and 40 percent. Fish are a major source of both food and livelihoods worldwide.

“It’s a big deal that impact investing was integrated into this grant from the start,” says Jason Scott, EKO’s managing partner.

The New York advisory firm’s initial exploration of the investment potential, partly funded by the Rockefeller Foundation, came to the preliminary conclusion that, “Yes, there are cash flows that can be organized in ways that private capital can invest in,” Scott says. EKO sees growing private-sector interest in investments in sustainable fisheries.

Bloomberg is part of that growing interest. “The Vibrant Oceans Initiative integrates strategies to bring in private capital to help reform international fisheries policy,” a Bloomberg spokeswoman said in an email exchange. “This is the first time that has been done in combination with national policy advocacy and local management improvements. It provide a truly comprehensive approach to the problem of overfishing, and is designed to achieve better results, sooner to revitalize a country’s fishery.

EKO is particularly keen on “environmental impact bonds,” a variant on the social impact bonds that are being tested around the country to try to leverage private capital to finance prevention programs in areas such as homelessness, chronic disease and prison recidivism. Indeed, as mayor of New York, Mr. Bloomberg in 2012 announced a $10 million social impact bond, offered by Goldman Sachs, to finance job training and other measures aimed at reducing return visits to Riker’s Island, the city’s juvenile detention facility. Bloomberg Philanthropies provided a $7.2 million guarantee against any losses.

Such “bonds” are more accurately described as pay-for-performance contracts. More standardized metrics and identifiable cash flows make many environmental initiatives even better candidates than social programs for such financing mechanisms, argue Cathy Clark and David Nicola of the Case i3 impact investing initiative at Duke University.

The financing opportunities will build on the other partners in Bloomberg’s Vibrant Oceans Initiative. “There’s going to be plenty of cash if you do the right things to rebound the fisheries,” Scott says. “The question is how do you organize it so it benefits the local communities.”

Oceana will advocate for industrial fishing reforms such as enforceable catch-limits and reduced by-catch. Rare will work with coastal communities to implement fishery management systems. One such scheme gives locals exclusive fishing rights in return for the set-aside of protected areas where fish can reproduce unharmed and increase the total stock. Both Oceana and Rare will build local teams to navigate local political and social structures.

Josh Donlan, director of Advanced Conservation Strategies, who has worked on such local strategies in Chile, says Bloomberg’s three-pronged approach represents “a strategic roadmap toward investable opportunities that could result in some significant environmental benefits.”

Stand by for more details on the financial instruments. Along with Bloomberg Philanthropies, the Rockefeller Foundation is supporting the release of  an ‘open-source’ impact investing toolkit. When the research is ready, EKO will publicly share the financial models and terms sheets and other tools to enable microfinance providers, infrastructure investors, private foundations and governments to implement similar projects in other countries.

About the author: David Bank

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