Investors’ appetite for funds that aim to improve the environment and society, as well as making money, has grown quickly in 2019 — to the extent that some are beginning to push quite unconventional products.
One such is the so-called Rhino Impact Bond, which is being coordinated by charity the Zoological Society of London and Conservation Capital, an environmental, social and governance funding consultant. It is billed as the first-ever financial instrument for species conservation and its surrounding habitat, and is due to launch next year.
Its advent comes amid growing interest in green and social-impact funds. Assets under management in the sector grew by 15% to $52bn during the first half of 2019, after rising just 1% through 2018, according to recent research from Fitch Ratings.
Although this still accounts for a fraction of the total $6tn in the money management industry, other financial instruments geared towards sustainability and charity are also gaining traction.
That is where the rhino bond comes in; an investment product aiming to make a financial return from boosting the population of endangered African rhinos. Here, Financial Newstakes a detailed look at how this bond works.
Is it really a bond?
It is not a bond in the traditional sense, and instead follows the structure of the increasingly popular social impact bonds, which are aimed at tackling a variety of social ills, including homelessness, development and education, or improving health issues.
Typically, investors put up money that charities, non-profit organisations or governments use to address these and other problems. If these institutions meet an agreed target, investors are paid back by them, with interest. However, if those targets are not met, investors will not get any money back.
What is it trying to tackle?
Since the 1970s, the population of black rhinos, primarily found in South Africa, has plummeted from 65,000 to just 5,500 due to poaching driven by demand from China and Vietnam for rhino horn.
The Rhino Impact Bond aims to supply $40m-$50m of upfront capital to help cash-poor government-funded sites fight back against poachers.