Episode 21 - Business and Biodiversity: Southeast Asia in Transition

Well, let's go back to the best reported chapter six.

And perhaps there was less blood, sweat and tears there.

But, you know, what I like about this chapter, it also raises some uncomfortable points.

It's not without it doesn't skirt.

They go around the controversies.

It goes.

It actually addresses them.

And it makes this really uncomfortable point about blended finance, which is on everyone's lips these days.

And blended finance, for those unfamiliar, is the practice of using public or concessional capital to attract private investment, in this case into biodiversity and conservation and other projects.

But the authors of Chapter 6 warn that blended finance can, quote, bring about harmful outcomes if it is informed by a de-risking logic that redistributes financial risks from the private to the public sector, unquote.

What is the harmful outcome that IPBES is talking to now? What is it that we should be concerned about with regards to blended finances?

Blended financing is often sold as a win-win.

Public capital de-risks a project, private capital comes in and biodiversity gets funded.

But the chapter is right to raise a warning.

If you are not careful, de-risking can become risk-shifting, where the public absorbs the downside and the private sector collects the upside.

Is this happening in Malaysia and the wider region? It is not a dominant role, but yes, the concern is real.

I give you a few examples.

Many biodiversity projects here rely heavily on government grants, philanthropic money or concessional loans to make them bankable.

Private investors often come in only once the public sector has taken on the early stage risk.

feasibility studies that have been carried out by the public sector, community engagement, land issues and ecological uncertainty.

In some cases, the public sector is effectively underwriting the project while the private sector earns the return.

We can see that also in Malaysia and the region.

So the core issue is not blended finance itself.

It is how it is structured.

When deals prioritise investor comfort over ecological outcomes, you end up with a model where nature is public responsibility and profit is private reward, as you can see now.

Well, let's go back to the best reported chapter six.

And perhaps there was less blood, sweat and tears there.

But, you know, what I like about this chapter, it also raises some uncomfortable points.

It's not without it doesn't skirt.

They go around the controversies.

It goes.

It actually addresses them.

And it makes this really uncomfortable point about blended finance, which is on everyone's lips these days.

And blended finance, for those unfamiliar, is the practice of using public or concessional capital to attract private investment, in this case into biodiversity and conservation and other projects.

But the authors of Chapter 6 warn that blended finance can, quote, bring about harmful outcomes if it is informed by a de-risking logic that redistributes financial risks from the private to the public sector, unquote.

What is the harmful outcome that IPBES is talking to now? What is it that we should be concerned about with regards to blended finances?

Blended financing is often sold as a win-win.

Public capital de-risks a project, private capital comes in and biodiversity gets funded.

But the chapter is right to raise a warning.

If you are not careful, de-risking can become risk-shifting, where the public absorbs the downside and the private sector collects the upside.

Is this happening in Malaysia and the wider region? It is not a dominant role, but yes, the concern is real.

I give you a few examples.

Many biodiversity projects here rely heavily on government grants, philanthropic money or concessional loans to make them bankable.

Private investors often come in only once the public sector has taken on the early stage risk.

feasibility studies that have been carried out by the public sector, community engagement, land issues and ecological uncertainty.

In some cases, the public sector is effectively underwriting the project while the private sector earns the return.

We can see that also in Malaysia and the region.

So the core issue is not blended finance itself.

It is how it is structured.

When deals prioritise investor comfort over ecological outcomes, you end up with a model where nature is public responsibility and profit is private reward, as you can see now.