A world-first: the bond that pays out when nature wins

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In this BizNews interview, Irakli Rekhviashvili sits down with the three people behind FirstRand's R2.5 billion Cape Water Performance-Based Bond, the first time a commercial bank anywhere in the world has tied a bond's payout to nature. The Nature Conservancy's Louise Stafford traces it to 2018, when Cape Town's dams were weeks from "Day Zero" and the catchments were choked with thirsty invasive trees. Her teams have since cleared 40,000 hectares and reclaimed more than 36 billion litres of water. "If we clear that we can reclaim about two months' water supply for Cape Town at a fraction of the cost of grey infrastructure," she says. RMB's Martin Potgieter explains the twist: investors earn a performance-based success payment on top of their coupon, paid only when the trees actually come down and independent verifiers confirm it. The aim, he says, is to "get the investors to start thinking about nature as an asset class," and tellingly, "75% of the outcomes-based funding came from entities that had never before funded nature." Peace Parks Foundation's Colin Porteous frames the deeper problem: "Historically, conservation has been a cash-negative product," and philanthropy alone cannot carry a $700 million, 10-year funding need. Potgieter's parting warning is blunt: ecosystems are "the infrastructure behind the infrastructure," and the money flowing into nature must multiply "by 40, 50, maybe 100 times."

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