Illuminating the way to sustainability: TNC's debt-to-nature conversions

In this episode, Slav Gatchev, Managing Director of Sustainable Debt at The Nature Conservancy, sheds light on the organisation's approach to addressing the intersecting challenges of debt, biodiversity loss, and climate change in emerging markets through innovative debt conversions and partnerships with governments.

Following on from Uxolo’s feature on the topic, Debt-for-nature swaps: Because the environment is worth it, Gatchev outlines TNC's approach which involves debt conversions and partnerships with sovereign governments, and traces the group's development in the debt-for-nature swaps sphere. He also highlights TNC's recent deals in Belize and Barbados as prime examples of their impact, both of which are award winners of Uxolo’s Deals of the Year. 

Gatchev begins with an introduction to The Nature Conservancy (TNC) (00:18) and to his team in Impact Finance and Markets (02:12). The team focuses on partnering with sovereign governments in order to address the triple crisis affecting many developing countries, the debt, biodiversity and climate crisis, through debt conversions.

He goes on to narrate TNC’s journey and the wider context of the debt-for-nature swaps sphere (03:35), starting from 1.0 – bilateral debt swaps (04:35) – to 3.0 – TNC’s Belize deal (08:40) and its latest deal in Barbados (11:05) which has been named one of Uxolo’s 2022 Deals of the Year. 

At (13:50), he responds to the statement that debt-for-nature swaps are not a solution to debt distress but an addition to it. He emphasises that,where some alternatives to debt distress, like forgiveness, are subject to elusive political will, debt conversions rely on sound market mechanisms by targeting commercial debt. 

Next, at (18:40), Slav responds to the IMF’s suggestion that transactions could be made faster by structuring deals around broad climate goals, like reducing emissions or protecting nature, and linking swaps to simple-to-measure metrics like monitoring emissions. He says that TNC takes climate and nature hand-in-hand, treating biodiversity issues just as importantly and in many ways as a solution to climate emissions. He notes that there are many mechanisms that can be deployed as KPIs to see how a country is doing on its conservation and climate journey.

And to finish, at (23:18) Slav describes what TNC has in store for 2023. He reveals that they have a robust pipeline of conversions to close, in sub-Saharan Africa, Asia, and the Caribbean. He expresses his hope that debt conversions will become a scalable and replicable financing option, much like the once revolutionary, and now mainstream, lightbulb.