Millions of people rely on thriving coral reefs for their sustenance, and with the looming dangers posed by global warming, harmful practices, and the exploitation of these ecosystems, a novel financial approach initiated by the United Nations is opening avenues for investments that support coral reef health. This is exemplified in the case of Fiji.
"We provide opportunities for investors to make fair returns on their money, at the same time as they are investing in the protection and restoration of our Pacific reefs and linked ecosystems," says Jodi Smith, General Partner of Matanataki, a Fiji-based impact fund currently being raised, and working together with the UN.
The small island nation Fiji, with just shy of a million inhabitants, comprises an archipelago of some 330 islands in the South Pacific Ocean. Its closest neighbours are Samoa, Toga, and Vanuatu. Under the surface of the sea, the country's diverse coral formations cover 6,704 km2.
Tourism is hugely important and just like in many other island countries, the population relies on the reefs for their livelihood. In addition to people travelling from all over the world to experience the abundance of the ocean, Fiji's island communities derive about 75 per cent of their dietary protein from the ocean, relying on small-scale commercial and subsistence fishing.
However, the coral reefs are Fiji’s most exploited marine ecosystem. To make matters worse, rising ocean temperatures, overfishing, synthetic fertilizers seeping into the ocean, and mountains of waste that pollute the water are severely impacting the health and survival of the reefs.
To save the reefs and the population that depends on them, a shift from harmful to reef-positive businesses and practices is urgent. To enable this shift, there is a desperate need for investments. However, few investors are willing to take a chance on smaller businesses in the middle of the ocean.
To address this challenge, local communities, private capital, and large international actors are coming together in what is termed the Blue Economy, defined as the sustainable use of ocean resources to benefit economies, livelihoods, and ocean ecosystem health.
A pioneering international actor is the United Nations (UN) Joint Sustainable Development Goals (SDG) Fund. The Fund is tasked to develop a new wave of financing strategies and create new market opportunities for scaling up investments that unlock public and private capital towards the SDGs.
The core concept involves presenting a robust business proposition to investors, motivating their involvement in international ventures. Through the development of a sustainable business model, the aim is for the United Nations to gradually withdraw as the enterprise attains sustainability and self-sufficiency.
In Fiji, the Joint SDG Fund created a new programme in 2021, called: Investing in Coral Reefs and Blue Economy. It provides opportunities for commercial investments for businesses that address the challenges Fiji’s reefs are facing and aims to leverage US$ 50 million in investment capital by 2030. Businesses can receive concessional loans, performance-based grants, and technical assistance through this programme.
In the short time that has passed since its inception, businesses are starting to grow, and a shift in the right direction has started.
In this UN joint programme, supported with US$ 5,4 million from the Joint SDG Fund, with the leadership of the Resident Coordinator, three UN agencies, United Nations Development Fund (UNDP), UN Capital Development Fund (UNCF) and the UN Environment Programme (UNEP) are operating as one.
Dirk Wagener, the UN Resident Coordinator, expressed satisfaction with the program's achievements, highlighting how the programme fosters collaboration among the Government of Fiji, the private sector, and civil society.
“This joint programme is a proud example of different parts of the UN coming together to empower the people of Fiji to become stewards of their own destiny. Through the programme the Residents Coordinators Office supports a call for collective action, empowering communities to shape their own future, equipping them with the tools and knowledge required to safeguard livelihoods and ensure that no one is left behind,“ he says.
“It fosters collaboration and weaves threads of connection between government, the private sector, and civil society; this sense of collaboration being the very ethos of the Sustainable Development Goals.”
When initiating the joint programme, the UN team, along with national and international partners, prioritised addressing the most damaging threats to the coral reefs. Secondly, they identified sustainable development goals- and coral reef-positive businesses that needed additional financing but could not access locally available financial markets.
In Fiji, the UN team partnered with Matanataki, a Fijian business development and investment management company with a vision to restore health to Fiji’s land, people and it’s reefs.
Matanataki is the Fijian vakaviti word meaning action.
“It is a name chosen with great conviction. There is still a lot of talk and not enough action to tackle the climate crisis, of which small islands like Fiji are at the coal face,” says Jodi Smith, CEO of Matanataki.
Born in New Zealand, Smith has worked globally as a business development and turnaround specialist. Since 2012, she has lived in Fiji where her great, great grandparents once moved from China.
“I realized that there has been little development in the primary agriculture and fishing sectors since my great, great grandparents lived here, and I experienced firsthand how these practices, combined with harmful chemicals, were degrading the reefs. And the reason that businesses and small holders are acting in this harmful way, is that they are competing with other developing countries in the global market and are trying to keep the costs down. What is needed pre-investment is regenerative practices embedded into the fabric of investee companies and strong market opportunities for regenerative products. Once this design and planning work is done, the companies need risk capital and thereafter hands on mentorship after receiving investment,” says Jodi Smith. “This is what our company provides.”
First approached by the UN’s Multi-Partner Trust fund Office in 2020, Smith and her team started searching for investment opportunities that address the challenges Fiji’s reefs are facing and with strong entrepreneurs that Matanataki could join up with. Now, three years later, the first grant of seed money from the Joint SDG Fund has come to an end.
“We pitched a series of companies, which form our pipeline of investment opportunities. Utilising an interconnected deal flow approach, which was described by Briony Coulson and Pierre Bardoux in the 2023 Financing the UN Development System report, the pipeline companies are all profitable and interlinked in their efforts to clean up and restore the coral reefs. With the support of the UN and the Joint SDG Fund, the Matanataki Fund managed to get seven companies started and up and running. None of this work could have been achieved without that first push and technical assistance from the joint program to get started.” explains Jodi Smith.
The companies include a waste management company and dumpsite rehabilitation project that will stop the leakage of waste into coastal and reef ecosystems, an organic fertilizer company replacing chemical fertilizers, and several others that operate with coral reefs as their "North Star," as described by Smith.
“The reefs guide us and set the direction for what we and our investees do collectively, just like the North Star has for seafarers for thousands of years,” says Smith.
These investments are key entry points to address and adapt to the challenges of climate change and biodiversity loss in line with the North Star. With the UN Joint SDG Fund providing initial funding and enabling a collaborative environment to make its funding catalytic with a target of US$ 50 million, Matanataki has begun raising its first local blended finance fund, Matanataki Impact 1. The fund is targeting US$ 35 to 50 million and aims to extend Matanataki’s work to the broader Pacific. This is exactly the transformative impact the UN Joint SDG Fund is aiming its efforts at.
For one of the Fijian companies, the Fertile Factory Company, this means continued managerial support. Their business idea is to take what is now considered waste and turn it into organic fertilizers. To do this, the company received an initial US$ 750,000 loan from the UN, which supplemented the company´s own US$ 400,000 investment. Their target is to put the first round of organic fertilizers on the market in June 2024. Once farmers shift from chemical products to organic alternatives, the runoffs from farming will no longer harm the ocean’s ecosystem.
“The initial response from potential investors at the fund is looking positive. This is the first time for this kind of interconnected and thoroughly developed deal flow in the Pacific,” says Jodi Smith with a smile. “We provide opportunities for investors to make money, at the same time as they are investing in a healthy ocean and a healthy planet.”
In addition to the investments made through Matanataki, several other businesses have received support from the joint UN programme.
One of them is Beqa Adventure Divers, an award-winning shark diving center founded in 2004. In addition to welcoming divers to experience formidable meetings with sharks, they run an extensive conservation, anti-poaching and research programme.
In the pipeline to become part of the programme are, among others, two Locally Managed Marine Areas (LMMA). An LMMA is an area of nearshore waters and its associated coastal and marine resources that are largely or wholly managed at a local level by the coastal communities. They generate revenues from eco-tourism, sustainable fisheries and blue carbon credits.
Two LMMA’s in Fiji will get technical assistance to formalize a management structure that will attract private investments. The scope of these LMMA‘s is substantial: some 460 km2 will be protected and the investments will benefit approximately 3,300 artisanal fishers.
The UN country team estimates that, in total, more than 70,000 women and children living in vulnerable coastal communities, will reap positive economic and environmental impacts from the joint programme.
"Fiji's vibrant coral reefs face immense challenges, but innovative solutions hold promise for Fiji and the greater Pacific region,” says Munkhtuya Altangerel, the UNDP Resident Representative.
“By supporting blue and green businesses that prioritize both environmental and economic well-being, this work will support 200 fish wardens to lead the charge in protecting vital marine areas, ensuring sustained fish stocks for the 75 percent of island communities who rely on the ocean as a food source. In addition, 300 direct and indirect jobs will be created, boosting local economies while promoting coastal ecosystem restoration, reducing plastic pollution – ensuring we safeguard our Blue Pacific for future generations."
Several other countries need to change their ways as well to protect the fragile reefs in our oceans.
Over half a billion people worldwide depend directly on coral reefs for food, income, and protection from storms and erosion. In addition to being crucial to local economies, and businesses that depend on tourism as well as deeply important to local culture, the coral reefs matter to all of us in purely economic terms: The US National Oceanic Atmospheric Administration (NOAA) estimates that the net economic value of the world’s coral reefs is tens of billions of US dollars per year. Researchers have estimated the value to be hundreds of billions of US dollars per year.
According to NOAA, about 25 per cent of the ocean's fish depend on healthy coral reefs. They host as many species as the rainforests and are endangered by climate change. For decades, coral reefs around the globe have been dying in great numbers.
In Fiji, the support of the UN, the Joint SDG Fund and its donors, is opening a window for change and giving that initial financial and transformative nudge that most businesses need to orient themselves toward growth.
Facts:
The Joint Sustainable Development Goals (SDG) Fund is an innovative instrument to incentivize transformative policy shifts and stimulate the strategic investments required to get the world back on track to meet the SDGs.
Targets for Fiji: The Programme will directly impact marine conservation and the health of coral reef and other marine ecosystems (SDG 14), co-create coastal sustainable economies (SDG 8), and leverage innovative public and private partnerships (SDG 17). The programme's specific targets include 30 marine protected areas effectively managed in Fiji by 2030, 30,000ha of coral reef ecosystems protected, food security and income improved for over 6,000 fishers, 30,000MT GHG emissions reduced per year, 0.5ha of mangrove forest loss avoided per year, 560MT of fish stock increase per 1000ha and US$1 billion tourism loss avoided per year.
The Joint SDG Fund is not the sole investor in this transitional Blue Economy program. The UN Blue Accelerator Grant Scheme has provided US $150,000 to develop reef insurance solutions, and an additional US $150,000 has been raised from the UN Blue Accelerator Grant Scheme to support the sustainable LMMA business model around pearl, edible oysters, and seaweed.
The Sustainable Development Goals are a set of 17 globally agreed goals, see further at https://sdgs.un.org/goals
Note:
All joint programs of the Joint SDG Fund are led by UN Resident Coordinators and implemented by the agencies, funds and programmes of the United Nations development system. With sincere appreciation for the contributions from the European Union and Governments of Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Monaco, The Netherlands, Norway, Portugal, Republic of Korea, Saudi Arabia, Spain, Sweden, Switzerland and our private sector funding partners, for a transformative movement towards achieving the SDGs by 2030.
