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Green
The Big Take

Wall Street's New ESG Money-Maker Promises Nature Conservation — With a Catch

Belize is home to a threatened coral reef and a mountain of sovereign debt. It’s become a test case for a new kind of finance that mixes debt relief and environmental protection.

A green moray on the Lighthouse Reef atoll, part of Belize’s 190-mile barrier reef.

A green moray on the Lighthouse Reef atoll, part of Belize’s 190-mile barrier reef.

Photographer: Andre Seale/VWPics/AP Images

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Big global banks are eying some of the world’s most fragile countries for a new experiment in financial engineering: debt relief in exchange for environmental protections.  

Called “debt-for-nature swaps,” they present a tempting solution for the rising number of nations in distress, particularly those with ecosystems to protect. A country gets to avoid default and lower its debt burden, as long as it’s willing to earmark some of the savings to salvage a coral reef, preserve a forest or build a wind farm, for example. Global investors get better returns and enhanced green credentials. Wall Street takes a cut.