By Diane-Laure Arjaliès, Associate Professor at the Ivey Business School at Western University (Canada) and Founder and lead of the Ivey Sustainable Finance Lab, and Delphine Gibassier of Université de Nantes (France)



There are many examples of financial products being used to raise money for social and environmental causes, from carbon offsetting to tackling biodiversity and saving endangered species. Do these products solve the underlying crises? The jury is out. Nonetheless, the finance and accounting industry plays an important role in helping conservationists to test out financial principles and products.

That’s one conclusion from our new study that examines how capital market techniques and financial accounting, referred to broadly as ‘financialisation’, are increasingly being considered or adopted by cash-starved conservationists to garner credibility and capture public attention when raising money.

The need for cash is stark, and biodiversity loss is dramatic. In the past 50 years, more than 68% of the mammals, birds, amphibians, reptiles, and fish on Earth have disappeared, putting the planet’s survival and its inhabitants – including human beings – at risk.

Some proponents believe that assigning a monetary value to these causes will incentivise humans to protect habitats and species. Investors could opt for financial instruments like conservation bonds or social impact bonds, which reward conservation groups for their efforts based on achieving their objectives. But more than money is needed; designing the right type of financial products is essential.

In our research, we studied how the accounting and finance industry could further conservationists’ goals.

We first examined a case study of one organisation that set out to create an ‘index’ designed to assess the impact of conservation efforts on the survival of various endangered species. The conservationists hoped to use that index to calculate the financial return of a conservation impact bond. However, financialisation attempts have yet to be successful. We then spoke to other experts in conservation and finance about previous attempts to financialise nature.

Dispelling myths

We dispelled some myths about the nature of financialisation projects. For one, evaluating and pricing nature(s) is not enough to create cash flows. It is a complex endeavour that requires coordination across many actors and a deep understanding of the nature targeted by the financial product.

We also found conservationists did not resort to financial numbers to achieve financialisation. Endangered species are financialised primarily through what we call science-based “societal visuals,” including charts that categorise current and projected threats to species.

Thirdly, many attempts at nature’s financialisation are being led by conservationists rather than by financial actors, as commonly believed. The conservationists recognise that the emergence of financialisation in conservation stems from a collective failure of science, politics, and society to preserve biodiversity.

Projects and processes

We distinguish between the project and the process of financialisation, whereby a project is an individual or collaborative enterprise to achieve financialisation, and the process refers to its implementation.

Most financialisation projects fail because protecting nature entails nurturing the uniqueness of the relationships between humans and ecosystems. In contrast, financialisation instead involves abstracting nature into a ‘passive object’ to be commodified, calculated, and marketised.

To illustrate this more clearly, we distilled the typical process of financialisation of nature projects into four key elements.

1. Pacifying: transforming living entities into passive, compliant, and nonresistant entities or goods that can be desired and possessed, which creates the stability necessary for financialisation.

2. Commodifying: turning something that is not by nature commercial into something that will be valued chiefly for its monetary worth and incorporates it into the overall system of capitalist social relations. It is done by privately attaching property rights to the pacified goods or the right to appropriate the value assigned to them.

3. Calculating: creating calculative devices, usually in the form of financial models or accounting metrics, and practices that support the creation of a market by offering collectively agreed valuation processes applicable to nature.

4. Marketising: trading the invested nature / conservation units on the market to generate cash flows or financial returns.

Conceptually, we may think of material relationships built between nature and investors. However, the abstraction needed for financialising nature is only possible if some close relationships between investors and nature(s) are formed. Indeed, a fundamental contradiction exists between what conservation entails and what financialisation forces conservationists to do. We need to create new spaces for interaction between investors and other stakeholders.

We also found that a financialisation project can transform practices toward financialisation even if the process is unsuccessful.

Creating Conservation Impact Bonds

Our research demonstrated the potential contribution that accounting and finance can make to conservation and solving significant challenges such as climate change, by providing the right type of products.

Our team at the Ivey Sustainable Finance Lab helped design a new type of Conservation Impact Bond (CIB) – the Deshkan Ziibi Conservation Impact Bond (DZCIB), which is community-based and focused on healing the relationships between the land and peoples. By including Indigenous and Western perspectives into the design, governance, and delivery of the bond, through creating ethical and safe spaces where all partners could interact, the DZCIB succeeded in putting financialisation at the service of biodiversity while generating financial returns. Our research shows that to work, CIBs need to be carefully designed and focus on nurturing the relationships between peoples and nature(s), rather than abstracting it through financial numbers.

Working across the industry

A promising avenue for future research would be to study how accounting and finance can help produce a sense of legitimacy and normalcy in such neoliberal initiatives to compensate for the negative consequences of neoliberalism.

Most scientists agree that the biodiversity crisis may be one of the most disruptive events in Earth’s history. Since humans seem to choose finance as the default institution for governing societies, scholars who study accounting and financial practices probably have even more responsibility than others to consider the consequences of this transition.

Beyond the financialisation of conservation, this study raises questions about how social and natural scientists, citizens, and financiers, among others, can work together to tackle the challenges the planet and its inhabitants are facing. We hope our interdisciplinary account will encourage further researchers, particularly accountants, to engage in such endeavours.

For more information, see the full paper. (Arjaliès D-L. and Gibassier D. (2023), Can financialization save nature? The case of endangered species, Contemporary Accounting Research, 40(1): 488-525.)


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