ICLEI - Local Governments for Sustainability, South Asia
Unlocking sustainable finance for people, nature, and climate in coastal communities
Key Details
Project lead: Rare
Financial Innovation: Impact Bonds / Outcomes-Based Finance
Financial Support: The UK’s Blue Planet Fund
Location: Indonesia
Project timeline/status: Ongoing (2025 –2029)
People Supported: 24,586
Investment Leveraged: $4.85 million
Area Conserved: 22,156 ha
Summary
The Small-Scale Fisheries (SSF) Impact Bond is an Outcomes-Based Finance (OBF) contract that supports sustainable, community-led coastal and marine management.
The project focuses on Indonesia’s Southeast Sulawesi region, where Rare is establishing three Managed Access with Reserves (MA+Rs), community-managed marine areas that balance sustainable fishing with conservation. The MA+R sites strengthen local livelihoods and formalise small fishing enterprises while building inclusive governance for shared fishing grounds.
The SSF Impact Bond measures outcomes at two levels: primary outcomes such as management plans and business development, and premium ecosystem outcomes such as stabilised fish populations and increased ocean ecosystem coverage, such as coral reefs.
This proof-of-concept has established a strong foundation and building on the pilot Bond in Southeast Sulawesi, Rare is working on the next phase to extend the approach to additional Indonesian provinces, including Maluku, North Maluku, and North Sulawesi.
Challenge
Small-scale fisheries are vital to coastal economies, supporting food security, jobs, and climate resilience. Yet they typically remain informal, underfunded, and poorly integrated into national plans, with limited governance or long-term investment.
Without the local governance frameworks and tools to sustainably manage fishing areas, many communities face declining fish stocks, insecure incomes, and eroding coastal ecosystems. These pressures are intensified by climate change and ocean biodiversity loss, placing both people and nature at increasing risk.
Solution
Rare’s Small-Scale Fisheries Impact Bond is the world’s first impact bond tailored specifically to the needs of fishers and ocean ecosystems.
Here’s how it works:
- Investors provide upfront capital to implement the programme.
- Rare, acting as the implementer, delivers on agreed governance milestones as well as premium ecological results.
- Outcome funders, such as DEFRA via ORRAA, repay the investors only once each outcome is achieved and independently verified.
The Outcome-Based Finance “pay-for-success” model links financial returns to real, measurable and independently verifiable conservation results, giving a healthy ocean and coastal communities clear economic value. Early philanthropic support jumpstarts the sector by reducing risk, attracting blended finance, and enabling flexible, results-based management.
Rare launched the SSF Impact Bond in January 2025, which will run for five years before maturing in December 2029. At the end of October 2025, the project achieved its first outcome through designating three new MA+Rs in Southeast Sulawesi, Indonesia. This outcome was independently verified in January 2026, demonstrating the rigor and credibility of the Impact Bond model.
The project aims to meet additional governance and ecological outcomes, including the formalisation of new fisheries management body business units, approval of fisheries management plans, and stabilisation of fish biomass and habitats like coral reefs.
Scalability and Next Steps
With ORRAA’s extended support, Rare is now conducting feasibility assessments to scale the mechanism across three additional provinces in Indonesia, while assessing how OBF can support other, important yet, underinvested components of the regenerative and sustainable blue economy.
These efforts are intended to build a pathway from the current pilot toward a larger national, and eventually regional, facility capable of attracting government outcome funding and significant private investment. The SSF Impact Bond is currently sparking wider conversations on OBF in the regenerative and sustainable blue economy, which highlights how innovative finance can channel investment into people, nature, and climate resilience.
“This impact bond demonstrates how we can channel both public and private capital into ocean conservation at scale. By reducing investment risk and rewarding measurable outcomes, we are enabling communities to lead the protection of their fisheries and coastal ecosystems – delivering benefits for people, economies, and nature alike.” – Kate Schweigart, VP of Innovative Finance at Rare.
