New Research from UNEP FI with partners in UNEP, the Finance for Biodiversity Foundation and leading experts shows that private finance for nature has surged elevenfold in four years, from $9.4 billion to over $102 billion, per research shared at the 3rd World Biodiversity Forum in Davos this week (link below).
If the pace of market growth continues, UNEP FI projects that $1.45 trillion could flow into nature finance by 2030, helping to close the nature finance gap . Alternative investments, traded debt, and private equity are increasingly adding nature-related Key Performance Indicators (KPIs) and new instruments like biodiversity credits show promise for funding vital conservation and restoration efforts.
This expansion reflects a stronger commitment to tracking biodiversity loss by the private sector, with the development of innovative financial instruments such as debt-for-nature conversions, nature-supportive Exchange Traded Funds (ETFs), biodiversity credits, and private venture capital for biodiversity. These rapid advancements suggest promise for even more innovation in this area.
However, significant challenges remain. It is crucial to link these financial resources to national and local biodiversity priorities, especially in emerging markets where the funding gap is largest. Furthermore, very little financial support reaches the custodians of the environment, such as indigenous peoples and local communities, who globally oversee some of the most biodiverse areas. UNEP FI is working to incorporate nature into sustainable finance frameworks and taxonomies and advocates for the rights and leadership of nature’s stewards in emerging biodiversity credit markets.
Through its work with banks and insurers, UNEP FI is boosting finance for nature and providing essential tools and resources to support these efforts. Some of UNEP FI’s initiatives include the Principles for Responsible Banking (PRB) Nature Target-setting Guidance, which helps financial institutions integrate biodiversity considerations into their operations. The fosters knowledge sharing, while nature-positive insurance work promotes policies that protect and restore natural habitats. Additionally, the new UNEP FI Risk Center focuses on integrating biodiversity and nature-related risks into financial decision-making processes. Each year, UNEP FI also leads a “New Green Shoots” event documenting the latest trends and innovations in nature finance. These tools and resources enable UNEP FI members to contribute effectively to the conservation and sustainable use of biodiversity.
The co-authors of the research are collaborating with a number of universities to develop the “New Green Shoots” framework into a peer reviewed academic publication, to ensure a sound and repeatable method can be used on an annual basis to assess the state of the nature-related finance market. A to provide additional detail and feedback is welcome to jessica.smith@un.org.
The data has been released to stimulate conversations between stakeholders ahead of the forthcoming CBD COP16 discussions on defining and tracking private finance for the delivery of the Kunming-Montreal Global Biodiversity Framework (including Indicator D3 to measure the contributions from private sector)