Scaling Finance for Nature: Barrier Breakdown
15 October 2024 - Private capital can play a critical role in closing the US$700 billion annual biodiversity finance gap and addressing nature’s decline. The report uses the mitigation hierarchy as a lens through which to view how nature finance can contribute towards the goals of the Global Biodiversity Framework.
Read the report
The Centre for Sustainable Finance, together with Capitals Coalition, UNEP-WCMC, IDEEA Group and Tecnalia, have released a new report highlighting the critical role of private capital in addressing nature’s decline. The report, produced as part of the A-Track project, emphasises the need to close the US$700 billion annual biodiversity finance gap through redirecting capital that is having a negative impact and scaling that which is having a positive impact.
Interviews with practitioners in the finance sector were carried out to investigate the misalignment between capital flows today and international goals such as the Global Biodiversity Framework (GBF). Limited capacity and knowledge, drawn-out timelines and high perceived risk, nascent regulatory and political landscape, and confusion on measuring impact were all noted as themes that created inaction. However, the main theme that emerged from nearly every conversation was that nature finance is often narrowly perceived as conservation finance with low returns, making it unsuitable for private commercial capital at scale.
To scale private capital’s meaningful contribution to a nature-positive economy, it must focus on both halting and reversing nature loss.
To illustrate this, the report uses the mitigation hierarchy as a lens through which to view how nature finance can contribute towards the goals of the GBF. Nature-positive financing consists of two distinct branches:
- avoiding and minimising pressures on nature and
- restoring and conserving nature.
This report clarifies that achieving nature-positive outcomes requires both halting existing damage to nature while also contributing to reversing nature loss, with financing and investments structured to achieve both objectives.
Finally, the report lays the foundation for future work on how private commercial capital can be part of the solution, including evidence of momentum through various financial mechanisms such as bonds and biodiversity credits, offering actionable insights for policymakers, bankers, insurers and investors.
Victoria Leggett, Equity Fund Manager and Head of Impact Development, Union Bancaire Privée - "There’s a perception that nature finance is restricted to the realm of conservation projects with low returns and low scalability. This report seeks to broaden the definition of nature finance, to include ‘halting’ nature loss (reducing existing pressures) alongside conservation efforts. Seen through this lens, nature finance becomes a term that can penetrate mainstream finance, across a range of asset classes and returns expectations. This gap – in both perception and financial flows, must be closed to achieve our ultimate aim of a nature positive economy."
Oliver Withers, Head of Nature, Standard Chartered - "When it comes to nature, we’re focused on mobilising finance to where it's needed to make a material impact towards both halting and reversing nature loss, in alignment with Target 19 of the Global Biodiversity Framework. As a bank, that's the key contribution we can bring and publications like this will play an important role in supporting that ambition."
Dr Nina Seega, Director, Centre for Sustainable Finance, CISL - "The central message of this scene-setting report is that the whole finance sector can play a meaningful role in addressing the nature crisis already today. Well-established financial mechanisms can be used to redirect private capital away from harmful activities and towards those that restore and conserve nature. Nature positive finance is more than impact investing, it includes reducing pressure on nature through mainstream finance."
Funding
This work has received funding from the European Union’s Horizon Europe research and innovation programme under grant agreement No 101082268 (A-Track project), as well as from the UK’ Research and Innovation (UKRI) and Switzerland’s State Secretariat for Education, Research and Innovation (SERI). The work was co-funded by CISL’s Investment Leaders Group and Banking Environment Initiative. The authors are grateful to the Naturance project and the ClimateWise members for productive discussions during the March 2024 Innovation Lab which they organised.
Citing this report
University of Cambridge Institute for Sustainability Leadership (CISL), Capitals Coalition, UNEP-WCMC, IDEEA Group and Tecnalia. (2024). Scaling Finance for Nature: Barrier Breakdown. A-Track. Cambridge, UK: University of Cambridge Institute for Sustainability Leadership
A-Track Nature+ Startup Accelerator
At CISL, we are excited to announce the forthcoming A-Track Nature+ Startup Accelerator, launching in 2025 as part of the wider A-Track project. This initiative, led by CISL’s Innovation team, Canopy, will empower startups working towards nature-positive solutions, providing them with the resources, mentorship, and partnerships needed to scale their impact. The accelerator will also serve as a practical testing ground for the nature-positive business model archetypes developed in CISL’s groundbreaking study, "Better business: Re-thinking business models for nature positive outcomes".
Through this programme, we aim to identify, support, and scale startups with business models that exemplify or enable nature-positive outcomes, restoring and protecting nature through their operations. With a history of accelerating over 500 sustainability-led startups in areas like net zero and circular economy, Canopy is uniquely positioned to foster impactful collaborations across industries, finance, and government. We are eager to explore partnerships that can enhance the accelerator’s reach and unlock transformative solutions, aligned with the European Green Deal and the Kunming-Montreal Global Biodiversity Framework. Get in touch to find out more.