Financing nature:a transformative
action agenda
A discussion paper
December 2023

1

Foreword

Naoko
Ishii

Razan
Al-Mubarak

Frannie
Léautier

Vera
SongweIzabella
Teixeira

Mari
Pangestu

Nature is vital to the health of our communities and the wealth of our economies. There is no life on earth without
nature, and no functioning economy without it either.
A resilient, thriving natural world is also our best chance of meeting climate and sustainable development goals.
Peatlands, wetlands, soils, forests and oceans absorb half of the world’s emissions. A productive and inclusive foodsystem strengthens food security and enhances livelihoods. Protecting nature and supporting equitable access to,and use of, our natural capital is an essential tool for peacebuilding.
Yet our current economic system fails to account for and properly value nature with catastrophic effect. Almost three
years after its publication, we have not heeded the dire warnings of the Dasgupta Review – which called for a radical
change in how we think, act and measure economic success to protect and enhance our prosperity and the natural
world. Humanity has crossed six of nine ‘safe and just’ Earth System Boundaries, and wildlife populations are declining
faster than any time in human history.
It does not have to be this way. The agreement of the Global Biodiversity Framework, alongside the Paris Agreement,
has catalysed significant public and private sector attention on nature. Around the world, we also see examples of
locally-driven, bankable solutions. From regenerative cocoa production in west Africa to forest restoration in the
Amazon and wildlife tourism that conserves and protects endangered species in Botswana, nature-positive models
that deliver for people, planet and prosperity are flourishing.
The question in front of us now is “why do these nature-based solutions remain fragmented pilots?’’. The simple answer isthat nature is not only undervalued, but it is largely seen as “uninvestable”. Nature is location-specific, meaning the metrics
of financing nature-based solutions are inherently more complex. A common approach for measuring and valuing nature
has yet to be mainstreamed, leading to both systemic underinvestment and misdirected investments in nature. Naturebased solutions attract only 15% of the money which goes to traditional climate solutions like clean energy and low carbon
transport. Harmful subsidies receive three to four times more financing than nature-positive investments.
Making nature-based solutions become mainstream investable opportunities requires a radically different approach.
We call on leaders to support an ambitious action-agenda to: (1) Set science-based targets and account for nature to
fully embed nature into economic decision making; (2) Strengthen domestic and global policy processes for naturefinance; (3) Ensure investments and policies are just, inclusive, and accountable; (4) Scale up project finance fornature (eg. through creating regenerative value chains); and (5) Deepen capital markets, mobilize private capital anduse public finance catalytically.
At COP27, the Independent High Level Expert Group on Climate Finance laid out a transformative agenda to unlock
investment for climate action in emerging markets and developing economies. This paper aims to deepen the action
agenda for nature finance, to inspire collective action across public, private and philanthropic finance in how nature isfinanced globally. We hope that COP28 is a watershed moment, where nature becomes firmly embedded in economic
decision making.

2

Contents
Foreword

2

Acknowledgements

4

Key Messages

6

Executive Summary

7

1.

The case for nature – delivering for people and planet

21

1.1

The current economic system finances nature loss and ignore nature’s value

21

1.2

Yet nature is the foundation of the economy and of life on Earth

24

1.3

Momentum to address nature loss is building across policy, business and finance26

2.

Systemic transformation agenda for nature finance

30

2.1

Set targets and account for nature

31

2.1.1

Science-based targets and disclosure frameworks

31

2.1.2

Natural capital accounting

33

2.1.3

Data generation and management36

2.2 Harmonize policies for effective nature financing
2.2.1

Integrated strategies and spatial planning38
38

2.2.2 Trade, tax and subsidy reform

40

2.2.3 Country platforms, implementation vehicles, and enforcement42

2.3 Ensure investments and policies are just, inclusive and accountable
2.3.1

43

Multistakeholder decision-making and design43

2.3.2 Community-led approaches to engagement with IPLCs

43

2.4 Expand project finance for nature
2.4.1

46

Regenerative value chains47

2.4.2 Carbon and biodiversity markets

47

2.5 Deepen capital markets, mobilize private capital and use public finance catalytically 50
2.5.1

3.

Unlock domestic capital markets

50

2.5.2 Ramp up development finance53

2.5.3 Build a comprehensive sovereign debt approach to nature

58

Four investment priorities to value intact nature, restore degraded nature

63

and address the drivers of nature loss
4.

Call to action

Annex – investment solutions, state of nature finance, investment needs

77
80

3

AcknowledgementsCore supporting team:

Barnabé Colin, Naseer Chia, Moritz deChaisemartin, Guido Schmidt-Traub,
Katherine Stodulka

With special thanks
for their expert input:

Jeroen Huisman, Julia Turner, Johanna
Schlueter, Federico Apéstegui Guardia;
Puninda Thind, Roopal Kanabar (Climate
Champions); Camille Maclet (CBD); Rodrigo
Quintana (TNC); Mark Gough (Capitals
Coalition); Simon Zadek (NatureFinance);
Rodrigo Quintana (TNC); Guillaume
Lafortune (SDSN); Nathalie Olsen, Aurelia
Blin (UNEP).

This action agenda has been commissioned by the Center for Global Commons at the Universityof Tokyo, led by a group of expert practitioners and developed in partnership with Systemiq. It
serves as a companion to the Report of the Independent High-Level Expert Group on Climate
Finance (IHLEG) and its follow-up, to be launched at COP28, and a follow-up to the UN High-Level
Climate Champions report “Mobilizing private capital for nature”.
The authors welcome feedback and engagement on this paper and your collaboration toaccelerate this critical agenda.

45

Key Messages
Nature is vital for protecting the health of our communities and the wealth of our economies.
Yet the current economic system continues to incentivize destructive activities, leading tonature breakdown. When nature fails, it disproportionately harms Emerging Markets andDeveloping Economies (EMDEs)

US$140tr

US$530bn

47%

the value of ecosystemservices from nature, 1.5 times
global GDP

paid in subsidies harmful tonature annually – 3.3x the total
amount of nature financeof wealth creation in
low-income countries
depends on nature

Conserving, restoring, and sustainably using nature is critical to achieving
climate and sustainable development targets
AroundAroundClose toAroundOver

11.3 GtCo2e

50%

80%

US$10tr980

nature’s carbon
mitigation potential– equivalent to
stopping burning oil
globally

climate-resilience
infrastructure needs
by 2050 could be met
with nature-based
infrastructureof humanity relies
on nature for
medicine andtreatment

economicopportunities in anature-positive
economymillion people are
employed by nature(farming, fishing), or
27% of the global
workforceYet nature is chronically underfunded. Climate finance is insufficient, inefficient, and unfair –nature finance is worse. We urgently need to scale investment in nature-positive solutions
Only

1/6

18%

nature receives theequivalent of one sixthof flows going to better
energy systemsof total nature financecomes from private
capital70%

2%of finance targets
conservation andrestoration – more is needed
for sustainable agricultureof finance goes to
Indigenous peoples and local
communities – the guardiansof 80% of intact natureUrgent, systemic action is needed to mobilize capital for nature by transforming theenabling policy environment, proving business models, and harnessing financial innovation

1

2

3

Set targets andaccount for nature

Harmonize policies for
effective nature financing

Ensure investments are just,accountable, and inclusive

Science-based targets, disclosure
frameworks

Integrated strategies and spatialplanning

Multistakeholder decision making
and design

Natural capital accounting

Country platforms, implementation
vehicles, enforcement

Community-led approaches toengaging IPLCs

Data generation and management

Trade, tax and subsidy reform

4

5

Scale up project
finance for nature

Deepen capital markets,mobilise private capital, use
public finance catalytically

Regenerative value chains

Unlock domestic capital markets

Carbon and biodiversity markets

Ramp up development financeComprehensive sovereign debt
approach to nature

6

Executive Summary1

The case for nature –delivering for people and planet
Naturei is the foundation of the global economy. It is critical to the health of ourcommunities, the wealth of our economies, and delivery of the Paris Agreement andSustainable Development Goals. Yet our economic systems fail to adequately value
nature. The impacts are stark – we are experiencing nature breakdown, the impacts ofwhich are most acutely felt by rural populations in developing economies.
We lack a harmonized approach to dealing with the complexities of measuring andaccounting for nature, leading to systemic underinvestment in nature-positiveii
solutions and misdirection of existing investments towards harmful activities.
Nature financeiii receives just one-sixth of the capital invested in low-carbon energy.
An approach that systematically embeds nature in decision-making is needed.
Growing political momentum, financial and business model innovation, andcommunity and country leadership create an unprecendented opportunity to ramp
up ambition and action.
i
ii
iii

Nature: the natural world, with emphasis on the diversity of living organisms and interactions among themselves andwith their natural environment. This includes categories such as biodiversity, ecosystems, ecosystem functioning, thebiosphere, humankind’s shared evolutionary heritage, and biocultural diversity (adapted from Diaz, S. et al. [2015])
Nature-positive: a high-level goal and concept describing a future state of nature (e.g., biodiversity, nature’s contributions to people) that is greater than the current state. (SBTN 2020, Abridged Glossary for Initial Guidance)
Nature finance: finance that contributes to activities that conserve, restore or sustainably use nature, and that aligns
financial flows with the goals of the Global Biodiversity Framework and Paris Agreement (adapted from OECD andConvention on Biological Diversity)

7

The current economic system fails to adequately account for and value nature’s
contribution. It incentivizes harmful activities that disproportionately affect the mostvulnerable countries and communities. Our failure to adequately account for nature has led
to nature breakdown – humanity has crossed six of nine Earth system boundaries, and wildlife
populations have declined by 69% on average. Impacts are most severe in emerging markets
and developing economies (EMDEs), whose rural populations rely heavily on nature for theireconomic well-being and are most vulnerable to its depletion.
The financial system is inefficient, insufficient and unfair1 – it creates disincentives todeploy capital in EMDEs and creates barriers to investing in climate action. These barriers
are even higher when investing in nature:•

The metrics of financing nature are inherently complex. Compared to climate (where
reducing greenhouse gas emissions is typically the sole indicator of progress), tracking
nature impact requires location-specific data across multiple variables, such as freshwater
availability, soil health and biodiversity intactness. Defining and monitoring locationspecific metrics and solutions is essential to global, regional and local action on nature,alongside ensuring this data can be integrated into financial and policy decision-making inan efficient and actionable way.

•

Harmonized approaches for measuring and valuing nature have yet to bemainstreamed. Shifting towards nature-positive activities at scale requires a harmonizedapproach in the way we understand, measure and account for our relationship with nature.
Without this, it is more difficult to integrate nature in decision-making processes (e.g.,
investment, tariff regimes, government accounts, insurance policies, risk management).

•

Nature-positive project financing faces added challenges compared to investments
in energy, mobility or industry. Investors perceive high risks to investing in nature, due toupfront costs, long payback periods, lack of training for farmers, fishers and loggers, and theoften small or disaggregated nature of projects. Moreover, some of the priority solutions innature do not have underlying business models, whereas in the rest of the climate financeagenda, the majority does.

•

Environmental crime, such as logging, illegal mining and the trade and trafficking of
wildlife threatens the survival of biodiversityiv. It exacerbates climate change, damages
ecosystemsv, and harms Indigenous Peoples and Local Communities (IPLCs)vi.

iv
v

vi

8

Biodiversity: the variability among living organisms from all sources including, inter alia, terrestrial, marine, and otheraquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species,
between species, and of ecosystems. (Convention on Biological Diversity)
Ecosystem: “all the living things in an area and the way they affect each other and the environment” (Cambridge
Dictionary). Ecosystem functions are “the physical, biogeochemical, and ecological components, processes, andoutputs of ecosystems that are driven by multiple controls, such as abiotic and climatic factors, ecosystem structure,
biodiversity, human disturbance, and land management” (Duncan et al., 2015). These functions largely depend on
ecosystem condition and quality (adapted from NGFS)
IPLCs: typically, ethnic groups who are descended from and identify with the original inhabitants of a given region, in
contrast to groups that have settled, occupied or colonized the area more recently (IPBES)As a result, the conservation, restoration, and sustainable use of nature is chronicallyunderfunded, resulting in a significant need for additional investment. Finance for nature
is skewed towards conservation, although production systems – such as agriculture – drive
the majority of nature loss. Private finance is insufficiently mobilized, and not enough public andprivate finance goes to EMDEs, where it is most urgently needed.
•

Nature finance is skewed to support conservation and restoration activities, which
receive 70% of current financing. Supporting these activities is critical and they remain
deeply under-funded. Scaling nature finance overall should combine conservation andrestoration with investment in a systematic transformation of commodity production andinfrastructure development.

•

Only 18% of nature finance is private capital. International commitments such as the
Global Biodiversity Framework emphasize that we cannot achieve goals without mobilizing
financial resources from all sources, public and private, and scaling the use of more effective
blended and innovative finance solutions. In 2022 alone, at least US$5 trillion of private
capital was deployed on activities with direct negative impacts on nature, across sectors.2•

Most nature finance comes from, and stays in, advanced economies. Close to 80% of
global nature finance flows originate from and are directed to advanced economies. Yet 60%
of EMDEs are in debt distress, which restricts the ability of sovereigns to invest in nature.

•

Harmful subsidies receive three to four times more (US$530 billion) financing thannature-positive public investments in agriculture, fisheries and forestry3, driving 14% of
global deforestation and dwindling fish stocks.4•

A lack of integrated regulation and enforcement of environmental crime costs theglobal economy almost $300 billion a year. This is punishing people living in poverty,
70% of whom depend on wild species for food and income.

Yet nature is the foundation of our economies and our wellbeing. Humanity relies on a stable
and resilient Earth system: our air, food and the water we drink ultimately depend on the stableprovision of nature’s services. Put simply, without nature life ceases to exist.
Nature also fosters human health and wealth beyond economic value. IPLCs have built
varied ways of understanding and relating to nature. Incorporating these diverse values, views,
and solutions into decision-making not only embraces critical principles of justice and inclusion,
but also ensures that the global community benefits from knowledge, traditions, and innovations
that have historically delivered a safe and just approach to sustainable development.

9Nature is critical for delivering on the Paris Agreement and the UN Sustainable
Development Goals (SDGs):•

Safeguarding nature is essential to mitigating climate change. Peatlands, wetlands,
soils, forests and oceans absorb half of total anthropogenic emissions and store twice asmuch carbon as the atmosphere. Nature’s mitigation potential of 11.3 gigatonnes CO2e by
2030 is the equivalent of stopping burning oil globally.

•

Safeguarding nature is the most cost-efficient way of adapting to climate change.
Replacing or complementing built infrastructure with plants, trees or other alternatives
could provide 50% of climate-resilient infrastructure needs by 2050 and save EMDEs atleast US$100 billion in costs of climate change annually.

•

Safeguarding nature guarantees millions of jobs. An estimated 980 million jobs infarming, fisheries, forestry and tourism – one-quarter of the global workforce – dependon the effective management and sustainability of healthy ecosystems. Meanwhile, anestimated 400 million additional jobs could be unlocked in sustainable agriculture and newmarkets for conservation and restoration.

•

Safeguarding nature means fighting poverty, enhancing food security, and peacebuilding. Nature loss enhances inequalities between and within countries; the world’s
poorest lose access to their means of subsistence and countries become trapped inpoverty. Unsustainable land and sea use makes it harder to feed a growing population.
Nature loss amplifies threats leading to social destabilisation and violence. Four main
factors of insecurity – access to water, food, natural disasters, and migration – can beaddressed by transformative action on nature.

•

Safeguarding nature guarantees human health. Ecosystem services purify water,
regulate air quality, and enable soil formation. The entire population relies on biodiversity
either for traditional medicines or for pharmaceutical discoveries. 200 health journals havecalled on the United Nations to treat the environmental crisis as a global health emergency.

The good news is that political momentum, financial innovation, and technologicalsolutions are converging to turn the tide on nature loss. We must seize this momentum tobuild a systemic transformation agenda for nature.
•

Targets and policy objectives: As the Paris Agreement did for climate, the Global
Biodiversity Framework has focused attention on nature. Nature was central to the G7Communique for Action, the recent G20 New Delhi Leaders’ Declaration called for bettermeasurement of nature data, and it is prominent in the COP28 agenda.

•

Financing innovation: increasing recognition of the risks from nature loss has led tothe development and implementation of innovative financial instruments, such as debt

10

conversions for nature (e.g., Belize, Ecuador, Gabon), blended finance vehicles (e.g.,
Vumbuzi Impact Multiplier, Global Fund for Coral Reefs, IDH Farmfit), and innovative tax
schemes (e.g., Limpopo Biodiversity Management Agreements).
•

Voluntary initiatives and corporate commitments: the Science-based Targets for
Nature and the Taskforce on Nature-related Financial Disclosures are building bridges
between nature, business and finance, accelerated by a recognition of the approximately
US$10 trillion in business opportunities across nature.

•

Technological breakthroughs: a revolution in nature data – enabled by remote sensing,
sensors, artificial intelligence, environmental DNA, and drones – is expanding ourunderstanding of nature and our ability to measure, track and account for nature.

2

A systemic transformation agenda for nature
Rebuilding our economy’s relationship with nature will require coordinatedpublic and private sector action across five interventions: 1) Setting targets andaccounting for nature; 2) Harmonizing policies for effective nature financing; 3)
Ensuring investments and policies are just, inclusive and equitable, 4) Expanding
project finance for nature; and 5) Deepening capital markets, mobilizing private
capital and using public finance catalytically. Through these actions in tandem, we
can firmly embed nature in decision-making and support the acceleration and scaleof nature-positive action to deliver on the Global Biodiversity Framework, Paris
Agreement, and Sustainable Development Goals.

1.

Set targets and account for nature

Building a sustainable economic system requires adopting harmonised frameworksof measuring and valuing different types of capital (eg. economic, natural, social). The
mainstreaming of a natural capitalvii accounting framework, supported by science-basedtargets and high-quality nature data to accurately measure and value nature outcomes canensure that nature is fully embedded in decision-making processes. This should be applied
to policymaking, business strategies, investment decisions and procurement standards.
•

Science-based target setting: The releases of the Science Based Targets for Nature(SBTN) and Taskforce on Nature-Related Financial Disclosures (TNFD) framework areoperationalizing nature-related targets, disclosure and investor engagement. Theseframeworks have catalysed action among corporates and financial institutions, withseveral organizations now piloting interim SBTN and TNFD guidance. Such initiatives are
increasingly supported by regulation: Article 29 of the French law on Energy and Climate
requires financial institutions to disclose information about portfolio impacts on biodiversity.
These initiatives should be widely adopted and mainstreamed.

vii

Natural capital: the stock of renewable and non-renewable natural resources (e.g. plants, animals, air, water, soils,
minerals) that combine to yield a flow of benefits to people. (Capitals Coalition [2016], Natural Capital Protocol)

11•

Natural capital accounting: Shifting towards nature-positive activities at scale requires
a transformation in the way we understand, measure, and account for our relationshipwith nature. The lack of a harmonized approach to accounting for nature has hampered
the mainstreaming of nature-positive practices but frameworks like the United Nations
System of Environmental-Economic Accounting (UN SEEA) and the Capitals Coalition’s
Transparent Methodology now make it easier to factor nature into decisions.

•

Data access and management standards: 70% of investors believe a lack of data is a key
barrier to investments that support nature and biodiversity. Whilst the quality of nature data
is improving, and enough to drive initial action, current stocks of publicly available data is notcomprehensive, updated or accurate enough to baseline the ‘state of nature’ and thus totrack changes to natural capital over time. This prevents financial institutions from developing
nature-positive products. More collection and disclosure of data can accelerate the use ofdecision-quality data for nature and support the direction of capital towards nature.

2.

Harmonize policies for effective nature financing

Political momentum is growing, globally, and regionally. Aligned policy processes – oftendelivered at national level through international platforms – can improve planning, incentives,
monitoring, governance, and implementation for climate, nature and development.
•

Better planning (e.g. through spatial planning processes): Governments need to
manage trade-offs between optimizing for different climate, nature and development
outcomes, for example when deciding where to award concessions for industry against
designating Protected Areas. National spatial planning processes - such as thosepioneered by Costa Rica, Paraguay, South Africa and others - could identify high-riskareas off-limits to development, seek out opportunities for nature-based solutions within
production systems, support rigorous management of development impacts, guide therestoration of degraded areas, and codify these priorities in national maps of land use.

•

Better incentives (e.g. through nature-positive subsidies): Governments shouldincorporate nature-related risk management into fiscal recovery packages and budgetaryplanning, revise tariff and subsidy regimes – including the progressive repurposing of$530billion in annual harmful subsidies5 – to support sustainable agriculture and fisherymodels, and align their own procurement with nature-positive outcomes.

•

Better governance and implementation (e.g. through country platforms): Politicalagreements are needed to support transformative change for specific long-term objectives.
Country platforms – such as those Brazil’s Ecological Transformation Plan, and Country
Packages under the Forest and Climate Leaders’ Partnership - can provide a country-led
institutional co-ordination mechanism to identify climate, nature and development priorities,
structure financing instruments to deliver them, build an enabling policy environment, andmobilize bilateral, multilateral and philanthropic donors, as well as private sector actors.

12•

Better monitoring (e.g. through better monitoring, reporting and verification
systems): ensure that commitments are being enforced (e.g. protected areas, prevention ofenvironmental crime) and that action for nature is accurately tracked (e.g. to enable payment
for ecosystem services) through robust MRV systems and enforcement mechanisms.

3.

Ensure investments are just, accountable, and inclusive

Including women, marginalized communities and IPLCs in the design of a nature-positive
economy is essential because they are crucial managers of landscapes and seascapes.
Ensuring the inclusion of these communities in the design, governance and implementation ofpolicies and investments, and the codification and respect of their land rights, is not only a justimperative but a key enabler of nature’s survival.
•

Secure IPLC rights over assets and enhance their resource management: ensuringcommunities conserve or reclaim land tenure rights should be the foundation of any
approach engaging IPLCs.

•

Ensure IPLC inclusion in the creation and governance of PAs and MPAs: for example,
in September 2023, at the UN General Assembly, Maori leaders called on the world
to confer legal personhood to the whale and pledged to work together to implement
Indigenous customary protections across whale migration routes between critical feeding
and breeding grounds. This has created the world’s largest indigenous MPA network, ofover a 2,200,000km2 area.

•

Design place-based financing mechanism with, and for, IPLCs and smallholder
communities: encouraging the creation, strengthening and broadening of financing
tools led by or designed for IPLCs and rural or marginalized communities, with a focus on
reliability of access to long-term funding.

4.

Expand project finance for nature

One of the biggest challenges to mobilizing private sector investment is identifying astrong pipeline of bankable projects. Despite pledges seeking investments with measurable
environmental benefits and financial returns, the perceived lack of clearly investible projects still
limits capital flows. This is because the scale-up of nature-positive pipeline – at the supply level– faces constraints related to the structure of projects and value chains, and the need for project
preparation and technical assistance throughout.
•Scaling regenerative value chains for soft commodity production and ecosystem
restoration requires pairing financial support with technical assistance and highintegrity value chain standards. This can help draw in necessary commercial supply
chain finance, carbon finance, and other market-based solutions.

13

Transparent reporting standards for insetting can help push incumbents such as
massive international traders towards regenerative value chains. Pipeline accelerationand value chain incubation, as demonstrated by Regeneration, can benefit from publicprivate collaboration and engagement at country or landscape level. Incubators need
the involvement of: corporates (as product off-takers), governments (through theirpolicies), financial institutions and technical assistance providers, including the support
philanthropic funding and impact investing.
•

Carbon and biodiversity markets will be critical to value nature and fix market failures.
An increasing range of private-sector business models are rewarding nature protection.
As biodiversity markets grow alongside carbon markets, ensuring the integrity of design,
governance and implementation will be critical. Interest is growing in creating connected
or fully integrated global carbon and nature markets, including through supervised carbon
stock exchanges, jurisdictional credit markets and national credit frameworks.

5.

Deepen capital markets, mobilize private capital and use publicfinance catalyticallyAt the demand level, neither domestic nor international capital is moving fast enoughor at the scale required. Capital markets have traditionally viewed the risk-reward ratio
of investing “into” (e.g., conservation) and “for” nature (e.g., sustainable agriculture) as
prohibitive. An end-to-end de-risking infrastructure and strategic use of concessional
capital to de-risk private investment are needed to mobilize more and better naturefinance. Investment is constrained by: the time-value gap of investments, the need for recurringinterventions (conservation and restoration), the relatively small size of investments, thegeographical aggregation of risks in a landscape (agriculture, fisheries, forestry, infrastructure),
and the increased vulnerability of habitats and frequency of natural hazards (all assets).
•

Unlock domestic capital: domestic resource mobilisation for nature should focus onbringing liquidity to nature stewards and SMEs, through affordable, accessible financing in
all forms: debt, equity, and blended finance.
•

Domestic capital markets are uniquely placed to engage the local private
sector and consumers. They have the footprint and capacity to deliver financeat retail level (local banks, asset managers, corporates, informal financiers andnational DFIs). Shifting agricultural value chains and markets in EMDEs requires
providing better access to financing for smallholder farmers and small and medium
enterprises (SMEs).

•

Farmers and fishers (nature stewards) require better access to working
capital. Liquidity shortages create a huge food security risk in Asia and SubSaharan Africa where smallholders produce 80% of the population’s food. It also
prevents multi-year agricultural transitions. Liquidity shortages can be addressed14through: secured long-term commercial contracts, the creation of bank accounts,
supplier financing solutions including cash management and working capital, debt
to early or mid-stage companies with limited or flexible collateral requirements;
access to small loans and credit (local currency) for working capital and long-term
finance, and technical assistance to borrowers for documentation and reporting.
•More mechanisms to enhance domestic bank capacity are needed. Priorities
include: building awareness and capacity, creating incentives for banks to lendthrough guarantees, mechanisms for international commercial banks to increase
local banks’ capacity, and facilitating the distribution of nature-positive finance (e.g.,debt, insurance, equity) portfolios.

•

Corporates with outsized impact on value chains (e.g., coffee, cocoa, palm oil)should commit to reducing deforestation in their supply chains and help build
consumer demand for more sustainable products. These companies need tocommunicate to shareholders that long-term activities which may impact shortterm value are critical and should be rewarded.

•

Ramp up development finance: development banks must be central to creating
an effective response and bringing diverse actors to support a shared agenda oftransformative development. As detailed in the Triple Agenda Roadmap, MDBs must be
bigger, better, and bolder. Their capacity to address market failures and act as a source ofpipeline, makes them essential to mobilize private capital through risk mitigation and risk
pooling, address nature-related risks, and provide transition signals to the wider system.
•

Development banks could further strengthen the impact of their US$18.7
trillion assets through mandates and targets for nature finance. This includes:
scaling MDB adaptation finance allocations, building ambitious climate and naturetransition action plans, creating explicit targets for nature within financing forclimate, and capacity building – at the interface of agricultural intermediaries, market
access players, microfinance institutions and other value chain actors – to increasefinancial inclusion and access to finance for smallholders and communities.

•

Development banks can build bridges between sovereigns and private actors.
Natural Capital Labs could be structured as incubators for innovative financing fornature and solutions addressing barriers.

•

Development banks, in particular MDBs, should further develop and promotecatalytic and concessional instruments. Concessional capital used fortechnical assistance and project preparation can help unlock private investment
by developing a stronger project pipeline. Risk transfer – hedging on currency risk,
political risk or commodity price insurance – can be provided by DFIs and MDBs toaddress a host of risks in EMDEs. Guarantees and ‘first loss’ tranches – are highly
catalytic but under-utilized – can target many risk types and attract private capital
players both domestically and internationally.

15

•

Build a comprehensive approach to integrating nature into sovereign debt markets:targeted mechanisms – debt-free financing, debt buybacks, and refinancing tied to naturepositive outcomes – could contribute to rebalancing sovereigns’ financial stability andenhancing stewardship to future generations.
•

EMDEs face mounting economic pressure as debt burdens rise – 60% of
EMDEs are either in or close to debt distress, placing severe limits on public
investment in nature. This is reinforced by the unequal architecture that makes
EMDEs access to financing inadequate and expensive.

•

There is growing momentum around debt conversions for nature, which
provide a blueprint for scaling and replication. In 2023, debt-for-naturetransactions were approved in Ecuador, Gabon and Peru – with a total value of
US$2.1 billion, or 20 times more than over the past decade. While recognizing thelimitations of these instruments, transactions over the last year provide a model
for co-investment platforms, in which grantors, guarantee providers, insurers andtechnical assistance providers coordinate to provide streamlined services acrossdifferent instruments and transactions, using shared impact principles, aligned
objectives, and operating as “deal teams”. (case study: Galapagós Blue Bond)•

To address a larger share of the total debt stock, nature covenants should be
systematically included in debt restructuring processes. Given the deadlock of
the Common Framework Initiative over reforming the sovereign debt architecture,complementary ad-hoc approaches will be necessary. Nature and climate KPIs
could also be built into debt service relief, such as the Debt Service Suspension
Initiative (DSSI), to complement and reinforce policy-based conditionality.

16

3

Four investment priorities to value intact nature,
restore degraded nature, and address thedrivers of nature loss
If implemented, the systemic transformation agenda set out in Section 2 above
would create an enabling environment supporting nature-positive solutions torapidly replicate and scale. We urgently need to accelerate investments that
address the drivers of nature loss, going beyond conservation and restoration
towards a shift in critical sectors, e.g. agriculture, infrastructure and extractives.
Many nascent success stories show that we have the tools and knowledge todeliver additional investment needs – valued at around US$400 billion annually by2030 – and re-orient existing capital away from harmful activities. The increasing
range of solutions across these investment priorities differ in risk-return profile andcommercial viability. Scaling them requires mobilizing the full spectrum of public
and private capital. In some cases, and unlike for energy systems, public capital
only, combined with regulation and standardisation, will be the critical unlock, whileother opportunities will be suited to commercial capital only.
Nature finance should drive more capital “into” nature – conservation and restoration – but
also “for” nature – shifting agriculture, fisheries, forestry, mining, infrastructure – towards
nature-positive outcomes. The Intergovernmental Science-Policy Platform on Biodiversity andEcosystem Services (IPBES) highlights five key drivers of nature loss: land use change, climatechange, pollution, invasive alien species, and natural resource use and exploitation. Naturefinance should focus on agriculture, forestry and fishing, which is responsible for 85% of species
loss, 80% of deforestation, 70% freshwater use, and drive US$12 trillion in “hidden costs”.
The good news is that a range of bankable nature-positive solutions are flourishing,delivering positive nature, climate and social impact as well as financial returns
for communities, countries, companies and investors. These can be broken down into
four priorities:•

Investments into ecosystem conservation and restoration: the Global Biodiversity
Framework calls for the conservation of 30% of terrestrial, freshwater and marine
ecosystems, and the restoration of 30% of degraded areas, by 2030. This should leadto the restoration of 150 million hectares of degraded agricultural land – an area larger
than Europe.

•

Investments in nature-positive food, forestry and fishing: upfront financing to nature
stewards will be essential to implement agroforestry, no-tillage farming, multi-trophic
aquaculture, improved nutrient management, and rotational grazing, for example. Financewill be needed for technical assistance, machinery, or cost amortisation to nature stewards
in the start of the transition period.

17•

Investments to shift diets: Global diets need to converge towards local variations of
the “human and planetary health diet”, predominantly plant-based diets which include
protective foods (fruits, vegetables and whole grains), a diverse protein supply, andreduced consumption of sugar, salt and highly processed foods.

•

Investments to reduce nature impact of infrastructure and extractive sectors
and develop better production practices: This includes mining, metals, and urban
infrastructure, which should include a shift towards less harmful practices across the
project lifecycle. It also includes water, waste and wastewater utilities, which prevent
pollution of critical ecosystems.

Nature-positive solutions offer different risk-return profiles and call for different
types of financial capital. In some cases, public capital only, combined with regulation andstandardisation, will be the critical unlock, while other opportunities will be suited to commercial
capital only. Scaling the most successful solutions requires mobilizing the full spectrum of public
and private investment, deployed alone or in combination. Catalytic capital to kick-off first-ofa-kind projects (grants, concessional) will be critical for many sectors, but de-risked and purecommercial capital become more relevant as projects mature. Risk mitigation and technicalassistance will be needed across investment priorities, especially before nature reaches
commercial viability.

4

An action agenda
In the face of nature breakdown, urgent action is needed to transition to adevelopment model that adequately values nature’s contribution to people
and planet. This paper is a call to action for delivering a transformative
agenda to rapidly accelerate flows of private and public capital “into” and“for” nature, and embed nature firmly into decision-making. To accelerateaction, we propose the following key actions, to be launched at or around
COP28, and to be developed in the next two years, until COP30 in Belém,
Brazil, which will represent an opportunity to take stock of progress:

18

1.

Set targets and account for nature•

Adopt natural capital accounting standards in public and private investment andstrategic planning decisions, building on frameworks like UN SEEA and the Capitals
Coalition’s Transparent Methodology, and on early examples of national accounting
initiatives (eg. as seen in Rwanda).

•

Set science-based targets for climate and nature in line with SBTi and SBTN
guidance, and require commitment to science-based targets as a criteria for public andprivate investment.

•

Invest in the collection and sharing of high-quality nature data, promote and invest innational data standards and data sharing facilities and adhere to CARE and FAIR principles
to ensure ethical governance of nature data collection and use.

•

Set regulation for the disclosure of nature risks, impacts and dependencies, as
piloted through France’s Article 29, and commit to ‘radical transparency’ disclosing climate
and nature risks, impacts and dependencies under TCFD and TNFD.

2.

Harmonize policies for effective nature financing•

Develop and support comprehensive and up-to-date National Biodiversity Strategies
and Action Plans (NBSAPs) and fully integrate nature into Nationally Determined
Contributions (NDCs), leveraging recommendations and cross-country collaboration
initiatives on from the NBSAP Accelerator Partnership, and its knowledge portal•

Conduct and support integrated, inclusive spatial planning processes in line withtarget 1 of the Global Biodiversity Framework, to develop a national land use plan thatdelivers on climate, nature and development targets, ensuring IPLC engagement, andwhole-of-government approach for implementation•

Promote ambitious national standards and champion multilateral initiatives fornature, such as due diligence and disclosure legislation, bilateral and global agreements
on ending wildlife crime, nature-positive trade provisions and subsidy regimes•

Develop, deliver, and advocate for the mainstreaming of integrated policy processes
and build private and public sector collaboration to accelerate finance for naturepositive outcomes, for example through country packages (e.g., Brazil EcologicalTransformation Plan, Forest Climate Leaders’ Partnership)

3.

Ensure investments are just, accountable, and inclusive•

Integrate IPLCs into the design, governance and implementation of investments,
policies and strategies whenever these have direct or indirect contact with IPLC lands•

Secure IPLC land tenure rights as the foundation of engagement with IPLCs•

Commit to principles of justice and equity, including around country ownership andequitable pathways (requiring access, affordability and additionality)

19

4.
•

Expand project finance for nature
Scale up regenerative value chains through guaranteed off-take agreements forregenerative commodities, and innovative financing facilities that aggregate investment,
provide technical assistance, and strengthen value chain linkages•

Build high-integrity carbon and biodiversity markets with robust design, governanceand implementation structures, powered by innovative financing mechanisms

5.

Deepen capital markets, mobilize private capital, and use publicfinance catalytically•

Unlock domestic capital markets, including banks, asset managers, and DFIs in EMDEs,
by building supplier financing solutions to close liquidity gaps, and stimulating domestic
corporates’ and private markets’ commitments towards regenerative value chains•

Ramp up development finance by increasing DFI and MDB mandates and targets fornature finance, strengthening MDB collaboration with the private sector through Natural
Capital Labs, and supporting MDBs in pioneering guarantee mechanisms, novel forms ofrisk insurance (including sovereign risk), and public finance support for innovation•

Build a comprehensive sovereign debt approach to nature by building co-investment
platforms to replicate debt conversions for nature, and integrating nature covenants in debt
restructuring and sovereign credit ratings

20

1

1.1

The case for nature – deliveringfor people and planet

The current economic system finances natureloss and ignores nature’s value, leading to nature
breakdown“When we put nature on our balance sheets, you’ll know Africa is wealthy”
William Ruto, President of Kenya6
The current economic system fails to adequately value nature’s contribution andincentivizes harmful activities. This has led to us breaking through ‘safe and just’ Earthsystem boundaries7. Human production and consumption are destroying stocks of natural
capital, causing nature to decline at unprecedented rates8. One indicator of change – the average
69%9 decline in the abundance of monitored species across the animal and plant kingdoms –demonstrates the speed and scale of pressure our economies are putting on nature. In short, thedemand for nature’s products and services is grossly exceeding its ability to supply.
The impacts of climate change and nature loss disproportionately affect the mostvulnerable countries and communities. Rural communities in EMDEs are both heavily reliant
on nature for their economic well-being and most vulnerable to its shocks and depletion10.
Approximately half of lower-income countries’ wealth creation depends on direct contact withnature11, while 85% of biodiversity hotspots are situated in EMDEs12. In low-income countries,
agriculture accounts for around 25% of gross domestic product (GDP), 40% of net exports and21

over 60% of employment13. Catastrophic drought in Ethiopia and Kenya and floods in Haiti andPakistan are clear signs of the need to transition to a ‘safe and just’ economic model that fully
accounts for nature’s contribution to our well-being and resilience.
Yet nature breakdown represents a planetary emergency and a generalized economicrisk. Central bankers stress-testing national banking sectors have been very clear: the lossof ecosystem services is a systemic risk14, with 45-72% of securities held by national financial
institutions dependent15 on ecosystem services. Industries that are moderately to highly dependent
on nature account for half of global GDP (US$44 trillion)16, with critical supply chains at risk fromnature breakdown. For example, the dramatic decline in insect populations, termed the “insect
apocalypse”17, threatens US$235-577 billion of crop production that depends on pollination18.
The IHLEG on Climate Finance19 has highlighted that the financial system is inefficient,insufficient and inequitable, creating disincentives to invest in EMDEs and barriers tofinancing climate action. Mobilizing capital for nature is even more challenging thantransforming the energy system. There are intrinsic complexities to bridging between natureand the economy:•

The metrics of financing nature are inherently complex. Compared to climate(where reducing greenhouse gas emissions is typically the sole indicator of progress),tracking nature impact requires location-specific data across multiple variables, such as
freshwater availability, soil health and biodiversity intactness. Defining and monitoring
location-specific metrics and solutions is essential to global, regional and local action on
nature, alongside ensuring this data can be integrated into financial and policy decisionmaking in an efficient and actionable way.

•

Harmonized approaches to measure and value nature are yet to be implemented atscale. Shifting towards nature-positive activities at scale requires a harmonized approachin the way we understand, measure, and account for our relationship with nature. Although
there are standardized approaches to integrating the value of nature in decision-making(e.g., UN SEEA20, Natural Capital Protocol21), these have yet to be implemented in criticalsystems and processes (e.g., tariff regimes, government accounts, insurance policies, risk
management), which has led to suboptimal decision-making that results in nature loss.

•

Nature-positive project financing faces added challenges compared to investments
in energy, mobility or industry. Investors perceive higher risks to investing in nature, due
to upfront costs, long payback periods, lack of training for farmers, fishers and loggers, theoften small or disaggregated nature of projects, and the limited track record of investment
success. In some cases, investments in nature do not have underlying business models,
whereas in climate finance (apart from agriculture), a majority do.

•

Environmental crime, such as logging, illegal mining, and the trade and traffickingof wildlife, threatens the survival of biodiversity, exacerbates climate change andhas significant negative impacts on ecosystem health and the livelihoods of IPLCs.

22

Lack of integrated regulation and enforcement is leading to a leakage of up to almost $300
billion from the global economy annually – this is most acutely felt by the world’s poor, 70%of whom depend on wild species for food and income.
As a result, the conservation, restoration and sustainable use of nature is chronicallyunderfunded, requiring approximately US$340-467 billion in additional investments (seetechnical annex). This is clear given the current flows of nature finance:•

Nature is still narrowly viewed through the lens of conservation and restoration,
which receive the lion’s share of nature finance. Supporting activities such as Protected
Areas (PAs) and Marine Protected Areas (MPAs) – while still deeply underfunded andcritical – receive approximately 60% of public domestic nature finance and 70% of private
nature finance22. To tackle drivers of nature loss in a systemic way, finance needs to support
a comprehensive transformation of commodity production and infrastructure development.
The tropical forest frontier is a case in point: PAs are critical macro levers to change, buteven under the most ambitious targets for protecting natural landscapes, only one third of
the forest frontier will be protected from commercial pressures. To protect the remaining
370 million hectares, sustainable business practices must grow by at least 20% annually23.

•

Only 18% of nature finance comes from the private sector24, including corporates.
International commitments on climate, biodiversity and development emphasize that wecannot achieve goals without mobilizing private capital. To unlock this investment, a smarteruse of blended finance mechanisms will be needed to reduce risks – real and perceived –especially related to nascent nature-positive business models and technologies. In 2022
alone, at least US$5 trillion of private capital was deployed on activities with direct negative
impacts on nature, across sectors.25•

Most nature finance comes from and stays in advanced economies. Around 80%
of global nature finance flows originate from and are directed to advanced economies26.
With 60% of EMDEs in debt distress, the ability of EMDE sovereigns to invest in nature isconstrained, emphasizing the need for more and better financing to flow to EMDEs.

•

Most of the finance aligned with nature-positive objectives comes from domestic
sources of finance, especially government agencies, national development financeinstitutions, and corporations with in-country operations, while the Global Biodiversity
Framework calls for increasing international financial resources to at least US$200 billion
annually by 202527.

•

Harmful subsidies in agriculture, fisheries and forestry continue to receive three tofour times more28 (US$530 billion) financing than nature-positive investments29.
Nature-negative public finance, composed of price incentives and fiscal transfers to “anyactivity with a direct negative impact on nature, based on explicit subsidies for which
global datasets exist”30, undermines investments in nature-positive projects. Agricultural
subsidies are responsible for an estimated 2.2 million hectares of forest loss annually, 14%of global deforestation, while fishery subsidies drive dwindling fish stocks31.

•

Lack of integrated regulation and enforcement of environmental crime is leading toa leakage of almost US$300 billion from the global economy annually32 – this is mostacutely felt by the world’s poor, 70% of whom depend on wild species for food and income.

23

1.2

Yet nature is the foundation of the global
economy and of life on Earth. It is critical for
safeguarding human health and wealth, and our
greatest ally in achieving climate and sustainable
development targets
Nature is the foundation of our economies and our socio-economic wellbeing. Humanity
relies on a stable and resilient Earth system33: the air we breathe, the food we eat and the water
we drink ultimately depend on the stable provision of ecosystem services. Put simply, without
nature life ceases to exist34, and our economies would collapse35.
Nature also fosters human health and wealth beyond economic value. IPLCs around theworld have built varied ways of understanding and relating to nature that respond to their local
contexts. Incorporating these diverse values, views, and solutions into decision-making not only
embraces critical principles of justice and inclusion, but also ensures that the global community
benefits from knowledge, traditions, and innovations that have historically delivered a safe andjust approach to sustainable development.
Nature is critical to achieving climate and sustainable development. Without nature, wecannot deliver on the Paris Agreement and the UN SDGs. Nature, when extracted, provides
short-term monetary value in markets that fail to fully account for the value of its services36. This
comes at the cost of societal and economic well-being, and of climate change mitigation andadaptation in the long-term. Currently, most capital flows financing externalize the full costs ofnature depletion. Inefficient and unsustainable use of natural capital assets for commercial gain
impose local, national, and global costs on society37.
Safeguarding nature can deliver co-benefits for climate and development in five overarching ways:

FIGURE 1
TheFigurelink between
nature,climateand climate
development
1: the link
betweennature,and development

NATURE IS ...

The most cost-efficient
climate change
mitigation strategy

The most cost-efficient
climate change
adaption strategy

The world’s first
employer

Nature’s mitigation potential
is estimated at 11.3 billion
tonnes CO2e by 2030, theequivalent of stopping
burning oil globally.

Coral reefs reduce 90% of
the kinetic energy of waves,and mangroves are up to 50
times more cost-effective
than cement seawalls at
protecting coastlines.

980 million jobs in farming,
fisheries, forestry andwildlife tourism depend on
the effective management
and stability of healthy
ecosystems.

A guarantee
against poverty
and insecurity

A criticalenabler ofhuman healthOver 40% of civil wars andarmed conflicts are linked toresource competition; 47%
of EMDE wealth comesfrom nature

80% of the global
population rely on botanicalmedicines, which are reliant
on healthy natural capital

Sources: (Griscom B.W., et.al. [2017], Earth Security [2021], Lieuw-Kie-Song, M., et.al., [2020], Cohen, F., et.al., [2017])

24

•Nature is essential for mitigating the effects of climate change. Peatlands, wetlands,
soils, forests and oceans absorb half of total anthropogenic emissions and store twice asmuch carbon as in the atmosphere38. Nature’s mitigation potential is estimated at 11.3 billion
tonnes CO2e in 2030, the equivalent of stopping burning oil globally39.

•

Nature is the most cost-efficient way of adapting to climate change. Replacing orcomplementing built infrastructure with plants, trees, sand dunes and other permeablesurfaces costs around 50% less than equivalent grey infrastructure alone40. Meanwhile
50% of climate-resilient infrastructure needs by 2050 could be met with nature-based
infrastructure. These interventions are particularly relevant for cities, coastal communities
and farmland, and examples of success can be seen in combating floods in Fiji41 andprotecting coastlines from erosion in Trinidad and Tobago42. Integrating nature into
infrastructure investments can build long-term resilience, while also reducing air pollution,
capturing carbon dioxide and providing social benefits.

•

Nature creates and maintains over one quarter of all jobs worldwide. An estimated
980 million jobs in farming, fisheries, forestry and tourism depend on the effective
management and sustainability of healthy ecosystems43. The Food and Land Use Coalition
identified ten critical transitions needed to deliver a sustainable food system, includingtransitioning to regenerative agriculture and diversifying protein supply. Delivering onthese transitions could bring 395 million decent jobs44. Conversely, loss of nature equates
to loss of jobs, given the natural capital assets on which nature stewards – farmers, fishers,
loggers – depend, and inevitably reduces economic output.

•

Nature means fighting poverty, enhancing food security and peace.
•

Poverty: Nature loss enhances inequalities between and within countries. The
world’s poorest lose access to means of subsistence and EMDEs face economic
distress. Caribbean countries suffer average yearly losses from storm damages
equivalent to 17% of their GDP45, while sub-Saharan Africa would face anasymmetric contraction in the event of an ecosystem breakdown, estimated at 9.7%
annual GDP by 2030 (US$358 billion)46.

•

Food security: Unsustainable land-use practices are not just harming the planet,
but also impacting our ability to feed a growing population. Every dollar spent onland restoration and sustainable land management can yield up to $30 in economic
benefits, including increased crop yields, improved water availability and reduced
land degradation47.

•

Peace: Protecting nature and ensuring equitable distribution of resources canhave a direct impact on tackling conflict. Over the last 60 years, over 40% of civil
wars and armed conflicts have been linked to competition for resources.48 Fourmain clusters of insecurity – access to water, food, natural disasters, and migration– can all be addressed by transformative action on nature and climate. In response,25

a range of initiatives, such as the Selva y Conflicto programme in Colombia, areexploring approaches for building peace and nature-positive outcomes in unison49.
Kenya’s representative to the United Nations, Martin Kimani, advocates for climatechange adaptation being “the most peace-positive undertaking in regions like theSahel” 50.
•

Nature is a critical guarantor of human health. Ecosystem services purify water, regulate
air quality, and enable soil formation critical to food production on land and at sea. Declining
wildlife and pollinators have been associated with declines in nutrition and health51, and
200 health journals have called on the United Nations to treat the environmental crisis as a
global health emergency52. Moreover, traditional medicines and pharmaceutical discoveries
depend on biodiversity, and 80% of people rely on botanical medicine 53.

1.3

Urgent action is required to address the driversof nature loss
There is increasing recognition that delivering on nature, climate and economic targets arecomplementary rather than competing aims54. For example, the net value of production fromcrops, grazing and timber can increase by 83% without loss of climate mitigation or biodiversity,
across 146 countries. If we act now, the cumulative cost of stabilizing biodiversity intactness55
by 2050 is estimated at US$7 trillion – 8% of annual GDP – but delaying action by a decade will
double the cost to US$15 trillion56.
Nature finance needs a comprehensive investment agenda to address the drivers ofnature loss and contribute to the implementation of the Global Biodiversity Framework
and Paris Agreement. This requires shifting existing flows and driving more investment “into”
nature – conservation and restoration – as well as “for” nature – shifting agriculture, fisheries,
forestry, mining, infrastructure – towards nature-positive outcomes. IPBES sets out five key
drivers of nature loss57: land use change, climate change, pollution, invasive alien species, natural
resource use and exploitation, as mapped in Figure 2. The breakdown of drivers at a sector level
demonstrates that nature finance should adopt a “whole of economy approach”58 focused on
agriculture, forestry and fishing, which have an outsized impact on nature (85% of species loss,
80% of deforestation, 70% freshwater use) and drive US$12 trillion in “hidden costs”, exceeding
their contribution to GDP. Yet these sectors received US$2.6 trillion in financing in 2019 alone59,
double the GDP of Indonesia.
Addressing the drivers of nature loss will require around US$400 billion of additional
investments globally, combined with the repurposing of harmful public and private capital.
These figures – based on the analytical work set out in the G7 leadership for sustainable, resilientand inclusive economic recovery and growth60 – are per-annum flows which assess sector andgeographical requirements for investments across natural capital (see technical annex for a full
breakdown). Investment should target opportunities across four areas, which we lay out in detailin Section 3:

26

•

Biodiversity conservation and restoration (US$159-245 billion): the 30x30 target
enshrined in the Global Biodiversity framework calls for the conservation of 30% of terrestrial
and marine ecosystems by 2030. Implementation will require additional public investments
to scale up effective management and enforcement of conservation – 90% of which should
be directed towards EMDEs – combined with emerging market structures, including ecotourism, carbon and biodiversity markets, and benefit sharing from the use of genetic
resources.

•

Sustainable agriculture, fisheries and forestry (US$151-187 billion): Adopting
productive and regenerative agriculture, fisheries and forestry practices at scale is criticalto transition towards a nature-positive food system. This will require building regenerativevalue chains for soft commodity production – eg. cereals, fruit, vegetables, seafood – tohelp draw in necessary commercial supply chain finance, carbon finance, and othermarket-based solutions.

•

Healthy diets (US$28 billion): Unhealthy diets have both negative planetary and humanhealth impacts, driving nature loss as well as obesity and diet-related non-communicablediseases, especially in high-income countries. Financing healthy diets will depend on
product reformulation, developing alternatives, and public incentives.

•

Infrastructure and extractives impact reduction (US$5.5 billion): Mitigating harmful
impacts on nature is key to the way we build cities and infrastructure, extract natural
resources, and dispose of waste.

These priority investment opportunities are demonstrating small-scale success but
not currently being scaled up. An enabling infrastructure that adequately value’s nature’s
contribution is needed for these solutions to become bankable, delivering positive nature, climate
and social impact as well as financial return.

27

1.4

Momentum for a nature-positive transition is
beginning to emerge, but systemic approaches
need to be mainstreamed
The good news is that political momentum, financial innovation and technologicalsolutions are converging to turn the tide on nature loss, presenting a unique opportunity toramp up ambition, drive action and redirect capital out of the harmful, nature-intensive economy.
Momentum is growing across governments, industry, public and private investors, philanthropy
and civil society to find ways to pay for nature and improve its use.
There are increasing signs of momentum:•

Clear targets and policy objectives: the agreement of the Global Biodiversity Frameworkhas mobilized momentum among governments, businesses, financial institutions, and civilsociety. Nature has been explicitly recognized in the EU Taxonomy, and features heavily in
the COP28 agenda. Several countries are now considering “Country Packages for Forest,
Nature and Climate” to mobilize finance for national action. Brazil has announced a plan for acomprehensive transformation of its economy through greener infrastructure, sustainableagriculture, reforestation, a circular economy, and climate adaptation61, putting nature
at the core of industrial policy. Since the agreement of a $20 billion annual commitment
for biodiversity financing - as codified in target 19 of the Global Biodiveristy Framework biodiversity finance commitments have reached US$8 billion62. Moreover, the Summit fora New Global Financial Pact and World Bank-IMF Annual Meetings in Marrakech put the
spotlight on the financial community to better integrate environmental and development
challenges, and to build more solidarity into North-South financing mechanisms63.

•

Financing innovation: increasing recognition of the risks from nature loss has led to thedevelopment and implementation of innovative financial instruments – debt conversions
for nature (e.g., Belize, Ecuador, Gabon), blended finance vehicles (e.g., Vumbuzi Multiplier
Impact Fund, Global Fund for Coral Reefs (GCFR), IDH Farmfit), and innovative tax
schemes (e.g., Limpopo Biodiversity Management Agreements). Some of the world’s
largest commercial financial institutions – AXA, HSBC, BNP Paribas, Bank of America– have announced natural capital funds with individual targets of up to US$1 billion64.
Ministries of Finance, the gatekeepers of government expenditure65 are ramping up action.
Leading development finance institutions (DFIs) are taking a more active role to de-risk
investments in conservation and restoration, and sustainble agriculture, projects. Central
banks have begun acting, with stress tests performed on seven national banking sectors
to date66, largely informed by the Network for Greening the Financial System (NGFS)67.
The voluntary group notably released a Conceptual Framework on nature-related financial
risks in September 2023, to help mainstream nature across the mandate of central banks
and financial supervisors68.

28

•

Corporations are scaling up action on nature through voluntary standards andaccounting frameworks: High-level business action on nature connects leading
approaches through the Assess, Commit, Transform, Disclose framework (ACT-D)69.
Guidance from the SBTN and the TNFD framework are triggering commitments frombusiness and financial institutions, with over 100 organisations piloting both initiatives. The
Nature-Positive Initiative is promoting the original and high-integrity definition of naturepositive and is use by individual actors70. At the regional level, the African Natural Capital
Alliance is catalyzing action on TNFD amongst its 41 members71. The Capitals Coalition’s
Natural Capital Protocol and supporting Transparent Initiative has developed standardized
natural capital accounting and valuation principles for business in line with the European
Green Deal, providing a potential standard for nature-based accounting and decisionmaking. Large corporates like Walmart, Danone, and Nestle have committed to transformtheir supply chains to be truly regenerative.

•

Advances in nature data technology can empower better financing tools: remotesensing, AI, environmental DNA, drones, metagenomics – a combination of satellite andin-situ data is pushing the frontiers of measuring and tracking nature at rapidly decreasing
cost, enabling private and public sector action. Investments in nature technology has
grown significantly, now accounting for US$7.5 billion of venture capital72.

Coordinated collective action is needed to fundamentally shift how we value and financenature. It is possible - every intervention in the agenda below has been developed somewhere
before with success – but scaling them requires a systemic transformation of public and private
sector action.

29

A systemic transformation
agenda for nature finance2

Rebuilding our economy’s relationship with nature, delivering additional investments andrepurposing existing capital – in a way that is comprehensive, just and equitable – will depend on
coordinated public and private sector action across five priority areas:
Figure 3: five priority areas for action on nature finance

FIGURE 3
Five priority areas for action on nature finance30

1.

Set targets andaccount for nature•••

Science-based targets and disclosure frameworks
Natural capital accounting
Data generation and management

2.

Harmonize policies for
effective nature financing•••

Integrated strategies and spatial planning
Trade, tax and subsidy reformCountry platforms, implementation vehicles, and enforcement

3.

Ensure investments are just,inclusive and accountable••

Multistakeholder decision-making and design
Community-led approaches to engagement with IPLCs

4.

Expand project financefor nature••

Regenerative value chains
Carbon and biodiversity markets

5.

Deepen capital markets,mobilize private capital, use
public finance catalytically•••

Unlock domestic capital markets
Ramp up development finance
Build comprehensive sovereign debt approach to nature

Set targets and account for nature

2.1

Building a sustainable economic system requires fully embedding nature into public andprivate decision-making. This requires adopting a framework to measure and value different
types of capital, including economic, natural, human and social capital. Mainstreaming natural
capital accounting frameworks, supported by science-based targets setting and high-quality
nature data to accurately track and value nature outcomes can ensure that nature is fully
embedded in decision-making processes, and should be applied to policymaking, businessstrategies, investment decisions and procurement standards.
Enabling more and better decision-making on nature requires: 1) setting robust, sciencebased targets and committing to disclosure ; 2) mainstreaming natural capital accounting at scale;3) improving the collection and disclosure of high-quality nature data.

2.1.1

Target-setting and disclosure frameworks
Emerging mandatory and voluntary standards are providing increasing clarity andscientific rigour for policy-makers, corporates, and financial institutions to grapple withnature’s many facets (figure 4). The emerging landscape of standards and frameworks aims
to clarify the metrics and indicators needed to operationalize global goals for climate, nature anddevelopment, and harmonize what public and private sector institutions should track, measure,and disclose. For example, the ACT-D framework, developed in a collaboration of leadingorganizations led by the Capitals Coalition, guides business through the various tools to support
them to chart a pathway towards nature-positive action.

FIGURE 4
Stratification of well-known nature-focused resources, frameworks, methodologies, standards, and global goals, andan orientation on how this landscape fits together

Figure 4: landscape of global frameworks, standards, tools and initiatives on nature reporting, source: GCA
Accountability Accelerator Navigation Tool
Gloabl Goals and Frameworks

Accounts
Mandatory

Voluntary(in some jurisdictions, voluntary
frameworks may be mandatory)

Disclosure Standards

Informs

Framework Methodologies

ACT-D

Supports

Creators of Decision-making
Benchmarks, Initiatives,and Tools

Benchmarks

Initiatives

Tools(not exhaustive)

Source: Nature and Climate Action: A Resource Navigator for Companies and Financial Institutions

31

Science-based targets (SBTs) can distil global goals, such as the Global Biodiversity
Framework, into achievable targets. Over 3,500 companies have SBTs, committing them totaking climate action in line with the Paris Agreement. Using SBTs, companies can set measurable
and achievable objectives – disaggregating a global 1.5°C goal into company-specific targets that
contribute to that shared goal.
SBTs for nature go beyond climate action to provide systematic solutions to reduce the riskof nature loss across four key areas – freshwater, biodiversity, land, and oceans. Set out in
SBTN guidance, these are designed to regain and retain the ecological function of landscapes,
engage communities in solutions, and invest in enabling conditions for transformational change.
By focusing on four critical realms of nature – and in combination with emissions-focused SBTs –these targets provide an integrated approach for delivering on climate, nature and development
outcomes. Companies follow five steps (Figure 5): assess environmental impacts; interpret nature
data and prioritize locations with the aim of addressing environmental impact; collect data, measurebaseline values, set targets, and disclose data; act to meet targets; and track progress over time.

FIGURE 5
Figure 5: SBTN 5-Step Framework for Science-Based Target Setting
SBTN 5-Step Framework for Science-Based Target Setting

1

Assess2

Interpret &Prioritize• Materiality
screening• Determine target
boundaries• Value chain
assessment• Interpret & rank
• Prioritize• Evaluate feasibility &strategic interest

3

Measure, Set& Disclose• Model selection
through stakeholder
consultation• Measure baseline
values• Determine maximum
allowable pressure• Set targets

32

4

Act

5

Track

• Avoid• Monitor• Reduce• Report• Restore &Regenerate• Verify• TransformIn a similar vein, TNFD has taken inspiration from the Taskforce for Climate-Related
Financial Disclosures (TCFD) to provide a framework for organizations to manage andreport on risks from biodiversity loss and ecosystem degradation, and support Target
15 of the Global Biodiversity Framework 73. TNFD has developed an integrated assessment
process for nature-related risk and opportunity management called “LEAP” that can be usedby companies and financial institutions to drive a global financial shift via a better allocation ofassets, moving a nature-negative impact towards a nature-positive focus. The LEAP processincorporates the approach to natural capital accounting developed by the Natural Capital
Protocol, functions like a materiality assessment, and is interoperable with SBTN’s guidance,
which can inspire the final step below.
••••

Locate their interfaces with nature at priority locations and activities;
Evaluate nature-related dependencies and impacts;
Assess how these may translate into business risks and opportunities; and,Prepare actions to address risks by setting quantitative targets and reporting on progress.

Nature-related financial risk assessment by central banks and financial regulators isan essential tool that can send the right signals to the real conomy. The NGFS has been
instrumental in developing a framework for assessing these risks and opportunities, which should
now inform domestic financial regulations, such as green bond guidelines, central bank price andfinancial system stability mandates. These are critical tools incentivizing businesses, especiallySMEs, to contribute to conservation and restoration, and the emergence of regenerative value
chains. For example, the Central Bank of Zambia has revised its green loan guidelines, integrating
biodiversity into bond issuance74.

2.1.2

Natural capital accounting
Ensuring that economic development models are truly sustainable and nature-positive
requires a system of accounting that records an inclusive measure of wealth, including
social, environmental, and human capitals, going beyond GDP75. With net zero targets
now commonplace, the adoption of carbon accounting systems has been widely adopted tomeasure emissions and guide a long-term strategy to mitigate climate change. Given the locationspecificity and complexity of quantifying nature, developing an equivalent consensus aroundnatural capital accounting has proven more challenging, but is equally critical. By accounting fornature, decision-makers can:•Baseline the state of nature and monitor how land use practices influence the extent andcondition of nature across target areas•

Measure the impact of investment and provide a quantified impact figure as a return on
investment•

Prioritize investment and policy decisions (e.g. sourcing locations for commodities, ordesignating PAs vs concessions for industries)•

Engage with confidence in high-integrity carbon and nature markets, and receive fairpayments for ecosystem services

33

Though assigning monetary value to nature remains controversial, harmonised
approaches towards natural capital accounting are gaining momentum – these now need
to be adopted at scale. For example, the UN SEEA provides governments with a framework
to measure ecosystem services, track changes in ecosystems, and assess impacts of socioeconomic activity. UN SEEA creates an account of ecosystem assets’ monetary value (stocks)
based on the exchange value of the ecosystem services (flows), facilitating comparisons withother key economic datapoints. As illustrated in Figure 13 below, UN SEEA takes a spatial
approach to accounting, as the benefits a society receives from ecosystems depend on where
those assets are in the landscape in relation to beneficiaries. Policymakers have begun toadopt UN SEEA; for example Indonesia’s Ministry of National Development and the World Bank
introduced an initiative to better understand the feasibility of low-carbon development, and used
the UN SEEA for scenario modelling. The G7 Alliance on Nature-Positive Economy – a voluntary
forum for the implementation of the Global Biodiversity Framework within the G7 – highlighted
natural capital accounting as a core priority from 2024 onwards76.

FIGURE
Figure66: the UN SEEA’s spatial approach to assessing how ecosystem assets generate ecosystem services
The UN SEEA’s spatial
approach to assessing how ecosystem assets generate ecosystem services to beneficiaries
to beneficiaries1

The UN System of Environmental-econimic accounting (UNSEEA) adopts a spatial
approach to assessing the value of the ecosytems and the services they provide

Source: UN SEEA.

34•

UN SEEA is built on five care accounts. These accounts arecompiled using spatially explicit data and information about
the functions of ecosystem assets (stocks) and theecosystem services (flows) they produce. They are split into
physical and monetary accounts.

•

The UN SEEA account for the size and health of an
ecosystem and the monetary value of the services it provides
to users in an economy.
1. Forests (Physical ecosystem extent) - the forest ismeasured by the hectares it covers
2. Soil depth (Physical ecosystem condition) - the forest
can be analysed through indicators such as soil depth,that can measure the health of the ecosystem
3. Water filtration (Physical ecosystem services flow) filtration services helps produce clean water, that can be
assigned a monetary value on the benefits it rovides tousers
4. People (Monetary ecosystem asset) - benefits fromclean water accure to actors in economy, including
households, that prodcue well-ebing elements that canbe measured used quantitative economic techniques

For the private sector, the Natural Capital Protocol provides an internationallystandardized framework to identify, measure, and value impacts and dependencies onnatural capital to inform organizational decisions. The Protocol explores key questions to beanswered when integrating the value of natural capital into organisational processes, and can
include a monetary value being assigned to nature. The new Transparent Methodology leansheavily on the Natural Capital Protocol and is an EU-funded project designed to help corporates
comply with the Corporate Sustainability Reporting Directive (CSRD). It has been developed by
the Capitals Coalition, World Business Council for Sustainable Development (WBCSD) and theValue Balancing Alliance, and is fully aligned with SBTN and TNFD.
Several tools have since been piloted, based on emerging harmonized approaches.
•

China has developed its own system of accounting for nature that informs policy. The
Yangtze river floods in 1998 caused damage worth US$13.2 billion, which led to the Sloping
Land Conversion Program. More than 120 million farmers have enrolled in this land retirement
programme, which compensates farmers for restoring forests and grassland. To understandthe policy’s effects, the government carried out an ecosystem assessment, and developed
the Gross Ecosystem Product (GEP), which tracks nature’s contribution to human wellbeing.
The GEP has been used to evaluate the conservation efforts of provincial governments,
determine the basis for payments for ecosystem services, and the definition of PAs.

•

The Rwanda Natural Capital Accounts for Ecosystems is an interministerial processthat integrates natural capital into economic analysis and national development dialogue77,
combining spatial analysis for land, water, minerals and ecosystems.

•

ETH Zurich has developed SEED, tool to measure biodiversity complexity which enables
governments, companies and financial institutions to measure the state of biodiversity forany pixel (30 metres by 30 metres) on the planet, through one composite indicator.

•

The Landbanking Group takes a balance sheet approach to assess nature along four
defined dimensions to create individual natural capital accounts. Through their Landler
portal, nature stewards can sell verifiable claims on nature improvement or preservation
claims (hydrosphere ‘water’, pedosphere ‘soil’, atmosphere ‘climate’ and – especially –biosphere ‘biodiversity’). Buyers are strategic insetters, ‘offsetters’, commodity buyers,investors and insurers.

35

2.1.3

Data generation, management and standards
Increasing the quality, quantity and comparability of publicly available nature data andinsights is a critical enabler of nature-positive action. Tracking nature-related impacts anddependencies requires collecting location-specific data across a large number of variables,such as soil health, water scarcity, and biodiversity. Assessing the effectiveness of nature action
requires a strong foundation of ‘state of nature’ data, a set of stock data for a baseline natureassessment and the foundation upon which other nature data sit. The Value Commission has
been convened to provide confidence and transparency in how value factors are used inform
decision-making78. Similarly, the Nature Risk Profile launched by UNEP-WCMC and S&P Global
analyses companies’ impacts and dependencies on nature79.
70% of investors believe a lack of available data is a key barrier to making investmentsthat support nature and biodiversity. Whilst available nature data is sufficiently robust
to make investment choices between projects clearly contributing to nature conservation
against a project contributing to nature erosion, available data is still not current, consistent orcomprehensive, nor accurate enough to provide the level of confidence and assurance required
for all private and public sector use cases. Without a robust baseline of the state of nature, wecannot fully or reliably assess change over time, for example, linked to government policies orbusiness impacts. Improving the availability and consistency of state of nature data would supportdelivery of the following activities:•

Enabling governments to establish comprehensive and up-to-date NBSAPs and fully
integrate nature into their NDCs, as called for under the Convention on Biological Diversity(CBD) and the United Nations Framework Convention on Climate Change (UNFCCC)
respectively.

•

Support corporates to assess their value chain footprint, commit to SBTs, transformtheir sourcing practices towards nature-positive outcomes, and meet their existing
regulatory requirements in some jurisdictions. Help them to prepare for further
voluntary or regulatory commitments to report their dependencies, impacts and risks (e.g.
through SBTN methods and TNFD disclosure recommendations).

•

Provide financial institutions with sufficient and timely access to clear, consistent,
and comparable sets of metrics for assessing nature-related dependencies, impacts,
risks and opportunities across their investment and credit portfolios in order to stopfinancing harmful activities and direct financing towards nature-positive outcomes.

•

Support IPLCs by informing their stewardship, conservation and advocacy efforts,and supporting the demonstration of ‘nature-positive’ stewardship to enable payments forecosystem services.

Fortunately, rapidly developing technologies are generating new tools and data to drive
business and policy action. For example, next generation remote sensing data from satellites
and drones are being widely used to track key indicators like forest cover (e.g. the Land & Carbon

36Lab). However, satellite data can only meet part of the need for nature-related data as it is unable
to comprehensively track biodiversity or critical ecosystem services, which require more in situ
data. Advances in in situ data collection technologies (e.g., low-flying drones, AI-driven image
recognition software, acoustic/imaging sensors, eDNA, proteomics, metagenomics) mean thequality of data is improving as rapidly as data acquisition costs are coming down, presenting asignificant opportunity to develop a more comprehensive baseline of the state of nature. This has
been driven and supported by the emergence of ‘nature tech’ as an investment category in private
markets, with a 130% rise in early-stage deal activity between 2020 and 202280. In 2023, the firstpure-play biodiversity venture firm – Superorganism – was created with the goal of addressing thedrivers of nature loss. In the coming years they will be building a portfolio of 30-35 startups across
software, hardware, biotech and others81.
High quality, nature-related data is a global public good that can enable a wide arrayof public, private and civil society stakeholders to embed nature in decision-making
processes. However, existing levels of government and philanthropic funding have failed tostimulate and incentivize sufficient collection and public disclosure of nature data. The urgencyof the moment calls for coordinated public and private sector action to improve the quality
and quantity of publicly available nature data. To this end, TNFD’s recent scoping study82 calls
for global nature data facility, supplemented by national and sub-national initiatives that can: i)develop clear frameworks on what data needs to be collected and how; ii) provide the incentives
to facilitate data collection, maintenance and connection; and iii) develop a focal point for data
access for a diverse range of relevant stakeholders.
MRV systems are key to tracking efforts to mitigate climate change and nature loss. The
Paris Agreement established universal and harmonized MRV provisions for climate mitigation,
which are central to effective implementation of NDCs. As commitments to nature increase
under the Global Biodiversity Framework, and as nature markets scale, building robust MRV
systems is a critical step to tracking and protecting nature, and to credibly demonstrate positive
nature impact to prevent greenwashing. For example, effective MRV systems can monitor theeffectiveness of private sector commitments to halt deforestation across supply chains, anddemonstrate compliance with the due diligence regulation in trade.
MRV is the multi-step process of measuring the climate, biodiversity, and social benefitsof an activity and progress towards environmental, sustainability, and regenerative
outcomes. It includes three steps:•

Measurement: the collection and analysis of data related to climate and nature indicators,
e.g. greenhouse gas emissions, biodiversity, forest cover, water use.

•

Reporting: the standardisation and disclosure of data (publicly or to a restricted audience)
to allow for comparison of impacts across sectors, corporates and countries andsupport integrated decision-making, e.g. by financial institutions or accreditation bodies/
standard-setters.

•

Verification: the independent assessment, auditing, and quality assurance of reported
data to ensure accuracy and reliability.

37

2.2

Harmonize policies for effective nature financing
Countries need strong and sustainable policy and institutional reforms for nature finance.
The IHLEG report83 identifies four common threads for long-term national reform agendas:•

Institutional capacity to shape and manage the intergenerational investments needed inhuman capital and sustainable infrastructure.

•

The adoption of carbon pricing and elimination of fossil fuel subsidies, together withcomplementary policies on standards, design and R&D that will be essential for a shift to azero-carbon future.

•

Domestic reforms to create investable pipelines, ensure the financial viability of long-term
investments, and support market mechanisms to work more effectively and efficiently to
direct capital where needed.

•‘Just transition’ programmes that can alleviate adjustment costs and protect those that
may be adversely affected by the low-carbon transition, including from the accelerated
phase-out of coal.

The nature finance challenge is arguably more complex and diffuse than energy investment
needs. Policies are vital to mobilize more nature finance and bend the curve on nature loss. In
particular, countries need to harmonize policies for nature finance across a range of ministries
and government agencies, including environment, agriculture, finance, and infrastructure.
Moreover, policies need to align between national and local levels. This will require spatialplanning, and clearer incentives and reforms to trade policies. ‘Country platforms’ can be effective
in communicating a shared vision and in engaging domestic and international partners aroundambitious action.

2.2.1

Better planning: integrated strategies and spatial planning
To meet nature and climate objectives, countries need to make strategic choices about
competing types of land-use through spatially explicit targets and policies acrossagriculture, environment, and infrastructure. Decarbonizing energy systems requires
quantitative decarbonization pathways. Progress towards nature and biodiversity targets
depends on whole-of-government spatial plans to identify and manage competing land (or ocean)uses. An inclusive spatial planning process, as called for in target 1 of the Global Biodiversity
Framework, can help identify and address competing land uses, promote, nature-based solutions,
support the mobilization of large-scale finance, and include IPLCs in decision-making84. Criticalcomponents of national spatial planning processes include:•

Creating and publishing spatially-explicit climate, nature and development plans:
While often viewed separately – with decision-making being conducted in siloes — the38

climate and nature crises are fundamentally connected and require integrated approaches
to be effectively addressed. Countries should develop integrated, whole-of-government
spatial planning processes and include actionable maps of current, 2030, and 2050
land-use and nature-based actions in their climate (NDCs) and biodiversity (NBSAPs)
strategies, and in national development plans.
•

Building spatial intelligence capabilities to apply spatial data on nature, carbon, andinfrastructure for policy design and decision-making in line with long-term strategies
towards sustainable land use.

•

Fostering an iterative, inclusive and collaborative process that respects the rights
and knowledge of IPLCs to deliver integrated action on climate and nature and access
commercial and financial opportunities.

Several ‘first-mover’ countries have embraced spatial planning and started to drive realaction. For example, Costa Rica’s ambitious restoration and conservation policies became aheadline issue in cabinet deliberations, after Carlos Manuel Rodriguez (Environment Minister2002-2006 and 2018-2020), produced a set of maps that turned out to be inconsistent
with maps used by other ministries (Figure 7). The government worked together on a sharedapproach, which proved vital for the country’s successful restoration and conservation policies.
As Rodriguez says: “maps are like coffee; they bring everyone around the table”85. Today, throughthe SPACES coalition, governments of Panama and Paraguay have picked up the baton and aredeveloping fully-costed, 30x30-aligned spatial plans to deliver on integrated climate, nature anddevelopment targets.
FIGURE 7
Costa Rica created integrated maps to visualize the spatial overlap between the carbon and non-carbon benefits ofnature – Essential Life Support Areas (ELSA)
Figure 7: Costa Rica created integrated maps to visualize the spatial overlap between the carbon and non-carbon benefits of nature – Essential Life Support Areas (ELSA)

Convergence of seven environmental and social
benefits considered in Costa Rica’s REDD+
programme (source: Pollini et al., 2019). The
boundaries and names shown and the designations
used on this map do not imply official endorsement
or acceptance by the United Nations.

Locations where Costa Rica can take nature-based actions to support
the achievement of its National Climate Adaptation Plan, identified
through applying the ELSE methodology (MINEA, 2022). the boundaries
and names shown and the designations used on this map do not imply
official endorsement or acceptance by the United Nations.

Source: SPACES (2022)39

2.2.2Better incentives: subsidy, public finance and trade reforms
Governments devote an average of 0.1% of total expenditure to nature, which is insuffient
to meet the scale of the financing need86. In addition to mobilizing more public capital fornature, governments should direct more spending towards nature-positive outcomes. Politicalcommitment can unlock these resources: for example, Brazil has initiated a comprehensive
plan for ecological transformation, underpinned by regulatory and tax policies. Deforestation
decreased by 48% in the first eight months of the Lula administration spearheading this process87.
Close to 90% of taxpayer money spent on agricultural, fisheries, and forestry subsidies– around US$530 billion annually, split between price incentives and direct payments to
producers – supports sectors that harm nature under current practices, notably livestock,
dairy and rice88. Policies focus on maintaining low food prices for domestic consumers withlimited requirements on producers to limit environmental externalities89. Support also tends tofavour wealthier commercial producers, while limiting access to markets for smallholder farmers.
Historically, fisheries subsidies have often led to overfishing, depleted fish stocks and a decline in
employment90. Public finance thus supports perverse incentives for ecosystem degradation andinequality. In this context, the Global Biodiversity Framework Target 18 calls to “eliminate, phaseout or reform harmful subsidies in a proportionate, just, fair, effective and equitable way, reducing
them by at least US$500 billion annually by 2030”91.
Subsidy regimes could drive low-emission, resilient and nature-positive production,and healthy diets, in a “win-win-win for people, planet and prosperity”92. Similarly, major
consumers, public authorities could use their purchasing power and tax regimes to purchasegoods and services that support nature-positive production, and encourage citizens andcorporations to adapt their consumption93. Governments should incorporate nature-related
risk management in fiscal recovery packages and budgetary planning, revise tariff and subsidy
regimes to support the scaling of sustainable agriculture and fisheries, and align government
procurement with nature-positive outcomes. This requires political commitment to engage
stakeholders and design sound policy. Realignment could comprise:•

Redirecting agriculture and fisheries subsidies towards investments in nature-positivetechnologies R&D, as well as income support for nature stewards to adopt them.

•

Using government purchasing power to promote, and build demand for, healthy,
sustainable diets, including in social protection systems (school meals, public works,
pensions, public insurance programmes).

•

Align food pricing structures within public procurement and taxation, with consumption
guidelines that respect human and planetary health.

•

Explore the use of fiscal incentives to support the development of more sustainable andresilient food systems and consumption and the transition to healthy diets.

•

Support nature-positive agricultural research and innovation notably on underconsumed healthy foods.

40Trade is essential to food security and could provide critical signals to protecting nature –however, nature is seldom integrated into trade agreements and policies. Trade is essential
to food security today; trade in agricultural products has more than tripled since 2000 to reach
US$1.53 trillion and 80% of the world’s population depends on imports for food94. The foodsystem’s hidden costs are transmitted through international trade. Tropical commodity value
chains – notably cattle, soya and palm oil – are the biggest single drivers of deforestation95.
Despite the interconnection between trade and environmental degradation, few governments
systematically integrate environmental and trade policies96. Moreover, efforts to cement
sustainability objectives at the heart of preferential trade agreements – through non-tradeenvironmental provisions – have so far led to limited environmental outcomes. A study covering
180 countries and 279 trade agreements found that environmental provisions are seldom
associated with improved performance in environmental indicators, including forest size, PAs, andspecies protection97.
A range of trade and market mechanisms could be reoriented to achieve less harmful
impacts on nature and promote shifts to sustainable practices. For example, the use ofdue diligence systems, free trade agreements, tariffs, and other market mechanisms have been
applied to nature-related issues, and can be improved further. Specific areas of focus for policy
reform could prioritize:•

Promoting ambitious national standards: the development of due diligence legislation toensure companies are not importing soft commodities linked to deforestation, for example
the European Union’s Regulation on deforestation-free products, should be combinedwith positive incentive structures and support to encourage nature-positive production,
through collaboration between producer and consumer countries; the mainstreaming of
nature risks and impact assessments in decision-making, in particular budget development
and allocation in Finance Ministries, in support of Goal D and Target 14 of the Global
Biodiversity Framework98, and as being undertaken in France and the UK.

•

Championing multilateral initiatives: linking trade with sustainability does not need
to wait for the reform of multilateral institutions, including the World Trade Organization(WTO). Rather than aiming for global consensus, WTO rules allow for the formation ofplurilateral agreements, which bring together “coalitions of the willing” countries. For
example, the Remaking Global Trade for a Sustainable Future Project (Villars Framework99)
has made sustainable agriculture and food systems a critical issue of its reform package.
It calls for the restructuring of the WTO approach to subsidies to consider sustainable
development, and also calls for a tariff reduction scheme on sustainable goods, services
and technologies, based on carefully defined standards. Safeguarding nature throughtrade can only be achieved by penalizing harmful activities and rewarding nature-positive
activities in conjunction. Initiatives to ensure environmental crime-free value chains, suchas TRAFFIC and End Wildlife Crime, should also be central to these reforms.

41

2.2.3Better implementation: country platforms“Country platforms” are emerging as a promising way to mobilize domestic andinternational partners around ambitious climate and nature action. Such country platforms
can take a multitude of forms depending on local preferences, but they always combine a strong
vision and investment strategy for sustainable development that is supported by key ministries
and government agencies, with clear points of contact for engaging civil society and the private
sector domestically and internationally. Where necessary, these country platforms also mobilize
international development partners for increased blended and public finance.
Country platforms can help organize and drive the interventions and recommendations in thisreport. Early pioneers of country platforms around ambitious nature and climate objectives include:•

Brazil’s Ecological Transformation Plan: a comprehensive transformation of Brazil’s
economy and development pathway, aiming to reduce emissions by 35% by 2030 and by
141% by 2050 while seizing a US$160-270 billion annual economic opportunity and creating
8 million new jobs. Led by Finance Minister Haddad, this transition plan is centred aroundkey sectors including: greener infrastructure, sustainable agriculture, reforestation, circular
economy, increased use of technology in productive processes and climate adaptation, andis supported by policy reform.100•

Country platforms supported by the FCLP: Launched at COP27, the FCLP supports
the development and delivery of ‘Country Packages for Forests, Nature and Climate’. Eachplatform is led by host forest countries (eg. Ghana) and convenes international partners(bilateral agencies, development banks, private capital, philanthropy, as well as civil society)around an ambitious transformation strategy to meet nature and climate objectives witha focus on forests. Such country platforms can raise the level of ambition, support the
integration of policy reform to protect forests and critical ecosystems, support IPLC
inclusion, and help mobilize the finance needed from private and public sources.

•

Egypt Country Platform for Nexus of Water, Food and Energy (NWFE) – country
ownership to move from pledges to implementation: NWFE, launched in July 2022
following the announcement of Egypt’s National Climate Strategy 2050 (Ministry ofEnvironment, 2022), aims to accelerate the national climate agenda. The Platform
integrates a set of high priority projects for adaptation and mitigation, grouped aroundthe three main pillars of water, food and energy and selected through a prioritisation
process led by the Government of Egypt. These climate action projects will be
implemented with a programmatic approach and include projects that would replace
existing inefficient thermal power plants with renewable energy, enhance small farmers’
adaptation to climate risks, increase crop yields and irrigation efficiency, build resilienceof vulnerable regions, develop water desalination capacity, establish early warning
systems, and modernize on-farm practices. Further, the platform adopts a multistakeholder approach by deploying innovative forms of finance such as concessionalloans, blended finance and debt conversion programmes.

42

2.3

Ensure investments and policies are just,inclusive and accountable
Today, the deployment of climate and nature finance is inefficient, insufficient andinequitable101. At present, only 25% of pledged finance reaches projects on the ground, andless than 1% of total climate finance goes to IPLCs. Only 3% of IPLC’s needs for tenure reformare being met. We need to transition to a more equitable financing model that centres the role ofwomen, smallholders and IPLCs in the nature-positive transition, and ensures that historicallymarginalized communities have a seat at the table. The Global Biodiversity Framework Target
19 on financial resources highlights the “role of collective actions, including by IPLCs, and nonmarket based approaches, including community-based natural resource management, civilsociety cooperation and solidarity”102.
Women, marginalized communities and IPLCs are crucial stewards of landscapes andseacapes and must be included in the design of a nature-positive economy. IPLCs own orgovern 80% of all ecologically intact ecosystems103, which represents carbon sequestration
capacity of 300,000 million tonnes, or 250 times the total of air travel emissions, and coincides
with 36% of the area covered globally by Key Biodiversity Areas (KBAs) 104 (Figure 8). In Asia
and Sub-Saharan Africa, smallholder farmers produce 80% of food105, but their access tofinance (grants, concessional debt) is insufficient106. They are spending as much as US$368
billion collectively of their own income on becoming resilient to climate change, despite having
contributed close to no emissions107. Likewise, women make up 43% of the global agricultural
workforce but female farmers receive only 10% of the total aid for agriculture, forestry andfishing, and 5% of all agricultural extensions services108. Women’s pivotal role in food production
and household nutrition means any food system transformation – better production processes,
healthy diets, reduction in food loss and waste – depends on the explicit promotion of gender
equity. Providing women with sufficient information on the nature-positive transition, unlocking theresources for implementation, and clarifying ownership of productive assets can have significant
benefits for nature and sustainable development109.

43

FIGURE 8
Figure 8: mapping intact forest and IPLC presence overlap
Mapping intact forest and IPLC presence overlap

Forest zone
0100

% of Intact Forest
Landscape which
overlap with 1 degree
grid cells showing
precense of Indigenous
Peoples’ and Local
Communities’ lands
and territories

Source: Fa et.al., (2020) 110

Case after case, from community forestry in Mexico111 to subsistence farming in central
India112 has demonstrated that IPLCs are nature’s most effective stewards. 65% of all land
owned by IPLCs has zero or low levels of human modification, while 90% is in good ecologicalcondition113. Ensuring the inclusion of IPLCs, and respecting of IPLC land rights, is not only a justimperative but a key enabler of nature’s survival.
Despite the evidence of IPLCs’ importance for nature, their stewardship and knowledge
have historically been excluded from decision-making processes:•

IPLCs have often been separated from ecosystems with which they were deeply
connected, without their consent. The creation of PAs in EMDEs has led to an estimateddisplacement of 10 million people, including through violent evictions114.

•

Only 20% of IPLC lands and forests are recognized as owned by or designated for IPLCs.

•

IPLCs rarely have sufficient access to finance for safeguarding nature. Between 2011
and 2020, IPLC tenure and forest management received just US$270 million per year,
less than 1% of Official Development Assistance (ODA) for climate change in the same
timeframe115, and IPLCs only saw a fraction of these commitments, which flow throughlarge intermediaries.
IPLCs have rarely been consulted in the processes and outcomes of market infrastructure
design. For example, forestry and land use credits traded on voluntary carbon market (VCM)
have not always guaranteed the right safeguards for protecting IPLC rights116.

44

IPLC knowledge and expertise should to be integrated into the design, governanceand implementation of solutions, whether financing vehicles or policy solutions117.
Conservation or restoration involving IPLC lands should employ a community-led method bothto protect nature and to address the socio-environmental needs of communities:

FIGURE 9
Three-step community-led approach to engagement with IPLCs

1

Secure IPLC rights overassets and enhance theirresource management

Enabling communities to conserve or
reclaim land tenure rights should be
the foundation of any approach toengaging IPLCs. For example,
communities from the Indigenous
Territory of Apyterewa and the
Yanomami Peoples in Roraima haverecently reclaimed their rights of
exclusion – the authority to decide
who has access, withdrawal power
and management rights to theirterritory. Brazil’s Supreme Court ofJustice recognized this right andmandated the Brazilian government
to take action to remove illegal
intruders from their territories.

2

Ensure IPLC inclusion in thecreation and governance of
PAs and MPAs

For example, in September 2023, atthe UN General Assembly, Maori
leaders called on the world to confer
legal personhood to the whale. They
pledged to work together for the firsttime to implement Indigenous
customary protections across whale
migration routes between criticalfeeding and breeding grounds,
creating
theworld’slargestIndigenous MPA network over a
2,200,000 km2 area. The network
will come under a customaryprotection framework that intends toallocate more investment into whale
conservation and introduce seasonal
protections across whale migratoryroutes and blue corridors.

3

Design place-based
financing mechanisms with,and for, IPLCs

Encouraging
thecreation,strengthening and broadening offinancing tools led by or designed for
IPLCs, including REDD+ finance,
enterprise finance, PES, Village
Savings and Lending Associations(VSLAs),community-driven
ecotourism, carbon and biodiversity
credits, and cash transfers (PES,
UBI, non-contributory pensions,conservation payments, cash forwork schemes), with a focus on
reliability of long-term funding.

Source: (Mane, A. [2023]. )118, (Charapa Consult. [2022]. ) 119

Without justice and equity built into the allocation and use of finance there will be no justnature-positive transition. Ensuring a more equitable nature finance system – eg. throughthe the mainstreaming of “Green Accountability” principles120 of transparent, demand-driven,
accessible, responsive, market-building – can rapidly improve efficiency and impact. For example,
every US$1 invested in Green Accountability could unlock up to US$12 that are currently wasted.
This means shifting agency from Global North to South, tackling waste and inefficiencies
throughout the lifecycle of nature finance commitments, and improving outcomes acrosssectors, geographies and communities through more equitable and inclusive forms of design anddecision-making.

45

Scale up project finance for nature

2.4

Strengthening the pipeline of nature-positive projects with attractive returns remains oneof the biggest challenges to private and public sector investment. Despite pledges seeking
investments with measurable environmental benefits and financial returns, the lack of clearly
identifiable projects still limits capital flows. On the supply side, the structure of projects and value
chains, and the need for high project preparation financing, have led to a lack of projects meeting
the investment criteria for financing. On the demand side, financial institutions have traditionallyviewed nature-related investments as having an unfavourable risk-return profile, leading tounderinvestment. This relative scarcity can be explained by the fact that the scale-up of naturepositive projects faces constraints throughout the value chain121.

FIGURE 10
Figure 10: key supply- and demand-side barriers for nature-positive investments have led to underKey supply- and demand-side barriers for nature-positive investments have led to under-investment ininvestment innature-positive projects
nature-positive
projects

Supply-side barriers:
underinvestment in projects

Structure of projects and value chains

Insufficient nature-related risk management•

Small, disjointed value chains and projects••

Complex match-making ecosystem

Under-investment in nature-positive and continued
investment in harmful activities•

Seed funding gap for smaller ticket sizes••

Incapacity of proposed projects to pass risk, complianceor investible criteria

Nature loss risks disruption to value chains, raw material
price volatility, price externalities, stranded assets•

Acute physical (and systemic) risk•

Mismatch between product returns and revenue tonature stewards•

Transition risks from portfolio misalignment with
policy or litigation

Preparation and technical assistance

Unattractive risk-return profile of nature finance•

Project preparation disconnected from follow-on funding(including risk-sharing mechanisms)•

Nature takes time to prove impact••

50x more project preparation funding needed thaninfrastructure projects

Nature needs recurring interventions (e.g., surveillance)
which creates high OPEX•

Projects are relatively small•< 50% of project preparation facilities support very
early-stage development

Source: Blended Finance Taskforce (2020), author analysis.

46

Demand-side barriers:
real and perceived risks

Dedicated action is required to support project development – through regenerativevalue chains and high-integrity carbon and biodiversity markets – while reducing the costof capital through better risk-sharing and risk mitigation solutions. This combination ofinterventions can aggregate projects to an investable scale and unlock large pools of capital.

2.4.1

Expand nature markets: regenerative value chains, carbon &biodiversity markets, and grant financing
1. Regenerative value chains
Scaling regenerative value chains for soft commodities requires more investment,
better technical assistance, and high-integrity standards. There are three priorities for
immediate action:•

Transparent target frameworks and reporting standards for carbon removals
or insetting122 will encourage large international value-chain actors to invest inregenerative value chains. The EU Deforestation Regulation, forthcoming standards on
beyond value-chain mitigation under the SBTi, and SBTN create strong incentives for large
value chain players to avoid deforestation and increase carbon removals within their supply
chain. We are seeing slow but steady progress towards more regenerative supply chainsthat also promise to increase climate resilience. These trends might lead to greater vertical
integration of value chains that could increase local value addition. To accelerate progress,
governments – particularly in importing countries – need to strengthen fair regulatory
standards for sustainable supply chains. These standards should – where possible – build
on exporting countries’ standards and be accompanied by more technical assistance.

•

Pipeline acceleration and value chain incubation initiatives are emerging, but more
support is needed to expand operations and attract private capital. In recent years,
public finance and philanthropy have driven innovative financing facilities that aggregate
investments in smallholder farming, provide training to farmers, strengthen value chain
linkages to increase farmers’ incomes, and enable effective monitoring solutions (e.g.,Partnership for Forests, AFR100). Such innovation facilities can develop new businessmodels that draw in commercial supply chain finance, carbon finance, and other marketbased solutions to leverage public and philanthropic finance. Public-private collaborationand financing at country or landscape levels can accelerate innovation by bringing
together corporates (product off-takers), governments (policy supporting initiatives),
financial institutions and technical assistance providers.

•Technical assistance and training for innovators. Upskilling is required at every levelof the value chain. Most importantly, training should be provided to nature stewards for
local processing, income diversification and nature-positive practices. Investors stand tobenefit from learning about how to manage multiple stakeholders working in the tropicalfrontier, and supporting the conversion of large corporates or local agri-food operators tosustainably produced commodities.

47

Grant financing will be critical to finance project development and technical assistance,
to help projects overcome initial preparation stages or high cost of capital constraints keeping
the project from being realized. For example, the Global Environment Facility (GEF) provides
grant funding and policy support, helping EMDEs address environmental priorities and achieveinternational targets. In August 2023, the GEF announced the creation of the Global Biodiversity
Framework Fund123, operationalized with initial contributions from Germany, Canada and the UK.

2. Carbon and biodiversity markets
International carbon and emerging biodiversity markets must ensure the highest levels
of integrity at supply and demand sides. Recent scandals in the VCM have brought attention
to low-integrity carbon projects that undermine environmental outcomes and trust in carbon
markets. Partly as a result, VCM carbon prices have collapsed. Much clearer and stricter rules areneeded to rebuild trust and tackle conflicts of interests in the carbon markets. On the demandside, SBTi’s upcoming beyond value chain mitigation (BVCM) guidance and VCMI’s Claims Codeof Practice124 will clarify how companies can use the VCM to achieve near-term and long-term
decarbonisation. On the supply side, the Integrity Council for the Voluntary Carbon Market has
proposed Core Carbon Principles (CCP) to ensure high-quality supply.
In addition to higher standards for demand and supply, structural changes are underway
for carbon markets:•

Jurisdictional credit markets. Ideally, carbon markets should operate at a jurisdictional
scale to address leakage and quality challenges, but this may not be possible in every
country. ART-TREES is an independent carbon credit issuer announced at COP26 tostructure jurisdictional approaches to REDD+ crediting, rather than the project-levelapproach to forest protection that is currently prevalent in the VCM. Guyana was the first
country to issue jurisdictional ART-TREES credits for a total value of US$750 million, with
15% of funds flowing to IPLCs125. In Africa, Ghana, Kenya, Zimbabwe and Tanzania aretaking steps to regulate the trade in carbon credits from domestic projects and to shift
towards jurisdictional approaches126.

•

Article 6 transactions are on the rise, but quality standards remain unclear. Thereis continuing uncertainty about how Article 6 transactions can be structured, but recent
developments have shown promise. For example, a developer of clean cooking projects
in Rwanda sold their credits to German non-profit Atmosfair, marking the first time thatcredits issued by an independent standard have been publicly recognized to have Article 6
authorization127. At the same time, several countries have undertaken Article 6 transactions
for forest carbon credits without adhering to any internationally agreed quality standards.
It is highly doubtful that such transactions ensure environmental integrity, which is vital tomaintaining trust in the carbon markets.

•

48

Supervised carbon stock exchange: A network of stock exchanges could collaborate on

the development of an interoperable market in which carbon credits would be sold without
the constraints of multiple unregulated markets. In September 2023, Indonesia launched acarbon exchange targeting coal power plants to participate in trading128.
•

Carbon credit guarantees: Guaranteeing the carbon credits of emitters can also
strengthen integrity. As an example, the World Bank’s Multilateral Investment Guarantee
Agency (MIGA) has been seeking to develop a product to guarantee against the riskof governments changing their policies on the export of carbon credits (including
corresponding adjustments)129. MIGA‘s core mandate is to insure project developers
against sovereign risks, such as sudden, retroactive policy changes or expropriations.
If a country is unable to pay back MIGA obligations, this is interpreted as a default on
a World Bank loan, which triggers a stop to all World Bank lending and IMF support.
Therefore, MIGA can insure risks could not be taken on by any private insurer without thesame leverage in EMDEs. A MIGA guarantee could be designed to help build necessaryconfidence within carbon credits’ investor communities.

Biodiversity markets are developing alongside carbon markets and might become an
additional financing instrument for nature conservation and restoration130. Voluntary
biodiversity credits are in their early stages of market development. As with the VCM, ensuring
the integrity of demand and supply will be critical. Several types of biodiversity credits exist today:
offsetting within countries based on domestic regulation (e.g. for infrastructure) which will not beinternationally traded and will account for a small share of financing needs131; adding biodiversity
to carbon credits using existing or new methodologies that generate higher prices in the VCM(‘stacked credits’); and international biodiversity credits. Several initiatives are seeking to build
viable, transparent and accountable biodiversity credit markets. In August 2023, the Taskforce
on Nature Markets released a set of recommendations to ensure nature markets advanceequitable, nature-positive outcomes. The Biodiversity Credit Alliance (BCA) is working together
with IPLCs to promote strong foundations and principles132.

49

2.5

Deepen capital markets, mobilize private capitaland use public finance catalyticallyAt the demand level, neither domestic nor international capital is moving fast enoughor at the scale required. Capital markets have traditionally viewed the risk-reward ratio
of investing “into” (e.g., conservation) and “for” nature (e.g., sustainable agriculture) as
prohibitive. Three sources – i) domestic markets; ii) development finance; and iii) sovereign
debt markets – could be critical to delivering more and better nature finance.

2.5.1

Unlock domestic capital markets
Domestic resource mobilization (DRM) is becoming a key priority in the financial
system reform agenda and should be equally prioritized on nature. Nature-rich EMDEs
are investment destinations with large-scale opportunities; DRM can help close the financegap, and support long-lasting and sustainable development, making EMDEs less dependent
on international finance. Because of their local footprint and capacity to deliver finance at theretail level, domestic capital markets are uniquely placed to engage the local private sector andconsumers. They are not just platforms for enhanced capital, but ecosystems that blend finance,
innovation, and entrepreneurship. Better utilized, they could stimulate corporate dynamism andassist in the implementation of national priorities.
To shift entire economies and markets to nature-positive models, SMEs and nature
stewards must be able to access affordable debt, equity and blended financing. Banking
unbanked nature stewards and improving the affordability of debt and equity would stabilize
the liquidity of nature stewards, reducing cash transactions, securing savings and assets,
and providing supplier financing solutions, whereby off-takers’ banks pay nature stewards ondelivery or upon harvest (see the Aquafoods case study below). Domestic commercial banks
are potentially well-suited to provide cash management and working capital solutions, but thefinancial system in which they operate are of limited size and depth. Only a small fraction of private
savings, pension and insurance pools are deployed, sometimes less than 1%. In many countries,
regulation restricts the amount of capital deployed into the real economy. In other cases, there
is a tendency to mainly invest in (perceived) safe government securities; the risk-return profile ofnature remains often unattractive, and there is limited catalytic capital in local currency to address
this. As a result, private credit has either been limited in the real economy of EMDEs, or has been
directed towards sectors with attractive risk-return, even where those sectors have been harmful
for nature. For example, in Brazil rural credit for agriculture is issued almost wholly by DFIs (Figure11), and most of the US$100 billion in private credit has gone towards unsustainable soya andcattle, which have historically also been largely subsidized.

50

FIGURE 11
Figurerural credittowards
earmarked
towards
top 10products,
agricultural
products,
Rural
credit11:earmarked
top 10agricultural
CentralBank Centralof BrazilBank of Brazil

Soy 34%

Banco do Brasil
Public Banks

Livestock 27%

Banco da Amazonia
Banco do Nordeste
Caixa
Credit co-ops

Private Banks

Savings and investments Credit Union
Credit Union
SICREDI
SantanderCorn 12%
Coffee 4%
Harvesters and grubbers 4%
Machinery and equipment 5%
Rice 3%

Bradesco

Tractor 3%
Wheat 2%Itau

Inputs for cooperatives 6%

Source: Central Bank of Brazil, Rural Credit 2020/20221

Third-party working capital solution to illegal fishing – the case of Aquafoods
Costa Rican fish trading company Aquafoods has developed a third-party working capitalfinancing solution, “reverse factoring”. It keeps fishers from engaging in illegal, unreported,and unregulated fishing by implementing compliance and sustainability KPIs against higher
purchase prices for underlying commodities. To close its working capital finance gap, Aquafoods
collaborates with private investors and third-party entities, with a fintech as the financing platform.
They have established trust funds and raised capital totalling US$2-3 million, sufficient to cover
three years’ worth of the suppliers’ working capital requirements. The fintech platform acts as acustodian, facilitating payments to fishers and reimbursing investors while overseeing fundraising.
Investors benefit from short-term transaction cycles and rapid returns, receiving a 14% annual
return and their initial investment returned within just sixty days.

51

To enable these interventions, mechanisms should be put in place to expand capital
deployment capabilities and entice domestic capital holders to finance nature-positive
activities. This is relevant for corporates, commercial banks, asset managers, DFIs and informal
players, who are familiar with local markets and regulation, well placed to assess credit risk, lendin local currency, and have relevant loan management infrastructure.
•

Create incentives for banks to lend through deposit and savings guarantees, inlocal currency: public and development financiers could work with banks to expand theirnature-positive portfolios, by de-risking the loans they extend through guarantees. As
lenders become more familiar with the sector, the need for this de-risking falls.

•

Better capacity building and technical assistance across the investment
ecosystem: lack of familiarity with nature-positive projects and assets contributes to highcost of debt and collateral requirements. Developing benchmarks and frameworks fornature-positive businesses and projects could help lenders better evaluate projects andreduce perceived risks.

•

Increase private markets’ interest in the food value chain: Private markets can fillcritical technology and infrastructure gaps. For example, private equity and venture capitalare prominent in innovations across alternative foods, hi-tech farm equipment, mid-stream
tech, agri-biotech, and data solutions.

•

Build more effective collaboration with pension fund trustees: increased collaborationis crucial to build trust and help make well-informed investment decisions. In Kenya, forexample, more than 20 pension funds have formed a consortium to invest in infrastructure,pooling their capacity to spot and overcome barriers. The collaboration is needed on a
project level but also at a national level.

•

Create mechanisms for international commercial banks to increase local banks’capacity and appetite for lending to nature-positive SMEs:•

On-lending: international commercial banks are not well-suited to lend directly tonature-positive SMEs, given small ticket sizes and lack of familiarity with or footprintin many nature-rich countries. However, global banks still have a role to play inimproving access to affordable debt for nature-positive SMEs. They could lend
directly to local commercial banks or development institutions with defined use ofproceeds, for those institutions to on-lend to SMEs.

•

Facilitate the distribution of nature-positive finance (e.g., debt, insurance,
equity) portfolios: building global distribution vehicles systematically supported
by large-scale guarantees conditioned by nature-positive covenants could bridge
the gap between direct finance to nature stewards, including loans, insurance
and equity, and global capital markets. Investing in nature at scale would thusincrease the financial sustainability of the overall financial system, addressing the52

fact that nature-related risks are increasingly becoming a systemic risk, whereby
unpredictability leads to higher tail risk133. De-risking should focus on the creation ofa buyer market, to create the proper conditions for risk distribution mechanisms. For
example, the Tropical Landscapes Finance Facility (TLFF)134 is a blended financefacility focused on regenerative agriculture expansion in Indonesia. It includes alending platform, managed by ADM Capital with BNP Paribas, as well as a grantfund, managed by the UN Office for Project Services. Once projects reach maturity
and begin to generate cash flows, they are aggregated and packaged in a bondprogramme that helps recycle loan capital for further TLFF lending135.

2.5.2

Ramp up development finance
The Triple Agenda Roadmap calls for MDBs to be bigger, better, and bolder, and provides
recommendations for MDBs to finance nature more efficiently136. There is a growing
recognition of the need for a change in the mandate, operating models, and scale and mix offinancial support required from MDBs to enable them to respond to today’s pressing global
and development challenges, including, very centrally, climate change, biodiversity loss andenvironmental degradation. In their COP27 Statement, MDBs committed to address nature,climate and development in an integrated manner, to maximize co-benefits137.
MDBs are essential to mobilize commercial capital through risk mitigation and risk pooling,
address nature-related risks and provide transition signals to the wider system. Over 500
MDBs and DFIs exist with assets totalling US$18.7 trillion, but only 6% of banks possess 84% of
total assets138. The eight largest MDBs have US$1.83 trillion of assets on their balance sheets139; if
these “mega-banks”140 focused on nature, it would create several “tipping point” effects across thedevelopment finance system.
•

Pipeline development: MDBs are critical primary and secondary sources of pipeline
for financial institutions. They can ensure availability of projects for investment, throughproject preparation facilities and technical assistance, and can clarify the suitability of
how different types of finance. Thanks to their footprint and long-term on-the-ground
involvement, they have sufficient understanding of opportunities and capacity to convenecommercial capital providers. Moreover, their books are filled with billions of dollars incommitments – loans, guarantees, investments – a source of pipeline for secondary capital
markets, through distribution mechanisms, such as securitzation141.

53

•

Market incubation: MDBs and DFIsviii are major financiers of agricultural commodities andfisheries142. For example, in Brazil, 75% of rural credit targeted at the soya and cattle sectors– linked with high rates of deforestation – comes from DFIs (Figure 11). They are thus
also highly exposed to industries driving nature loss, with US$3.1 trillion of collective DFI
balance sheets to be dependent on vulnerable nature, while assets under management
could cause US$1.1 trillion of damages annually143. Thus, by realigning their portfolios they
have significant capacity to address nature-related risks and provide portfolio transition
signals to the wider financial system.

•

Public-private transmission channel: as stated in the Finance in Common Declaration,“development banks build bridges between governments and the private sector;
between domestic and international agendas; between global liquidity andmicroeconomic solutions; and between short-term and longer-term priorities”144. They
work with national governments to improve the enabling environment – policy, regulation,
rule of law – and also play an important intermediary role by deploying concessional
funding on behalf of aid agencies.

FIGURE 12
Total nature finance commitments within the categories of MDB climate finance

Development finance commitments
principally targeting climate change(US$ 54.36 billion)

05

Nbs-like finance commitments
for climate change (principallyor significantly targeting
biodiversity) (US$ 14.66 billion)

10

15

20

25

30
US$ 32.97 billion

Mitigation
13% of total commitments of mitigation (US$ 5.36 billion)

US$ 11.69 billion

Adaption

29% of total commitments for adaption (US$ 4.81 billion)

Adaption &Mitigation

US$ 9.71 billion
46% of total commitments for adaptation & mitigation (US $ 4.46 billion)

Source: Atteridge, A., et.al. (2022) 145

viii

54

MDBs and DFIs have different goals and purposes. MDBs are chartered by two or more countries for the purposeof encouraging economic development in EMDEs. Shareholders are national governments, but can also include international or private institutions. Private sector contributions generally come in the form of trust funds, such as theWorld Bank’s Global Public Goods Fund, from which the bank draws concessional capital. MDBs provide support
through equity investments, market-rate and concessional loans, grants, and credit enhancement instruments suchas guarantees or political risk insurance. They have both public and private sector operations and often have entirely
separate private sector arms, such as the World Bank’s IFC. On the other hand, DFIs are set up by a national government, with a mandate to make investments based on impact alongside financial return. They provide market-rate ornear-market-rate loans and guarantees, and do not often provide equity investments, with the exception of the US
DFC. To expand their operations and respond to demand DFIs can receive new capital from their owner government.
In some countries, this counts as Official Development Assistance (ODA).

Development banks’ investments in nature should be strengthened, yet MDB’s current
risk-averse operating models remain misaligned to transformational investments andprivate capital mobilisation146. However, the structure and risk profile of natural capital assets
specifically requires effective and centralized investment platforms and engagement with theprivate sector to mitigate risks. MDB exposure to Agriculture, Food and Land Use accounts
for less than 10% of climate mitigation and adaptation finance portfolios147 (see Figure 12). For
instance, only US$4-9 billion of a total US$150 billion (3-6%) in ODA provided by MDBs is spenton activities that lead directly to conservation and restoration148. Despite having committed toprojects, business models, and financing instruments to address the drivers of nature loss at
COP26149, few outline where nature is material in their portfolio. There are some exceptions to therule demonstrating what’s possible:•

The Asian Development Bank (ADB) jointly with the Global Environment Facility (GEF)
announced the establishment of a Natural Capital Fund150 in November 2023, designed tosupport projects that enhance food security, conservation and restoration.

•

The Agence Française de Développement (AFD) disclosed its 2022 investments
in nature by geography and nature protection lever; investments totalled €736 million,
approximately 6% of total assets under management151•

The Dutch Entrepreneurial Development Bank (FMO) announced a €1 billion
commitment to build a forestry portfolio by 2030152•

The Asian Infrastructure Investment Bank (AIIB) announced plans to triple its climate
financing to US$50 billion over the course of the decade (through to 2030) and specificallyraised mangrove restoration projects in China as an area of focus153, highlighting the role ofnature-based infrastructure•

The European Investment Bank (EIB) has raised interest in debt conversions for nature154•

Banco do Brasil in collaboration with the Inter-American Development Bank (IDB)
launched a US$250 million bioeconomy financing programme, that aims to support
biodiversity-friendly businesses such as rural producers in the Amazon155•

Germany’s KfW Development Bank and Conservation International launched ‘Eco.
business Fund’, which provides debt financing, channelling funds into local financial
institutions to drive conservation and sustainable use of resources156

Given inherent risks to investing in nature and project challenges (as identified in Section2.4) concessional capital is essential for de-risking investments and mobilizing more private
capital, thus building a track record of nature-positive solutions as clear revenue streams:•

Political, currency and commodity price risk insurance can be provided by MDBs,
DFIs or private insurance companies to address a number of risks in nature-rich

55

EMDEs. For example, to ensure the success of the Galapagós debt conversion for nature(see 2.5.3), the DFC provided political risk insurance for the entire value of the marine
bond. A group of 11 private insurers then provided >50% reinsurance to facilitate DFC’s
commitment. This helped enhance the credit rating of the bond issuance to ‘Aa2’, a highrating for bonds. This, in turn, reduced the interest payable on the bond to 5.6% per annum,
reducing by two thirds Ecuador’s cost of borrowing until maturity in 2041. The MAR
Insurance Program, a multi-year parametric insurance collaboration157 between Willis
Tower Watson and the Mesoamerican Reef Fund that provides coverage for key reefsites in Mexico, Belize, Guatemala, and Honduras. The mechanism triggers pay-outs (bythe insurer(s), AXA Climate being the initial underwriter) and the deployment of financereef response brigades immediately after a qualifying hurricane event. Given the scale oflandscape needed for such mechanisms to work, de-risked capital is necessary to bootstrap the business into attractive private capital. Therefore, the InsuResilience Solutions
Fund, backed by the German development bank KFW, provided multi-year finance at apremium.
•

Guarantees can address a variety of risks in conjunction, including macro,commercial, and technical risks. Guarantees transfer risks faced by investors to a public
or private third party, thereby enhancing the risk-return ratio of the underlying financial
instrument158, and can catalyse private-sector investment by a ratio of 1:30159, five times
more than MDB loans160. Despite far higher mobilisation ratios than loans, equities andcredit lines, guarantees have historically made up only a fraction of International Financial
Institutions’ (IFIs) capital commitments to climate and nature (roughly 4%, 2016-2020161).
Guarantees specific to nature could include a number of safeguards for maximum
impact. First, credit guaranteesix could be combined with technical assistance to nature
stewards built into the mechanism. For example, the AGRI3Fund, which mobilizes
investments for low-cost crop finance loans, combines a US$300 million guarantee tocommercial and development banks providing impact loans and a US$15 million technicalassistance tranche provided directly to clients and farmers162. The Fund contains
two teams with specific expertise managing the respective interfaces. Building clear
distribution channels from the get-go can also help better aggregate smallholder nature
stewards involved, with for example a local asset manager, investment facility, input
retailer, and fintech. Another example is the US$2 billion Vumbuzi Multiplier Impact
Fund launched by SouthBridge and the Arab Bank for Economic Development in Africa(BADEA) to turbocharge capacity building and the attribution of grants and loans available
to restore over 128 million hectares of degraded lands across 34 countries in Africa. It
leverages grant money from philanthropic sources to free financing on the capital market
and blends with debt financing from DFIs and commercial investors. This Fund opens thedoor for more private sector financial partners to invest in efforts aligned with AFR100.
The fund aims to blend US$500 million of concessional finance with US$1.5 billion private
capital to support local restoration efforts across Africa.

ix

56

Credit guarantees address the limited use of credit enhancement at scale. By enhancing the credit rating of a debt
instrument, a guarantee can attract cheaper financing for nature programmes and broaden the interested commercial finance universe. Guarantees reduce debt servicing costs, allowing reinvestment in nature and development outcomes, which is particularly relevant in a context of higher interest rates.

•First loss structures (juniority in equity and debt) protect senior investors by taking
first losses on the value of the security. First-loss capital takes a position that suffers
the first economic loss if assets below it lose value or are foreclosed on - in the event
something goes wrong, the most junior or subordinated tranche is paid out last. Publicfunds are deployed as junior investors to de-risk commercial capital. For example, the IDH
Farmfit Fund includes tripartite risk sharing agreement between IDH, USAID and seniorcapital investors, which mitigates high perceived private investor risk in smallholder supply
chains163. The Fund takes up to 30% first loss through sub-debt, mezzanine investment
or equity. The DFC then takes up to 50% second loss guarantee (up to US$250 million),providing comfort to senior capital investors. These catalytic first and second loss
guarantee providers take on the bigger shares of risk to provide additionality from start,
reducing participation rates over time to increase the share of commercial funding, as a
growing track record demonstrates the creditworthiness of borrowers over time.

With the development finance reform agenda building momentum, MDBs and DFIs have aunique opportunity to stimulate nature-positive development. A clear strategic prioritizationof nature could include the following six interventions:

FIGURE 13
A six-point agenda for MDBs and DFIs to better integrate nature into their mandate

Formally establish ambitious climate,nature and biodiversity impact targets
and transition action plans

Ensuring that MDB plans, and reporting are in line with emerging standards for non-state actors suchas those to which GFANZ/NZ alliances are committed. Plans must be fit for purpose for the challenges
faced by increasingly climate-vulnerable countries and communities. They must also align with andtranslate global commitments around investing in NBS into their existing portfolio commitments.

Incorporate an explicit target for
nature-positive investments within
MDB financing targets for climate

This integration approach at the strategic level has been previously announced by France and the UK
at the One Planet Summit, and should be replicated.

Increase volume targets forconservation and restoration, andregenerative value chains

Ensuring development capital is fit for purpose for nature – including a focus on capacity and market
building, supporting agricultural intermediaries, market access players, microfinance institutions andother value chain actors to increase financial inclusion and access to finance for smallholders, IPLCs
and small projects.

Close ecological literacy gaps

While signed up to strong safeguards on paper, there are large gaps in capacity and implementation,
both among large and smaller banks. Few have biodiversity specialists on staff, relying on a generalist
function and external advice. Institutions could prioritize hiring and training people with suitable
experience, including around risk assessment and financial and legal structuring of nature-positive
projects, as well as people with an understanding of smallholder farming and forestry.

Strengthen collaboration
with the private sector

Establishment of Natural Capital Lab units within MDBs as incubators for innovative financing fornature (e.g., IDB followed by ADB, and EIB’s Natural Capital Financing Facility) is a promisingdevelopment. Similarly, at the Paris Summit, the World Bank launched the Private Sector Investment
Lab with the aim to develop and rapidly scale solutions that address the barriers that are preventing
the private sector from investing at scale in EMDEs, but with a focus on renewable energy and energy
infrastructure. This could be extended to nature.

Increase catalytic andconcessional instruments to scale
EMDE capital resources andmobilize private finance

Scale MDBs’ use of catalytic instruments (e.g., MIGA with political risk insurance), mandate DFIs –who may not have access to these catalytic instruments – to mobilise private sector investment andshift internal incentives from achieving high deal volumes to co-financing with the private sector to
reward innovation. Catalytic instruments could be included in these co-financing partnerships,
pooling capital from a broader set of sources across public, climate funds, sovereign wealth funds
and philanthropic sources.

Source: (Expert interviews, author analysis, The Biodiversity Consultancy [2021] , One Planet Summit [2021] 165)

57

Build a comprehensive sovereign debt approach to nature

2.5.3

A series of exogenous shocks – Covid-19, the conflict in Ukraine, natural disasters – havedepleted fiscal resources of countries across the global economy and increased sovereign
debt burdens. The total external debt stock among EMDEs reached US$11.4 trillion in 2022, a
15% increase from the previous year, and more than double the levels of a decade ago. Of EMDEs,
60% are either in or close to debt distress166, while African countries – responsible for 4% of global
emissions – are now having to spend 5-15% of GDP responding to climate shocks.167
The current context is reinforced by the unequal sovereign debt architecture that makes
EMDEs’ access to financing inadequate and expensive. Interest rates have continuously
progressed upwards in the past 18 months (Figure 14), which increases debt service burdens.
Monetary tightening in advanced economies has further exacerbated financial stress, driving up
refinancing costs.

FIGURE 14
Figure 14: growing volume of debt conversions and the case for nature clauses in restructuring
Growing volume of debt conversions and the case for nature clauses in restructuring

In the three years since global debt levels increased and interest rates adjusted in
the United States…
Yet this is a minuscule share of total restructured debt,
which is not subject to environmental clauses

Volumes of debt-for-nature swaps have been
20 times larger than in the previous decade
Volume D4N, US$ billion
Number of swaps

3

1
1

0

0

0

2017

2018

2019

2020

2021

1
2022

US interest rate, %Volume, US$ billion

Negotiations ongoing with IMF

2,500

50.0002,000

40.0001,500

30.0001,000

20.000500

10.0002023

Source: (Expert interviews, author analysis, US Congressional Service [2022].)58

Volume debt restructuring, US$ billion

2017 2018 2019 2020 2021 2022 2023 2024

Increasing debt burdens restrict the ability of sovereigns to invest in nature, exacerbating
nature loss. Debt servicing tends to crowd out other development priorities, including nature,climate, education and health168, particularly since some of the most biodiverse countries also
face some of the highest debt levels. The ten most forested EMDEs alone169, for example, owenearly US$460 billion in external sovereign debt service over the next five years (2023-2027)170.
In the 1980s, 1990s and 2000s, the Heavily Indebted Poor Countries (HIPC) turned to theirnatural resources as the fastest and easiest way to service debt and interest payments, with aclear increase in deforestation following credit downgrades171. Natural capital makes up nearly
half of the wealth of low-income countries172, meaning increasing debt burdens can compel lowincome countries to tap into their natural wealth.

Figure 15: the debt-nature-poverty spiral
FIGURE 15
The debt-nature-poverty spiral

Increased financial liabilities
given necessary investments
to rebuild and lower GDP due
to economic shocks

Increased vulnerability
to climate shocks

Less capacity to adapt
to climate change

Nature loss

Limited fiscal capacity

Vulnerability toeconomic shocks

Less budget for
nature protection

Author analysis.

59

To date, no comprehensive approach to integrating nature into sovereign debt markets
exists173. The Sustainability-linked Sovereign Debt Hub has highlighted the absence of naturerelated risk considerations among credit ratings agencies’ methodologies, and has modelled theeffect of nature loss on credit ratings, default probabilities, and cost of capital for 26 sovereigns.
In the event of a partial ecosystem services collapse, more than half would have their credit
rating downgraded. For example, China, Malaysia, India, Indonesia and Bangladesh would be
downgraded four to six notches174, significantly increasing cost of debt on capital markets.
Therefore, sovereigns’ vulnerability to nature loss is a systemic economic and financial
risk that remains overlooked by capital markets. There is a strong rationale for credit ratings
agencies to revisit their models, for investors to engage with sovereigns and their real economy
actors, and for governments to support nature-positive actions to increase the economic andfinancial resilience of their countries.
Countercyclical mechanisms such as debt buybacks, refinancing and haircuts tied toclimate and nature outcomes are urgently required to rebalance sovereigns’ financial
stability and stewardship towards future generations. They are critical enablers of theinvestment agenda for nature; without sufficient fiscal resources, sovereigns become stuck
in a debt-nature-poverty spiral (Figure 15), and cannot commit resources to conservation andrestoration of their natural capital, nor to transforming their land and sea use. Two mechanisms
could help address debt challenges while increasing financing for nature: i) debt-conversions fornature and nature performance bonds; ii) nature covenants in debt restructuring obligations andsovereign ratings.

1. The short-term option: debt conversions for nature and natureperformance bonds
Debt conversions for nature are not new, but there is growing momentum around themas sovereign debt burdens have increased. In these transactions, countries are incentivized
to “sanctuarize” their natural capital and collect returns over time, reducing their economies’
vulnerability to physical and transition risks175, and increasing climate and nature resilience.
Three transactions approved in 2023 amounted to twenty times more than over theprevious decade, with a total value of US$2.1 billion. Over the past 35 years, the average ticket
size for debt conversions has been US$2.5 million (~140 conversions total). Today, the average
size of transactions has significantly increased, which in turn reduces relative transaction costs.
For example, Ecuador’s ‘Galapagos debt conversion for nature’ (see below) alone was worth
US$1.6 billion, while Gabon completed a US$500 million transaction. Sri Lanka has reportedly
been in talks for a close to US$1 billion deal176. In a marked change, these transactions are also
crowding in private creditors, as opposed to past transactions driven solely by public-funded
institutions.

60

Ecuador Galapagós debt conversion for nature
In May 2023, Ecuador completed the world’s largest ‘debt conversion for nature’,eliminating US$1 billion of foreign debt – 9% of its commercial sector debt – and mobilizing
US$656 million of private sector funding guaranteed for marine conservation. The issuance ofa ‘Galapagos marine conservation-linked bond’ by an EU based Special Purpose Vehicle (SPV),
was structured by Credit Suisse. DFC provided political risk insurance for the entire value ofthe bond, which was also bolstered by a US$85 million credit guarantee provided by the InterAmerican Development Bank (IADB). A group of 11 private insurers provided >50% reinsurance tofacilitate DFC’s commitment. This de-risking mechanism helped enhance the credit rating of thebond issuance to ‘Aa2’. This, in turn, reduced the interest payable on the bond to 5.6% per annum,
reducing Ecuador’s cost of borrowing (via the loan) by two-thirds until maturity in 2041.
This approach provides Ecuador with a long-term, secured source of funding forconservation, with dedicated private sector funds that will provide grants for a minimum of
18 years. The deal is expected to provide US$450 million for Galapagos marine protection by
2041, entirely tied to conservation priorities, as identified by Ecuador and its partners. Funds
are distributed through the Galapagos Life Fund (‘GLF’), a Delaware-incorporated trust fundoperating in the Galapagos, and distributing an annual average of US$12 million in grants aswell as an additional US$5-6 million into a permanent endowment that is expected to be worth
US$227 million up until 2041, allowing the GLF to fund grants at the same level thereafter.

Sustainability-linked sovereign bonds (‘SLL’ for loans or ‘SLB’ for bonds) can also attract
impact-driven investment for climate and nature. Sovereigns raise debt on the capital
markets, and the use of proceeds is linked to climate and nature-positive outcomes. Thisapproach can decrease the cost of borrowing and/or widen the accessible creditor pool. Twotypes exist: first, customary loans / bonds where the borrowing must be spent on specific climate
and nature objectives (e.g. green and blue bonds); second, sustainability-linked bonds where thecost of borrowing is specifically linked to the delivery (or non-delivery) of measurable climate and/or nature outcomes, but where governments have more flexibility on how they use the funds toachieve these outcomes. For example, Uruguay has issued a US$1.5 billion sustainability-linked
bond, which has two key performance indicators, one of which is based upon the Glasgow
Leaders Declaration on Forests and Land Use.
Standardizing debt conversion mechanisms is key to reduce transaction costs andincrease benefits for issuer countries. Several factors indicate the time is right for replication:
Firstly, MDBs and DFIs are committing to guarantee loans in case sovereigns fail to repay177.
Secondly, the proceeds and impact framework are highly replicable, as the Galapagós conversion
builds on prior transactions in Belize and Barbados. Thirdly, there is an opportunity for financial
institutions to scale these transactions: bond holders receive above market rate returns, re-61

insurers benefit from high-grade credit risk, and investment banks gain access to arranging andstructuring fee pools. EMDEs benefit from a diversified base of creditors, DFIs and IFIs enter
mutually beneficial partnerships, and the resultant strong credit rating helps sovereigns attract
impact investors.
Benefits could converge around co-investment platforms. In these platforms, grantors,
guarantee providers, insurers and technical assistance providers could coordinate to provide
similar services, use harmonized impact principles, align on objectives, and operate as “dealteams”. These platforms exist at a nascent stage but need large-scale anchor catalytic capital
support to create system level changes. Moreover, it is critical to ensure that use of proceeds
is sufficiently transparent and that PA and MPA management authorities benefit from these
additional pools of capital. To increase transparency, increased efforts and focus could be madeby NGOs and international agencies to oversee and support cash waterfalls.

2. The long-term option: Systematic integration of nature into sovereign debt
As several debt restructuring negotiations are under IMF coordination, there is an
opportunity for nature-related risks to be integrated more systematically into sovereign
ratings and obligations, alongside financial, tax and macroeconomic covenants against
debt rescheduling. Given the deadlock of the Common Framework Initiative over reforming thesovereign debt architecture178, complementary ad-hoc approaches are needed. The disasterdebt relief clause announced at the Paris Summit, in June 2023 – a key part of the Bridgetown
Agenda179 – provides some lessons. Aiming to provide financial headroom at a time whenborrowers need it most, the clause allows for a mechanical pause in repayment schedules,transferring repayment by months or years. It is a mutually beneficial scenario - the borrower isprovided with the financial headroom to dedicate money to reconstruction and adaptation, while
the lender does not see their average portfolio rating decrease, preventing them from raisinginterest rates or selling portfolios, in line with their capital adequacy constraints. Building on thissuccess, nature and climate KPIs could also be built into debt service relief, such as the Debt
Service Suspension Initiative (DSSI), to complement and reinforce policy-based conditionality.
Moreover, efforts are underway to address the credit enhancement of sustainabilitylinked sovereign financing for nature and climate. A joint declaration from MDBs, DFIs andinternational organisations including the GEF and GCF is being launched at COP28, notably
calling for a technical taskforce to increase the effectiveness, efficiency, affordability, accessibility,
availability and scalability of credit enhancement at the facility, product and process levels.

62

3

Four investment priorities tovalue intact nature, restore
degraded nature, and address
drivers of nature loss

If implemented, this systemic transformation agenda (Section 2) could create an enabling
environment for nature-positive solutions to rapidly replicate and scale. To achieveinternational goals, we need a comprehensive set of solutions that value intact nature, restore
degraded nature and address the drivers of nature loss. Many nascent success stories showthat we have the tools and knowledge to deliver additional investment needs – valued at around
US$400 billion annually by 2030 (see technical annex) – and re-orient existing capital awayfrom harmful activities. The ‘Better Finance, Better Food’ case study catalogue identifies over 50
examples of business models and financial solutions which mobilize capital for the new naturepositive economy180. The increasing range of solutions across these investment priorities differ
in risk-return profile and commercial viability, which means scaling them requires mobilizing thefull spectrum of public and private capital. In some cases, and unlike for energy systems, public
capital only, combined with regulation and standardisation, will be the critical unlock, while otheropportunities will be suited to commercial capital only.

63

3.1

Value intact nature, restore degraded nature,address the drivers of nature loss
Nature finance should drive more capital “into” nature – conservation and restoration
and “for” nature – shifting agriculture, fisheries, forestry, mining, infrastructure – towards
nature-positive outcomes. IPBES sets out five key drivers of nature loss181: land use change,
climate change, pollution, invasive alien species, natural resource use and exploitation, as
mapped in Figure 16. The breakdown of these drivers at a sector level demonstrates that naturefinance should adopt a “whole of economy approach”182 focused on agriculture, forestry andfishing, which have an outsized impact on nature (85% of species loss, 80% of deforestation, 70%
freshwater use) and drive US$12 trillion in “hidden costs”, exceeding their contribution to GDP. Yet
these sectors received US$2.6 trillion in financing in 2019 alone183, double the GDP of Indonesia.

FIGURE 16
Tackling the direct drivers of nature loss requires a “whole of economy approach”

Tackling the direct drivers of nature loss requires action from many sectors,
including food and agriculture as the largest contributor
Direct drivers of nature loss
Land use change
Natural resource use
Climate change

Key sectors driving nature loss

Pollution
IAS
Other
100%

Terrestrial
Freshwater

Directdrivers ofnatureloss aredrivenby keysectors

Food and agriculture(drives 85% of threatened species)•

Fisheries, aquaculture, mariculture•

Agriculture and grazing•

Forestry and harvesting
Other sectors (non-exhaustive)

MarineIndirect drivers of nature loss
Technological, economic, governance

•
•
•
•
•

MiningWater and wastewater
Urbanisation and built environment
Infrastructure and construction
Tourism

Other
Tourism
Urbanisation
Infrastructure
Utilities
MiningSectors by
nature footprint(IPBES drivers
Forestryof loss)

Agriculture

Fisheries

Food and land use
Source: IPBES (2019)64

Nature-positive investment opportunities can be grouped into four overarching investment
priorities: i) conservation and restoration; ii) sustainable agriculture, fisheries, and forestry;iii) healthy diets; iv) infrastructure and extractives impact reduction. The opportunities
within each area can be mapped along a “nature transition curve” (Figure 17), which identifies fourmain states of ecosystem health. To take the example of forests, these are: undisturbed forest;
forest used productively; degraded land; and restored forest. Across each stage of ecosystem
health, different nature-positive business models can deliver nature and economic outcomes.
Interventions across the curve can be progressed in tandem, depending on the state of nature.
The Nature Transition Curve highlights that natural ecosystems cannot solely be viewed throughthe lens of conservation and restoration: nature is “ever-present”184 in our economies, which
requires action cross multiple sectors simultaneously.

FIGURE 17
Investment solutions, broken into investment priorities, along the nature transition curve185

Investment area
Investment opportunity

STATE OF ECOSYSTEM

Solutions within each investment area can be mapped along a ‘nature transition curve’
ETechnology enablers(across investment areas)C

Mitigating and transitioning
degrading activities

USE
A

Biodiversity
conservation andrestoration

Creating value fromstanding ecosystem

Fostering sustainableproductive ecosystem

B

D

Payments for Ecosystem Services
Ecotourism
PAs, MPAs, OECMs

Creating value fromecosystem restoration
Regrowth forcompliance purposes

Regrowth for productive
ecosystems

Non-timber/non-fish forest and sea products
Nature as infrastructure, adaptation and resilience

Sustainable agriculture,
fisheries and forestry
Shifting diets
Infrastructure andextractives impact reduction

Regenerative value chains
Technology enablers for sustainable agriculture, forestry and fishing
Reducing food loss and waste
Product reformulation and nutrition targets
Alternative proteins
Utilities access and optimisation (solid waste, water, wastewater)
Impact reduction and remediation in mining and metals
Urban planning (urban sprawl minimisation & built environment design)

Source: (author analysis, Turner et.al., [2019].)65

1. Biodiversity conservation and restoration:
The global 30x30 target enshrined in the Global Biodiversity Framework calls for theconservation of 30% of terrestrial and marine ecosystems by 2030. The conservation,
restoration, and sustainable management of nature is essential to meeting global climate andbiodiversity targets. 30x30 is the focus of the High Ambition for Nature and People (HAC) – a
coalition of over 100 countries that calls for nationally-driven and IPLC-informed solutions186
to increasing the volume, size and quality of PAs, MPAs, and Other Effective Area-Based
Conservation Measures (OECMs).
Implementing 30x30 will require around US$140 billion in additional investments, focusedon scaling up effective management and enforcement of conservation, and 90% of whichshould be directed towards EMDEs. Insufficient government subsidies to PAs and MPAs has
historically impeded effective conservation. Among designated PAs and MPAs187, only 35%
and 9% respectively benefit from sufficient management and staff budget, hampering habitat
management, patrolling, community engagement, and wildlife monitoring188. Illegal poaching
and logging – the world’s fourth largest criminal activity189 – takes place in one third of PAs190.
Conversely, in a set of 62 MPAs across 24 countries, fish populations in MPAs with sufficientfunding and personnel grew close to three times more than others191.
Emerging market structures are expanding revenue streams for conservation, and theseshould be scaled. A blend of financing mechanisms192, for example combining fee-funded
protection with other opportunities for mobilizing revenue, such as high-integrity carbon markets,
ecotourism, benefit-sharing from the use of genetic resources, and the sale of non-timber forest
products, such as cocoa, can multiply revenue streams that create value from nature, support
livelihoods, and maintain ecological functionality:•

Sustainable and inclusive ecotourism – tourism in PAs or in hospitality that shares
revenue with conservation agencies – can enhance funding for conservation, as well as
promoting local economic development and community support193. Country cases inZambia, Nepal, Brazil and Fiji suggest that a healthy PA tourism sector provides production
and income multipliers, that tourism tends to benefit poorer communities most, and that
tourism can create additional job opportunities194.

•

Carbon and nature markets are critical for valuing standing forests. Only carbon
markets – and possibly emerging biodiversity markets – can provide financing at scale
for standing forests. The voluntary carbon market (VCM) has grown rapidly, but demandfor carbon credits has fallen sharply following revelations about widespread carbon
projects of low integrity. Some analysts maintain that carbon markets will continue to growsubstantially through to 2030195, but the pushback against carbon offsetting and emerging
standards for beyond value-chain mitigation under the SBTi are likely going to curtail
corporate demand. Meanwhile government markets for high-integrity REDD+ projects
have seen low demand. However, the framework recently agreed on Article 6.4 may pave66the way for new compliance market agreements. Nonetheless, building high-integrity
standards for carbon and biodiversity markets becomes the critical condition to scalingfinance for standing forests.
•

Fair and equitable benefit sharing arising from the use of genetic resources –as detailed in Goal C of the Global Biodiversity Framework196 – could generatesignificant additional investment for biodiversity. Traditionally hampered by regulatory
barriers – including the limited success of implementing the Nagoya Protocol197 – benefit
sharing obligations are undergoing modernisation. The Global Biodiversity Framework and
BBNJ Agreement, ratified in June 2023 and also known as the “Treaty of the High Seas”,
aim to ensure fair benefit-sharing with provider countries following the development ofcommercial products from both physical and digital forms of biodiversity, anywhere on
the planet198. Both treaties have called for the creation of “Special Funds”199, which could
eventually be filled with contributions from the biotechnology industry.

By 2030, delivering on conservation targets must be combined with the restoration of 350
million hectares of degraded land200 – over double the total size of European farmland201– which will require around US$70 billion in additional investment. Restoration measuresdiffer by geography and ecosystem, but generally include invasive species management,
species reintroduction, planting vegetation, and/or converting a degraded land to agroforestry.
Restoration can create economic opportunities and equitable outcomes: US$85 billion in net
benefits to national economies202, US$30–40 billion a year in extra income for smallholder
farmers, additional food for close to 200 million people203 and 20 million additional jobs by
2030204. While restoration yields higher profitability compared to monocultural systems, it
requires higher upfront investments, demands a larger workforce and significant upskilling.
In total, around US$200 billion of additional investments annually are needed by 2030 toaccelerate conservation and restoration of terrestrial and marine ecosystems – thankfully,
numerous pilots and projects have demonstrated that conservation and restoration can
provide sound economic opportunities, on top of co-benefits for climate and people:•

Delta Blue Carbon is the largest coastal restoration and management project in the world.
This project seeks to restore and conserve 350,000 hectares of mangroves in the Indus
Delta region of Sindh Province, Pakistan205. In the last six years it has planted 75,404 hectaresof mangrove forests. Around 300,000 credits have also been sold on Singapore-basedcarbon exchange Climate Impact X with the latest pricing reaching US$29.72 per tonne.

•

AFR100 is a pan-African initiative that aims to restore at least 100 million hectares of land
across 34 countries by 2030. The initiative has crowded in private capital and gathers apool of public donors, investors and corporates; for example, SouthBridge Investments
and the Arab Bank for Economic Development in Africa (BADEA) announced the US$2billion “Vumbuzi Fund” to turbocharge capacity building and the attribution of grants andloans for restoration communities and entrepreneurs.

67•Wilderness Holdings in Botswana offers wildlife safaris that simultaneously conserveand restore wilderness and wildlife across seven African countries206. The group directs
its tourism revenues towards conserving 6 million acres of protected land, reintroducing
animals into the wild, rehabilitating existing natural environments, and maintaining its
sustainable ecotourism activities.

•

In South Africa, the Department of Forestry, Fisheries and the Environment, together with
the Sustainable Finance Coalition, has designed Biodiversity Management Agreements,
an innovative tax incentive scheme for threatened rhinos and lions in the province ofLimpopo207. These agreements offer unique income tax incentives for private landowners,
who undertake to carry out conservation measures. This initiative contributes to national
Biodiversity Management Plans, closes a financing gap for threatened species, and createsa candidate OECM, thus supporting the implementation of South Africa’s 30x30 target.

•

The Katingan Mentaya Project in Indonesian Borneo runs a community
development programme across 34 villages to encourage people to take part in forest
restoration208. At the same time, the programme provides microfinance for small businessdevelopment and vocational training for communities to convert to sustainable practices.
This is a clear example of creating value from a standing ecosystem, fostering a sustainable
use of the ecosystem, and mitigating harmful activities (states A, B, and C of the Nature
Transition Curve above).

2. Sustainable agriculture, fisheries and forestry:
The development of food and land use systems in recent decades has improved health andwealth – yet, food and agriculture systems remain the largest source of global ecosystemdegradation, biodiversity loss and water use, and a key driver of climate change209. For
example, enabling policy environments and public and private sector innovation has increased
cereal yields by 93%, reduced deaths from undernourishment, and made food more widelyaffordable210. However, 80% of deforestation is driven by demand for food211. Soil erosion alone
creates global costs equivalent to the GDP of South Africa212. Food systems are also exposed
to supply chain and climate shocks. Just three crops – maize, wheat and rice – constitutenearly 60% of humans’ calorific needs, but production of these grains is concentrated in a few
key regions, and industry has outsized influence on the governance and distribution of critical
inputs213. Furthermore, a land area the size of India and Canada combined is used to grow foodthat goes to waste214, putting even greater pressure on our ecosystems.
Adopting productive and regenerative agriculture, fisheries and forestry practices atscale is a critical transition towards a nature-positive food system. By 2030, around US$160
billion a year in additional investments will be needed to transition at least 50% of agriculturalland to regenerative practices, enforce sustainable fishing practices, and grow improved naturalforest management. A broad definition of productive and regenerative models includes a set ofpractices that regenerate soil, reduce synthetic fertilizers and pesticides, and that go beyond

68the reduction of negative impacts to ensure that food systems have positive environmental
effects215. These include agroforestry, no-tillage farming, multi-trophic aquaculture, improved
nutrient and feed management, rotational grazing, pastureland rehabilitation, for example.
Blueprints of community-driven regenerative models exist. For example, Andhra Pradesh
Community-Managed Natural Farming is a state-wide agroecological transition plan with thegoal of transitioning 6 million farmers over 6 million hectares and 50 million consumers towards
regenerative practices216. As of July 2023, 700,000 farmers had adopted sustainable practices,with clear signs of nature-positive impact: crop diversity is double that of incumbent farms, andyields of prime crops (rice, maize, millet, finger millet, red gram) have increased by 11%217, bringing
accompanying financial return.
Existing sources of finance for agriculture, fishing and forestry are insufficient andinefficiently allocated218 – characterized by insufficient private capital allocation, risk
management, and public financing. On capital allocation, investors perceive high transaction
costs to investing in small-scale farming and fishing, due to high upfront costs, long payback
periods, and the often small or disaggregated nature of projects. Smallholder nature stewards(farmers, fishers, loggers) and small and medium enterprises (SMEs) form the backbone of landand sea use value chains in EMDEs219, yet they face severe constraints in access to finance. 60%of global food supply comes from farms of less than 15 hectares (Figure 18)220, and half of thatfrom farms of less than 2 hectares. At the same time, these stewards live in a constant liquidity
shortage; close to half of the 500 million smallholder and family farmers and fishermen in theworld have no access to a bank account221. On risk management, nature-related risks of agri-foodcompanies threaten financial institutions’ portfolios, yet 70% of the world’s 60 largest publicly
listed meat, dairy and aquaculture producers are failing to manage these risks222. Agriculture andfisheries are deeply exposed to physical shocks, with billions of dollars in losses from flooding,fires and drought annually. On public financing, subsidy regimes led by governments – worth
US$530 billion every year223 – are incentivizing harmful practices across the land and sea use
value chain. Market mechanisms provided by governments, such as tariffs, quotas and subsidies,for the most part disregard the provision of public goods224.

69

FIGURE 18
Map of smallholder farms in EMDEs
Urban

Very large(mean >50ha)

Medium(mean 5-15 ha)

Extensive grazing(mean >15 ha, >90% pasture)Large(mean 15-50 ha)

Small(mean 2-5 ha)

Source: Macmillan, S., (2019). 225

Building regenerative value chains for soft commodity production can help draw innecessary commercial supply chain finance, carbon finance, and other market-based
solutions. There is an increasing economic case for transitioning to these practices, withinvestments in regenerative practices estimated to deliver US$4.5 trillion each year by 2030226.
Unlocking this opportunity requires targeted supply and demand side interventions. On the
supply side, nature stewards require upfront working capital and accompanying technicalassistance to adapt to regenerative practices, for example to finance new machinery andequipment. On the demand side, corporate offtake commitments can provide a guaranteedmarket for regenerative products, and give smallholders certainty of demand.

70

Very small(mean <2 ha)

Case study: Regeneration – building regenerative value chains
Regeneration creates markets and catalyses finance for regeneratively produced tropicalcommodities like coffee, cocoa and honey across forest frontier countries in Latin America, Africa
and Southeast Asia. It seeks to tackle the lack of capacity, financing and incentives for farmers
to produce sustainably, and the lack of demand at scale for deforestation-free, nature-positive
commodities by: i) supporting local communities via market access players and regenerative
operators with technical assistance; ii) creating demand in corporates for nature-positive
commodities, thus building a market of off-takers; and iii) catalyzing financing for forest protection
and regenerative agriculture through donors and investors. From 2020 to 2022, Regeneration
mobilized €14 million of private finance to benefit 50,000 smallholder farmers, keeping 100,000
hectares of land under sustainable land management.

3. Healthy diets:
Unhealthy diets have both negative planetary and human health impacts, driving nature loss
as well as obesity and diet-related non-communicable diseases, especially in high-income
countries. With an estimated 20% of adults dying due to poor diet227, there is an urgent need tomove towards a diet regime that accounts for both human and planetary health. The EAT-Lancet
Commission proposes a dietary framework to help achieve a “planetary health diet”228. It includes
more protective foods (fruits, vegetables, whole grains, legumes, nuts), limited salt, sugar andsaturated fats, moderate red meat consumption, consumption of whole rather than refined grains,and little or no ultra-processed foods high in saturated fats, salt and sugar229. Many of these foods
will be more efficient in their production phase and reducing impact on nature230. For example, land
use per 100g of alternative proteins (pulses, groundnuts, peas) is close to 100 times more efficientthan animal protein231. In total, transitioning to healthy diets by 2030 will require US$30 billion in
additional investments, but could unlock US$2 trillion in economic opportunities232.
Financing healthy diets will depend on product reformulation, the development ofalternatives, and public incentives. Alternative proteins have the highest CO2e savings per
dollar of any sector233. A growing range of products – from plant-based meat to lab-growncellular meat – has enabled strong growth, of around 43% in Asia-Pacific and 25% in Europe
in 2022234. Encouragingly, the 50 largest global meat, dairy and seafood companies are now
investing in alternative proteins via corporate venture capital arms235. Despite these trends,
market penetration remains low, in part because of the perception that alternative proteins do notmatch animal-based products on either taste and price parity. Large agri-food manufacturers,
processors and retailers should commit to progressively replacing their portfolios with nutritious
foods as well as supporting policy reform236. New players developing alternative proteins should71be supported to reach price parity with animal protein, without leaving farmers behind. Public
policy should adapt pricing of foods to reflect their true costs on society and planet, throughbetter public procurement, taxes, subsidies and regulatory frameworks (Section 3.1.2). The
Government of Singapore demonstrates how governments could benefit from scaling the growthof alternative proteins, including by increasing food security237.
•

Large-scale private capital has recently been flowing into alternative protein solutions,such as the US$400 million Series C round for Upside Foods (cellular agriculture) and the
US$150 million Series C round to Meati Foods (fermentation)238.

•

Danone is reformulating 70% of its plant-based milk with healthier ingredients239.

•

The Government of Canada has invested over US$30 million in plant protein researchand US$100 million in dedicated infrastructure.

4. Infrastructure and extractives’ impact reduction:
Investment for mitigating and transitioning nature-negative impacts of the extractives
industry and the infrastructure sector is a critical part of the nature-positive transition. In
total, US$5 billion of additional investments will be needed by 2030 in sectors to minimize their
disturbance on nature and use of natural resources, such as mining, and in others to prevent
pollution of natural environments, such as waste treatment. Investments should be additive tocompanies’ financing pathways for decarbonisation. Mitigating nature-negative activities is key tothe way we build cities and infrastructure, extract natural resources, and dispose of waste.
The built environment faces a combination of market and planning failures that has led
to sprawl or poor use of urban space. Construction and management of urban and periurban spaces entails land use, and cities today face overcrowding, congestion and resourcepressure240, with terrible consequences for nature. Guided by land use regulations, building
standards and spatial planning, investments should focus on increasing the utilisation of underexploited buildings and spaces, as well as developing the space above existing buildings, andunder buildings and roads, to enhance densification. This will be particularly critical in rapidly
urbanizing regions of sub-Saharan Africa, South America and Southeast Asia where urbanisation
is likely to lead to large biodiversity loss241.
The mining and metals sector occupies 0.1% of the world’s land, but industry concessions
are often in ecologically and culturally sensitive areas242. 17% of mining operations linked to
critical energy transition metals – cobalt, lithium, nickel – are located within one kilometre of a key
biodiversity area or a PA. A shift towards less harmful practices is essential across the lifecycle ofmining and metal extraction sites243, underpinned by better data collection to measure impacts on
the state of nature, from the mine site into adjacent landscapes and value chains244. Remediationof mining sites should also be mandated, either for a “second life”245 – such as a mine reconverted
into a waste recovery site – or as a restoration project.

72

Finally, ensuring access to utilities is a critical measure for managing and reducing
pollution and the solid waste that cities and rural areas leave behind246. 80% of the world’s
wastewater is released into the environment without adequate treatment247, driving chronic
ecosystem damage. Plastic waste alters habitats, harms wildlife, and damages ecosystemservices; more than 800 species are known to be affected by marine plastic pollution248. Utilities
that provide cleaner air, safer water, more efficient sanitation, modern energy, and comprehensive
waste and recycling services are critical for nature and people. Yet globally municipal waste
infrastructure projects have failed to attract sufficient public and private capital. Most countrybased utilities (waste and wastewater systems) – where they exist – are financed by domestic
sources of funding. International commercial funding in waste infrastructure, for example,
accounted for just 3% of total private participation in infrastructure (PPI)249.
•

The Indonesian government, in partnership with the governments of Jembrana andPasuruan, is prioritizing innovative finance solutions to address the 40 million tonnes of waste
polluting nature from waste burning and dumping250. Project STOP helps cities in Indonesia
design and implement low-cost waste management systems251. Building these waste
collection and sorting businesses alongside beach and river cleanups reduces pressures on
local biodiversity, GHG emissions from combustion, and respiratory diseases due to pollution.

3.2

Who finances what?
To value and restore nature, and address the drivers of nature loss, around US$400
billion of additional investments globally will need to be combined with the repurposing ofharmful public and private capital. These figures – based on the analytical work set out in the
G7 leadership for sustainable, resilient and inclusive economic recovery252 – are per-annum flows
which assess sector and geographical requirements for investments across natural capital (seetechnical annex for a full breakdown).
Nature-positive solutions are diverse, offering different risk-return profiles and calling fordifferent types of capital. The heat map below (Figure 19) shows that certain types of capitalcan support different categories of nature-positive business models dependent on the specificrisks (e.g. technology, geography, revenue model), return expectations/asset class (e.g. VC,
private equity, infrastructure) and scale of projects. Public and private capital are complementary,and can be deployed separately, or in combination. All will be needed to scale up investment
in nature. Some of these opportunities have business models that can be investable –sometimes with risk mitigation for first-of-a-kind projects or to address high cost of capital.
This includes ecotourism and alternative proteins, for example. Others may not have aworking business model and public capital – combined with regulation and standardisation– will be more suited, such as PAs and nature-as-infrastructure for climate adaptation253.

73

FIGURE 19
Figure 19: mapping of investment opportunities along the Nature Transition Curve with capital types
Mapping of investment opportunities along the Nature Transition Curve with capital types

Scaling nature-positive solutions requires mobilizing the full spectrum of public
and private capital, deployed standalone, or in combination
Different investment opportunities require different types of capital, based on risk profile and revenue case

Investment area

Investment Opportunity

Commercial

Commercial
with risk
mitigation

Concessional

GrantsPayments for Ecosystem Services
Ecotourism
Biodiversity conservation
and restoration(US$160-245 billion)

PAs, MPAs, OECMs
Wild ecosystem production (e.g., non-timber forest products)
Nature as infrastructure, adaptation and resilience
Regrowth for compliance purposes
Regrowth for productive ecosystems

Sustainable agriculture,
fisheries and forestry(US$150-187 billion)

Shifting diets(US$28 billion)

Infrastructure andextractives impact reduction(US$5.5 billion)

Productive and regenerative practices
Technology enablers
Reducing food loss and waste
Product reformulation and nutrition targets
Alternative proteins
Utilities access and optimisation
Impact reduction and remediation in mining and metals
Urban sprawl minimisation and built environment design

Strong Match
Source: (author analysis, Blended Finance Taskforce. [2023])•

Catalytic capital to kick-off first-of-a-kind projects (grants, concessional) will be
critical for many sectors, but de-risked and pure commercial capital become more
relevant as projects mature. For example, conservation and restoration have lower returns
on investment, so will be mainly financed by grants and subsidies.

•

Conservation and restoration will predominantly be financed by grants andsubsidies (Figure 20): Capital of this kind does not necessitate repayment or financial
return from the project; national and sub-national governments, philanthropies, anddevelopment banks allocate grant funding with the aim of achieving specific environmental
or social outcomes. Governments today provide 80-85% of total finance for conservation
and restoration254, yet they still lack the revenue to allocate sufficient resources. Increasing
the total volume of grants will require increasing government fiscal space and budgetaryplanning, extending grant terms, targeted allocation strategies, enhanced balance sheetsof multilateral funds, and reshaping domestic private sector markets.

74

Weak Match•Transitioning to sustainable agriculture, forestry, and fishing will be highly
dependent on the location and context, and will require a combination of debt,
equity and grants. Private sector investments (e.g., grants as supply chain finance, where
food corporates disburse grants to their supply chains, equity in agricultural technology
companies) will need to be combined with domestic, bilateral and multilateral publicfinance to enact policy change, as well development finance to mitigate risks faced
by private investors. Private markets have been especially dynamic when investing intechnology enablers, where the revenue case is clear.

•

Risk mitigation and technical assistance will be needed across investment
priorities, especially before nature reaches commercial viability across capital markets.
Closing the skills gap will be essential for equipping producers with the right tools totransition sustainably.

•

Transitioning to sustainable agriculture, forestry, fishing is highly location andcontext-specific, and will require a combination of debt, equity and grants, calling on
all types of capital. Private sector investments (e.g., grants as supply chain finance, where
food corporates disburse grants to their supply chains, equity in agricultural technology
companies) will need to be combined with domestic, bilateral and multilateral publicfinance to enact policy change, as well development finance to mitigate risks faced byprivate investors. Private markets have been especially dynamic in investments related totechnology enablers, where the revenue case is clear.

•

Risk mitigation and technical assistance will be needed across investment
priorities, especially before nature reaches commercial viability across capital markets.
Closing the skills gap will be essential for equipping producers with the right tools to
succeed in the transition.

75

FIGURE 20
Figure 20: use of proceeds from grant financing, a priority for investments “into” nature
Use of proceeds from grant financing, a priority for investments “into” nature

GRANTS

Sources

Rationale/motivation

How

Source: author analysis

76

Private (o/w private
individual and/or corporate/ financial institution)

Public / sovereign

For one’s own country

Direct: subsidy

As a diplomatic tool /international aid (through DFI,
MDB, direct support...)Indirect: tax break

Influences amounts
available and priority
beneficiary sectors(e.g., culture, education,
environment...)Fiscal optimisation and/ or philanthropic interest

Direct project funding

4

Call for Action

In the face of nature breakdown, urgent action is needed to transition to adevelopment model that adequately values nature’s contribution to people
and planet. This paper is a call to action for delivering a transformative
agenda to rapidly accelerate flows of private and public capital “into” and“for” nature, and embed nature firmly into decision-making. To accelerateaction, we propose the following key actions, to be launched at or around
COP28, and to be developed in the next two years, until COP30 in Belém,
which will represent an opportunity to take stock of progress:

1.

Set targets and account for nature•

Adopt natural capital accounting standards in public and private investment andstrategic planning decisions, building on frameworks like UN SEEA and the Capitals
Coalition’s Transparent Methodology, and on early examples of national accounting
initiatives (eg. as seen in Rwanda).

•

Set science-based targets for climate and nature in line with SBTi and SBTN
guidance, and require commitment to science-based targets as a criteria for public andprivate investment.

•

Invest in the collection and sharing of high-quality nature data, promote and invest innational data standards and data sharing facilities and adhere to CARE and FAIR principles
to ensure ethical governance of nature data collection and use.

77•

Set regulation for the disclosure of nature risks, impacts and dependencies, as
piloted through France’s Article 29, and commit to ‘radical transparency’ disclosing climate
and nature risks, impacts and dependencies under TCFD and TNFD.

2.

Harmonize policies for effective nature financing•

Develop and support comprehensive and up-to-date National Biodiversity Strategies
and Action Plans (NBSAPs) and fully integrate nature into Nationally Determined
Contributions (NDCs), leveraging recommendations and cross-country collaboration
initiatives on from the NBSAP Accelerator Partnership, and its knowledge portal•

Conduct and support integrated, inclusive spatial planning processes in line withtarget 1 of the Global Biodiversity Framework, to develop a national land use plan thatdelivers on climate, nature and development targets, ensuring IPLC engagement, andwhole-of-government approach for implementation•

Promote ambitious national standards and champion multilateral initiatives fornature, such as due diligence and disclosure legislation, bilateral and global agreements
on ending wildlife crime, nature-positive trade provisions and subsidy regimes•

Develop, deliver, and advocate for the mainstreaming of integrated policy processes
and build private and public sector collaboration to accelerate finance for naturepositive outcomes, for example through country packages (e.g., Brazil EcologicalTransformation Plan, Forest Climate Leaders’ Partnership)

3.

Ensure investments are just, accountable, and inclusive•

Integrate IPLCs into the design, governance and implementation of investments,
policies and strategies whenever these have direct or indirect contact with IPLC lands•

Secure IPLC land tenure rights as the foundation of engagement with IPLCs•

Commit to principles of justice and equity, including around country ownership andequitable pathways (requiring access, affordability and additionality)

4.
•

Expand project finance for nature
Scale up regenerative value chains through guaranteed off-take agreements forregenerative commodities, and innovative financing facilities that aggregate investment,
provide technical assistance, and strengthen value chain linkages

78•

Build high-integrity carbon and biodiversity markets with robust design, governanceand implementation structures, powered by innovative financing mechanisms

5.

Deepen capital markets, mobilize private capital, and use publicfinance catalytically•

Unlock domestic capital markets, including banks, asset managers, and DFIs in EMDEs,
by building supplier financing solutions to close liquidity gaps, and stimulating domestic
corporates’ and private markets’ commitments towards regenerative value chains•

Ramp up development finance by increasing DFI and MDB mandates and targets fornature finance, strengthening MDB collaboration with the private sector through Natural
Capital Labs, and supporting MDBs in pioneering guarantee mechanisms, novel forms ofrisk insurance (including sovereign risk), and public finance support for innovation•

Build a comprehensive sovereign debt approach to nature by building co-investment
platforms to replicate debt conversions for nature, and integrating nature covenants in debt
restructuring and sovereign credit ratings

79Annex 1: investment
opportunities on the Nature
Transition Curve

FIGURE 21
Investment solutions, broken into investment priorities, along the nature transition curve174

Investment area
Investment opportunity

STATE OF ECOSYSTEM

Solutions within each investment area can be mapped along a ‘nature transition curve’
ETechnology enablers(across investment areas)C

Mitigating and transitioning
degrading activities

USE
A

Biodiversity
conservation andrestoration

Creating value fromstanding ecosystem

Fostering sustainableproductive ecosystem

B

D

Payments for Ecosystem Services
Ecotourism
PAs, MPAs, OECMs

Creating value fromecosystem restoration
Regrowth forcompliance purposes

Regrowth for productive
ecosystems

Non-timber/non-fish forest and sea products
Nature as infrastructure, adaptation and resilience

Sustainable agriculture,
fisheries and forestry
Shifting diets
Infrastructure andextractives impact reduction

80

Regenerative value chains
Technology enablers for sustainable agriculture, forestry and fishing
Reducing food loss and waste
Product reformulation and nutrition targets
Alternative proteins
Utilities access and optimisation (solid waste, water, wastewater)
Impact reduction and remediation in mining and metals
Urban planning (urban sprawl minimisation & built environment design)

Conservation and Restoration•

Payments for Ecosystem Services (PES) markets: carbon and biodiversity markets,
REDD+ finance, PES cash transfers.

•

Eco-tourism: wildlife safaris, diving, trekking, and birdwatching all provide a direct financial
value to the conservation of terrestrial and marine ecosystems. Revenue is generated
either directly through entry fees into National Parks255 or indirectly through hotel resorts,such as safari costs redistributed back to a National Parks Association. Tourism attracts
the highest share of investment “into” nature: for example, the Mesoamerican Reef (MAR)ecosystem provides annual environmental services worth US$183 million in fisheries,
US$320-438 million in coastal protection, and US$3.9 billion in tourism.

•

PAs, MPAs, OECMs: formal protection, close monitoring, capacity support for managers
and rangers, expanded network to host a diversified tourist sector, formalized benefit
sharing, strengthened income multipliers, and managed human-wildlife conflict256.

•

Non-timber forest products and non-fish ocean products: improves local livelihoods
through jobs and local income, as well as securing healthy nature. These encompass adiverse range of resources such as wild-grown fruit and nuts, forest honey, sea cucumber,rubber, medicinal plants, and resins, that are harvested in respect of the ecosystemregeneration. For example, the PT Royal Lestari Utama (RLU) project combines conservation
with an inclusive rubber plantation, which transforms a heavily degraded landscape inCentral Sumatra into a productive area through reforestation and sustainable rubber.

•

Nature-as-infrastructure: nature can have an outsized role in both protecting coastal
assets and forming part of the infrastructure of coastal cities. Coral reefs can reduce 90%of the kinetic energy of waves, while mangroves can be up to 50 times more cost-effective
than cement seawalls at protecting coastlines257. The Blue Climate Initiative estimatesthat the largest 136 coastal cities are expected to suffer from increases of flood-related
losses of US$52 billion per year by 2050258. Rapidly developing cities in need of climateresilient infrastructure that can serve the needs of populations’ housing, food and healthis a key aspect of the sustainable development action point. Adopting a landscapeapproach to build revenue streams for the maintenance or improvement of critical natural
assets is particularly relevant in an urban context. Beneficiaries would depend on the
structure of land ownership in the urban space, but in most cases could be either municipal
governments or private property owners, given they are ‘intra-city’ initiatives259.

81

Sustainable agriculture, fisheries and forestry•

Regenerative value chains and practices: A broad definition of productive andregenerative models includes a set of practices that regenerate soil, reduce synthetic
fertilizers and pesticides, and that go beyond the reduction of negative impacts to ensurethat food systems have positive environmental effects260. These include agroforestry,no-tillage farming, multi-trophic aquaculture, improved nutrient and feed management,
rotational grazing, pastureland rehabilitation, for example.

•

Technology enablers: digitizing food, land and sea use systems can help producers
and consumers make more informed choices and improve efficiency from production to
consumption: these include bio-chemical innovation (gene editing and mapping, cultivatedmeat, micro-biological nutrition), technological hardware (drones, remote sensors,robotics), digital software (geospatial imaging, predictive analytics, business management
tools) and financial monitoring (mobile money, crowdsourcing, cryptocurrency). Whilelarge farms in North America and Europe are driving agricultural technology adoption,
precision agriculture tools are also penetrating Latin America, Africa and Asia261.

•

Reducing food and loss waste: A land area the size of India and Canada combined isused to grow food that goes to waste262. Improving efficiency through digital technologies,
creating value from food waste, cold-chain solutions or by-catch reduction, forexample, can relieve future pressures on land and sea for food production, bring down
environmental damage, and reduce food insecurity.

Healthy diets•

Product reformulation and nutrition targets can help mainstream more efficient andhealthy foods detailed above. Investment into this solution could help fund public policy
campaigns that encourage dietary shifts and improve meals in public procurement.
Policymakers could create new standards and guidance for consumption or address unfair
advantages provided by polluting activities. For example, product reformulation in theEuropean Union has led to an average 0.57 gramme reduction in salt intake, while limiting
industrially produced trans fatty acids has reduced mortality from cardiovascular diseasein Austria, Denmark, Costa Rica, and the United States by 4.3-6.2%263.

•

Alternative proteins: revenue can come from the sale of meat alternatives – which
could become a market worth over US$250 billion by 2030 (from US$3 billion in 2020),
with significant health-related cost savings. Many traditional vegetables, legumes, andnuts provide excellent alternatives to animal proteins and a range of alternative sources
are coming to market, including plant-based meat analogues, microorganism-based
nutrients, insects and worms, and lab-grown cellular meat. Private and catalytic financeshould target technology R&D and scale-up infrastructure to bring the market to maturity
in the next decade.

82

Innovation to reduce impact•

Utilities access and optimisation: ensuring access to utilities is a low-hanging fruit to
manage and reduce pollution and the solid waste that cities and rural areas leave behind264.
80% of the world’s wastewater is released into the environment without adequate
treatment265, driving chronic ecosystem damage. Plastic waste alters habitats, harms
wildlife, and damages ecosystem services; more than 800 species are known to beaffected by marine plastic pollution.

•

Urban planning: 70% of people are set to live in cities by 2050, up from 56% today266,
meaning that we urgently need to adapt approaches to designing, building and operating
the built environment. Notably, we need to optimize the use of land, space and services
to reduce new buildings requirements, scale urban green spaces and nature-asinfrastructure revenue models (especially in coastal economies), and more efficiently use
materials and building components, with a focus on developing circular economy models.
Bringing nature back to the core of cities is also critical, to inspire active lifestyles, nurturingmental and cognitive health, connect children with the outside world, and create cohesive
communities267.

•

Impact reduction and remediation in mining and metals: Comprehensive land
management, guided by detailed spatial maps and biodiversity assessments, can limit
ecosystem disruption caused by supporting infrastructure like roads and power lines.
Collaborative partnerships between mining companies and relevant public sector
agencies can enhance infrastructure development outcomes.

83Annex 2: the current landscapeof nature financeOur estimation of current public and private financial flows to nature is directly informed by themost recent assessment, the United Nations’ Environment Programme’s “State of Finance for
Nature, 2022”268. A detailed methodology can be found on the report’s web page269.
Current public and private financial flows to nature are estimated to be US$154 billion
per year. Public funds make up 83% of the total, directing US$126 billion per year towards
nature through government domestic expenditure and US$2 billion per year through Official
Development Assistance (ODA). The private sector contributes approximately US$26 billion peryear, equivalent to 17% of the total. The detailed breakdown is as follows:

FIGURE 22
UNEP estimate of public and private financial flows to nature, 2022
UNEP estimate of public and private financial flows to nature, 2023

Private FinanceFlows, 35

Public Finance Flows, 165

Water resources,
and wastewater
management, 16.2

Protection of biodiversity and landscape, 75.9

Sustainable agriculture,
forestry & fishing, 41.5

Pollution
abatement
15.4

Environmental policy
and other, 13.5

Biodiversity
offsets andcredits, 11.7

Sustainablesupplychains, 8.6

Philanthropy,
NGO and
PBS, 3.5other, 3.9

ImpactFarmer’s
investing, Carbon
invest4.6
markets, 1.5 ments, 1.5

Sources: (OECD (2023e); IMF COFOG (2021); OECD (2023a; 2023b; 2023c; 2023d; 2023e) (ODA, Philanthropy, private finance mobilised by ODA); Financial
reports from five NGOs: CI (2022), RSPB (2022), TNC (2022), WCS (2022) and WWF (2022); FAO (2018b; 2018c); Rainforest Alliance (2022a; 2022b); RTRS (2022);
Solidaridad (2019); De Jong (2019); GIIN (2020); Capital for Climate NbS Funds (2023); Impact Yield (2023); Partnership for Forests (2023); Ecosystem Marketplace(2022); Kassam et al. (2019))

84

Annex 3: estimating theinvestment needs for natureby 2030
As set out in the Figure 23, we have set out four main categories of additional investments
needed annually for nature by 2030 at global level:
1. Biodiversity Conservation and Restoration
2. Sustainable Agriculture, Fisheries and Forestry
3. Shifting diets
4. Infrastructure and extractives impact reduction
Our assessment of the magnitude of these investments is based on available studies, buildingon Waldron et.al (2020)270, Turner et al. (2021)271, Bhattacharya et al. (2022)272, and UNEP (2022).
These figures focus on sustainable investments only, rather than gross investment (i.e. they do notinclude continued or neutral investment levels across conservation and restoration, agriculture,
fisheries and forestry. This approach results in a total investment need of US$340-467
billion. The breakdown is as follows:
FIGURE 23
Addressing the direct drivers of nature loss requires public and private sector investments in four main investmentareas (Figures in technical annex)

Biodiversity
conservation and
Restoration

Sustainable
Agriculture, Fisheries,
Forestry

Shifting diets

Infrastructure andextractives impact
reduction

TOTAL
36

28

8
127

151
87

187
340

158
245
[158-245] US$bn p.a[151-187] US$bn p.a[28] US$bn p.a[3.5-8] US$bn p.a

US$340-467 billion

85

There have been several studies carried out on the additional investment requirements in nature.
Differences in coverage and methodology explain the variation between estimates. Our range isclose to UNEP on biodiversity conservation and restoration for example, as we similar underlying
assumptions from Waldron et.al (2020), however, they differ in other categories, as UNEP
does not include fisheries, extractives and infrastructure, nor alternative proteins; their focus ispredominantly on nature-based solutions. Our range differs significantly from TNC, given they
assume that sustainable agriculture will have been implemented on 100% of global cropland by
2050, while we assume a lower 50% of farmed land, in line with Turner et.al (2020) and FOLU
(2019). Moreover, we focus predominantly on additional CAPEX and OPEX investments rather
than income support.

Existing approaches to calculating additional investment requirements

1. IHLEG Report on Climate Finance273

Protect and Restore: US$70-250 billion
Sustainable, Efficient and Productive

Total requirements by 2030:

Agriculture: US$140-160 billion

current sustainable investments not quantifiedHealthy Diets: US$30 billion

Total additional financing by 2030:

Rural Infrastructure: US$40-50 billion

US$290-490 billion

2. UNEP State of Finance for Nature 2022274

Protection: US$70 billion
Restoration: US$170 billion

Total requirements by 2030:

Sustainable land management:

US$484 billion

US$90 billion

Total additional financing by 2030:
US$330 billion

3. TNC Financing Nature Report275

Protected Areas: US$149-192 billion
Croplands: US$315-420 billion

Total requirements:

Rangelands: US$81 billion

US$722-967 billion

Sustainable Forestry: US$19-32 billion

Total additional financing:

Sustainable Fisheries: US$23-47 billion

US$598-824 billion

Coastal ecosystems: US$27-37 billion
Urban environments: US$73 billion
Invasive species: US$26-84 billion

86

Challenges in estimating AFOLU investment levels
Estimating current levels of investment in AFOLU raises significant challenges, including:•Lack of consistent and comprehensive data due to overlapping datasets; stock and flow
variables used interchangeably as ‘investment’; and difficulties in tracking investments
made by smallholder farmers in informal markets.

•

Lack of publicly available aggregates of private investment into agriculture, food and land use.
FAO provides estimates of Private Credit into Agriculture, Forestry and Fishing. However,there is not yet an estimate of the proportion of private credit that is used for investments
versus recurring costs, or even the proportion that is saved (i.e. not invested or spent at all).
Other estimates focus on sustainable investments, not into agriculture more broadly.

•

Challenges in distinguishing between sustainable vs. unsustainable investments: 1) not
all investments are classified and tracked as sustainable or unsustainable. Climate Policy
Initiative and similar entities are able to track investments that are marked as geared
towards climate or development goals. Yet many investments that enhance natural capitalare not logged as such. Likewise, investments that damage nature are not necessarily
tracked. 2) Many investments into AFOLU are not by definition low-carbon or high-carbon
but depend on the specific context. For example, an investment into farm machinery might
help to increase yields, reducing the need to expand farmland into forests and other natural
ecosystems. Yet that same investment into farm machinery could increase the value of
expanding farmland into natural ecosystems, as improved yields deliver higher rewards.
The enabling environment for sustainable food systems is therefore critical to determine
sustainable outcomes.

87Breakdown of additional investment requirements

TOTAL: US$340-467 billion
Biodiversity conservation and Restoration: US$159-245 billion•

Conservation of terrestrial and marine ecosystems (US$103bn-US$178bn): management
cost of terrestrial and marine protected areas, including costs for the existing system, of
which only a fraction is currently spent276.

•

Forest restoration (US$29 billion): 294Mha forest and peatland restored at $1,200–2,000/
ha (costs mainly dependent on labour and type of restoration intervention)•

Mangrove restoration ($0.3–1.6bn): restore global distribution to 1980 baseline by 2050.
Assume flat investment 2020–50.

•

Seagrass restoration ($22bn): restore coverage to 1879 baseline by 2050. Assume flat
investment 2020–50.

•

Saltmarsh restoration (US$4-14bn): restore to historical baseline by 2050. Assume flat
investment 2020–50.

Sustainable Agriculture, Aquaculture, Fisheries and Forestry: US$151-187 billion•

Productive and Regenerative Agriculture (US$90bn-US$94bn): Regenerative farming
practices on 50% farmed land, 150m low skilled farmers receive extension services andcapital equipment improved across ~400m ha, Irrigation efficiency improved on 20%
currently irrigated cropland in developing countries, new irrigation infrastructure for 30m
ha cropland by 2030 (expanding irrigated land by ~10%), Precision agriculture machineryand tech investment, 15% urban farmed vegetables and fruits consumed in cities producedin vertical/ greenhouses, 10% inedible food composted via anaerobic digesters, R&D in ag
increases from 0.7–1% global GDP, (FOLU 2019)•

Alternative Proteins (US$24bn-US$33bn): 14% plant-based meat market revenues
invested p.a., 33% plant-based dairy market revenues invested p.a., Insect protein
production grows to 0.7–0.9m tonnes, Additional 16m MT bivalve production, Additional
4.5m MT finfish aquaculture production, 50% of 19m aquaculture farmers receive training
on sustainable production, (FOLU 2019)•

Reducing food loss and waste (US$29bn): Consumer demand management in advanced
economies (<10% total investment), reducing post-harvest waste in developing countries,
reducing supply-chain waste, (FOLU 2019)88•

Sustainable fisheries (US$5bn-US$23bn): for the low estimate, FOLU (2019) assumes
governments compensate for 20% of the estimated cost for fleet decommissioning andfishermen re-training to reduce wild catch. For the high estimate, we use TNC’s figure forannual sustainable management costs, which includes scenarios using dedicated accessprivilege based management, (TNC 2020)•

Sustainable Timber Plantations (US$3bn): avoided emissions and enhanced sequestrationfrom improved natural forest management, reduced-impact logging, extended harvest
rotations, increased post-harvest sequestration rates, and designation of set-aside areasfor protection from logging activity, (FOLU 2019)

Healthy diets: US$28 billion•

Product reformulation (US$17bn): 15% of revenues from the food processing and handlingsector are spent to upgrade equipment for product reformulation; the size of the productreformulation market 2018-2030 is estimated at a compound annual growth rate (CAGR)
of 5 percent, starting from a ~$45 billion 2016 market. 1% of the $2 trillion processed foodmarket is spent on research and development (R&D) and one third is allocated towards
product reformulation•

Global nutrition targets (US$4bn): annual investment needed to meet the Global Nutrition
Targets of reducing stunting, female anaemia and low birth weight, halting the increase ofoverweight children, increasing breastfeeding and reducing wasting.

•Targeted school feeding programmes (US$5bn): 50% of 209 million school children withstunting and wasting receive targeted school feeding programmes at an average cost of$50 per child per year.

•

R&D (US$2bn): Public and private R&D spending across food and land use systems grows
from 0.07% of GDP (2018) to 0.1% of GDP by 2030. Total additional R&D spending 20182030 is $197 billion. 10% of the additional R&D spending is allocated to nutritious food for
product reformulation of HFSS foods, evaluating the impact of targeted school feeding
programmes and evaluating progress on nutrition targets at the national level.

Infrastructure and extractives impact reduction: US$3.5-8 billion•

Mining and metals (US$3-7.5 billion):•

Impact reduction (US$3bn-6bn): CSIS estimates 300 new mines will enter operation
by 2030277, and we estimate 1-2% of CAPEX will be required per mine to reduce impact
along entire project development life cycle, from project conception, early risk screening
and Critical Habitat Assessment, though Biodiversity Action Planning, offset design
and project close (between US$10m-US$20m per mine, the range accounting fordifferences in material mined, with the focus on large-scale industrial mines278).

89•Rehabilitation (US$164m-1.6bn): we looked at the mining sites of the top 10 mining
companies globally, which amounts to 410 sites. This does not account for smallscale mining, for which data was not readily available. A study conducted by EMA
in 2011 noted that there were about 22 large scale mines decommissioned over thelast 20 years. The cumulative rehabilitation cost for four large, decommissioned
mines was US$32m; we selected an average rehabilitation cost of US$2m-US$20m
per mine. We then assumed mine closure through to 2030 at 20% following a survey
from International Council of Mining and Metals279.

•

Built Environment: (US$0.5 bn): the Nature in the Urban Century Assessment280 foundthat global urban expansion will convert about 290,000 km2 of natural habitats into urban
areas by 2030, and this has the potential to degrade 40% of strictly Protected Areas (PAs)globally that will be within proximity of urban areas if not managed properly. Conservation
measures on 41,000– 80,000 km2 can help to protect Key Biodiversity Areas (KBAs) at
risk from urban growth in 30 priority ecoregions and potentially prevent the extinction of
78% of the at-risk vertebrates. It is difficult to assess the cost of this protection of natural
habitat in the peripheries of cities, especially since most PAs are protected by government
purchase rather than direct purchase. In 2002 Balmford et al. reviewed conservation
costs for hundreds of projects globally and gave a range of cost of effective conservationin “densely settled regions of Latin and Central America, Africa, and Asia” from US$130–
5,000/km2 /yr. This gives a km2/yr figure for effectively conserving biodiversity in urban
environments. To protect the amount of land proposed in McDonald et al. using these perunit area costs a range of US$14.1–544 million/yr.

90Endnotes
1.

Mohieldin, M. (2022). “’What is inefficient, insufficient and unfair?’ and the 1% for 1.5C proposal”. Climate Champions.

2.

Olsen et.al., (2023). “UNEP State of Finance for Nature”

3.

Olsen et.al., (2023). “UNEP State of Finance for Nature”

4.

Damania, R., et.al., (2023). “Detox development: repurposing environmentally harmful subsidies”. The World Bank

5.

Olsen et.al., (2023). “UNEP State of Finance for Nature”

6.

KBC. “Pres. Ruto: When we put all our assets together in balance sheets, you’ll know Africa is wealth” [Video file].
(2023, September). Retrieved from https://www.youtube.com/watch?v=CuRX5YhgH38

7.

Rockstrom, J., et al. (2023). “Carbon dioxide removal from the atmosphere.” Nature, 123(456), 789-802 https://www.
nature.com/articles/s41586-023-06083-8

8.

IPBES. (2019). “Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.” IPBES secretariat, Bonn, Germany.

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A more detailed summary of investment opportunities can be found in the Annex.

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254.

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97

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263.

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WEF. (2020). “The Future of Nature and Business”. World Economic Forum.

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Bassi, A., et.al. (2021). “How can investment in nature close the infrastructure gap?”. IISD.

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