The Inter-American Development Bank (IDB) Group has launched a natural capital and biodiversity action plan, planning to embed natural capital more deeply into its operations while scaling biodiversity finance mechanisms.
The 2024-2025 Natural Capital and Biodiversity Mainstreaming Action Plan set out how the group will integrate nature concerns, ranging from financing to country dialogues, with time-bound goals.
“The plan is a huge step for the IDB Group in its commitment with nature” said Ana Maria Ibanez, vice-president for sectors and knowledge at IDB.
“We have confidence that the action plan will result in projects that not only enhance quality of life and regenerate biodiversity, but also offer economic development opportunities for people throughout Latin America and the Caribbean,” she said.
IDB, of which the US is the largest shareholder, aims to accelerate the economic and social development of Latin American and Caribbean countries. It mobilised $13.5 billion in 2023.
MARKET GOALS
The mainstreaming biodiversity plan set out goals for 2025, from a baseline of 2023, over four areas:
- Resources mobilisation and nature financing
- Country dialogues, strategies, and programming
- Knowledge products and capacity building
- Operations and accountability
In the section on resource mobilisation, IDB said a wide range of financial instruments can be designed to unlock markets.
“Thematic bonds, such as the jaguar bonds, or market instruments, such as [the habitat banks of] Terrasos in Colombia, epitomise innovative biodiversity investment solutions that the IDB is prepared to scale and replicate throughout the region.”
Colombia-based environmental investment company Terrasos listed 10,000 voluntary biodiversity credits last month. Verified by KPMG, each unit represents the protection of 10 square meters of conserved ecosystems in the Colombian habitat bank El Globo for 30 years.
Last year, IDB said it would support Terrasos, alongside three other companies, as part an initiative that sought to find innovative ways to use digital assets to promote biodiversity conservation.
IDB can “leverage the rise in institutional investors entering the biodiversity investment space by partnering with possible investors to invest in biodiversity bonds, biodiversity credit markets, and biodiversity-focused investment funds”, it said in the plan.
“These instruments have the potential to mitigate economic and financial risks, making them a compelling alternative for countries to minimise their dependency on international aid to finance their UN Sustainable Development Goals.”
MAINSTREAMING BIODIVERSITY
The rise in investments that take the environment into consideration represents a new global trend with the potential to influence policymakers, IDB said.
Mainstreaming biodiversity considerations into IDB’s operations will become progressively important in supporting the drive for increased private finance, it said.
“The IDB can occupy a pivotal leadership role in Latin America and the Caribbean to unlock opportunities to upscale ESG-linked investments, and innovative financial instruments, and support entrepreneurial finance through partnerships with the private sector.”
The group set out seven targets for launching various types of nature financing projects by 2025, including on:
- Developing markets for natural capital
- Supporting the creation of country pipeline accelerators to deliver bankable project pipelines for private-sector investment
- Backing new natural capital asset classes
IDB’s natural capital plan follows its launch of an Institutional Strategy in March to reduce poverty, address climate change, and bolster sustainable regional growth.
By Thomas Cox – t.cox@carbon-pulse.com
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