Governments and the private sector must improve incentives to invest in nature to help bridge the financial gap, accounting firm KPMG has said.
Tackling key challenges to ramping up financing is “critical” in creating the building blocks needed for investment, KPMG said in newly released report The Investment Case for Nature.
A change in the incentive structure will require “clear international and domestic policies, regulations and standards being developed, to effectively incentivise and create a level playing field for businesses”, it said.
Countries need to draw from the COP15 final agreement to provide clear national biodiversity strategies and action plans, it continued.
Furthermore, more tangible case studies with examples of solutions with clear business cases are required.
“There are a number of initiatives that are seeking to do this, but these need to speak to both the conservation communities that are looking for funding, including conservation NGOs, landowners, protected area authorities, and local governments in target countries as well as banks and investors.”
Corporate capacity, knowledge, and strategy needs to change by educating teams about the importance of nature across the whole businesses, KPMG said.
Global financing of nature must more than double from the levels of $154 bln in 2022 to around $384 billion per year by 2025, the UN Environment Programme said in a report published last year.
INVEST IN CAPACITY
Conservationists will need to be trained on the different funding strategies available so they can better understand how to access finance, KPMG said.
Building up capacity will help to break down the barriers between different communities operating across the nature space.
“Businesses and financial institutions similarly will need to upskill on nature and biodiversity within their organisations to understand how best to drive positive biodiversity action and identify opportunities that will arise.”
INVEST IN DATA
Funding for tackling data and technology needs to ramp up to reduce the technical barriers to investing in nature, KMPG said.
This could mean supporting companies looking to disclose their nature-related impacts.
“There is also a need for greater quality assurance and provenance around nature-related data and tools,” it said.
“There are a growing number of tools that are integrating nature-related data without a full scientific understanding of their intent and, in some cases, without acknowledgement of original data providers or licensing requirements.”
KMPG said funding for nature comes from sources including:
- Taxes on polluting products such as fertilisers
- Environmentally-motivated subsidies
- Overseas development finance
- Development banks
- Sovereign debt
- Payment for ecosystem services
- Public-private partnerships
- Bonds/loans
- Sustainability-linked loans, term loans
- Biodiversity loans and equity
- Biodiversity credits, and biodiversity in carbon credits
- Sustainable commodities
- Impact investing
- Philanthropy
By Thomas Cox – t.cox@carbon-pulse.com
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