The world’s major multilateral development banks on Saturday launched a first common set of principles to track nature-positive finance as part of a move to scale up and mainstream activities that protect and restore nature and biodiversity.

The launch was made on the sidelines of COP28 in Dubai, two years after the MDBs began the work.

“Scaling up nature-positive finance is key to solving the climate change, biodiversity loss, and pollution crises. With the common principles for tracking nature-positive finance, MDBs are implementing a key deliverable from their joint statement on nature,” said Ambrosie Fayolle, vice president at the European Investment Bank (EIB), one of the banks leading the process.

“At the EIB, from 2024 onwards, we will be integrating the common principles into our existing environmental sustainability tracking methodology. In doing so, we are committed to working with countries and the private sector to scale up nature-positive investments worldwide.”

The banks defined nature-positive finance as funding that supports actions that protect, restore, or enhance sustainable use and management of nature, or enables these actions.

In order to qualify, finance must meet all of the following three criteria:

• It must make a substantive contribution to nature
• It must have expected positive outcomes for nature that are measurable and can be assessed and monitored against a baseline or business-as-usual scenario
• It cannot be expected to introduce significant adverse environmental risks or impacts

“Many projects that promote environmental sustainability have benefits for nature. However, they may not necessarily meet the required criteria to be recognised as “nature-positive” even if they support the broad ambition of the KMGBF. MDBs may nonetheless report those co-benefits separately,” the principles said.

“The intention of these Common Principles is to set a higher standard for any finance tracked as nature-positive finance and to capture those MDB investments that make a demonstrable positive contribution … to putting nature on the path to recovery as part of implementation of the KMGBF.”

DIFFERENT FOCUS

At a launch event in Dubai, some of the banks showcased the recent progress they had made on bringing nature into the mainstream.

The presentations showed that the MDBs are taking different paths towards increasing nature-positive finance, though interest in nature-based solutions and the principle of causing no harm are prevalent with most.

The Inter American Development Bank (IDB) was the only one saying it is looking at the emerging market for biodiversity credits at part of its activities, though without offering detail.

When the carbon market emerged around two decades ago, early involvement from the World Bank, the Asian Development Bank, the EIB, and the European Bank for Reconstruction and Development (EBRD) played an important role in getting activities off the ground.

However, it may still be some time until a similar situation is seen in the biodiversity market.

“One thing we are going to be looking at, the same thing we did for carbon markets, is benefit-sharing, to see where the money goes,” said Valerie Hickey, the World Bank’s global director for environment and the ocean.

“If we are to get involved in the biodiversity market, we need to know the money is going to the people on the frontlines who are doing the work.”

Meanwhile, Jamie Fergusson, global director for climate business at the International Finance Corporation (IFC) said the lack of a common metric in the biodiversity space is a barrier to entrance for the IFC, and that the institution going forward will spend more time contributing to developing a taxonomy for nature.

EBRD APPROACH

At the same time, the EBRD released its own approach to nature on Saturday, outlining how it will focus on protecting and investing in nature and disclose nature-related information.

“The EBRD approach to nature reflects the institutional effort being made to scale up nature action. The approach demonstrates the bank’s alignment with its mandate, highlights its experience in contributing to the restoration of degraded ecosystems, and provides a vision for doing more for nature in future,” said Adonai Herrera-Martinez, EBRD director for environment and sustainability.

Its approach will include leveraging environmental due diligence to identify opportunities for biodiversity net gain and exploring new models for financing.

“The EBRD has an opportunity to leverage its position as a private-sector and market-oriented MDB to influence real change and make a positive impact for nature and biodiversity,” said Rachael Barza, the bank’s lead on climate adaptation and nature finance.

“The actions outlined in the approach to nature will drive the Bank’s contributions to the global nature positive goal – something we must all support to ensure a sustainable future.”

By Stian Reklev in Dubai – stian@carbon-pulse.com

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