Improving profits from assets related to nature and climate are attracting investors to the market, while biodiversity credits are tipped to mature this year, a survey has suggested.
Over a third (36%) of more than 120 financial and corporate professionals, who responded to Nature4Climate (N4C)’s survey on opportunities in 2024, said increasingly good returns were a motivation for investing in nature.
A ‘moral duty’ to help protect nature and climate was another leading reason for participating in nature markets (over 80% of respondents), as was seizing early mover advantages (40%), the multi‐stakeholder coalition N4C said.
Other key trends for 2024 included “further maturation of biodiversity credits, integration of emerging tech, and market participants using experience with forestry to finance other critical ecosystems, such as peatlands and mangroves”, N4C said in a press release. Carbon Pulse has asked for more information.
The nascent biodiversity credit market has attracted an increasing amount of attention over the last couple of years, with many project announcements seeking to help plug the nature financing gap, though few actual transactions have taken place.
“These important results show that while there is an immense interest in scaling finance to support nature, better data and more comparable metrics, more options for blending with public or philanthropic capital, and an improved market infrastructure are needed to help the market grow,” Lucy Almond, director of N4C, said.
Avoided deforestation, agroforestry, and reforestation were identified as leading nature-based investment opportunities in 2024, N4C said. Indeed, some 30% of respondents are working towards a deforestation-free finance commitment, it said.
Key policy developments in this area include the EU requiring deforestation-free products for some sectors, from this year, and the developing Corporate Sustainability Reporting Directive.
Nature-related technology is becoming “increasingly important”, with around three quarters of respondents either saying it was important for their investments, or that they were actively making direct investments in related assets, N4C said.
The Kunming-Montreal Global Biodiversity Framework has targeted mobilising $200 billion per year by 2030 for biodiversity from all sources.
By Thomas Cox – t.cox@carbon-pulse.com
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