The amount of private money committed to nature could help the total amount raised reach sufficient levels to reverse biodiversity loss, if investment rates continue, the UN Environment Programme Finance Initiative (UNEP FI) said in a report preview on Monday.

Some $1.45 trillion could flow into nature finance by 2030, helping towards closing the nature finance gap as defined by the Kunming-Montreal Global Biodiversity Framework (GBF), UNEP FI said.

Private finance for nature grew from $9.4 billion to over $102 bln in the past four years, it said, without specifying over what period the figures indicate exactly.

The surge in private nature finance is a “game-changer for global biodiversity”, it said in a press release about a report that will be presented in full at the World Biodiversity Forum in Switzerland later this month.

“There is promising momentum for closing the nature finance gap but it is by no means certain. It’s not set to close – there is early promise but still a long way to go,” Jessica Smith, lead author for the research, told Carbon Pulse.

“You’ll note the total sum is circulation is still a proportion of what is needed, but the trend is positive. Banks and investors need to keep up the early momentum of this initial surge since the GBF was agreed,” said Smith, who is also nature lead at UNEP FI.

The GBF called for mobilising $200 bln a year for biodiversity by 2030 across all funding sources in Target 19.

The largest asset classes contributing to growth, all of which are increasingly adding nature-related key performance indicators, have been alternative investments at $57 bln, traded debt at $27 bln, and private equity at $7 bln, the report said.

New instruments like biodiversity credits, debt-for-nature conversions, exchange traded funds, and private venture capital also show promise for innovative ways of funding conservation efforts, it said.

DATA QUESTIONS

The report data has some problems as there is no way to define ‘nature positive’ and nature finance across financial industries, asset classes and transactions, Smith said. “The lack of consistent definitions is a barrier to scaling, accountability and impact.”

UNEP FI is working with the Finance for Biodiversity Foundation on a discussion paper to answer these questions.

“The paper on Nature Positive Finance will be released ahead of COP16 and feed into discussions on indicator D3 of the GBF – which will track how much finance is flowing towards the goals and targets of the GBF.”

“Furthermore, there is no current matching of the available finance to countries’ National Biodiversity Strategy and Action Plan priorities, which is also needed to understand how the finance coming online is, or is not, making a difference to bending the curve of nature loss.”

The term ‘nature positive’ has yet to be defined though initiatives have ramped up work to clarify how it could be achieved over the last year.

REMAINING CHALLENGES

Despite private finance momentum, significant challenges remain. Funds must reach the projects that invest in conservation and nature’s stewards, she said.

Donor funding for forest guardianship by Indigenous Peoples, Afro-descendant Peoples, and local communities increased by a third over the last eight years, though few resources directly reached on-the-ground organisations, a report found in April.

In addition, early-stage nature projects need more money, Smith said. “A lot of the capital coming online is too far along the capital continuum and is not matching the needs for high-impact projects to scale.”

Funding must link to national and local biodiversity priorities, especially in emerging markets where the funding gap is greatest, the report stressed.

“Now, governments must set clear policy frameworks to channel these funds into national biodiversity priorities and towards front-line nature stewards. It’s time to turn this financial momentum into real-world impact,” said Eric Usher, head of UNEP FI.

COUNTRIES IGNORING FORESTS

Only eight of the top 20 countries with highest rates of tropical deforestation have quantified targets on forests in their Nationally Determined Contributions (NDCs), UN-REDD found in a report also published on Monday.

The report revealed a “major gap in forest protection, management and restoration in current NDCs” as those submitted 2017-23 “do not meet the global ambition to halt and reverse deforestation by 2030”.

Forests play a key role in achieving the Paris Agreement on climate change, as they can contribute one-third of the emissions reductions required to close the 2030 mitigation gap, it said.

While 11 of the 20 assessed NDCs contained quantified targets relating to tree planting, mitigating climate change requires reducing deforestation first, it said.

By Thomas Cox – t.cox@carbon-pulse.com

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