One small step for finance, one giant leap for nature

5 July 2022

Exploring nature-based climate solutions for a net zero future, and how UNEP FI is connecting across the industry to support banks, insurers and investors on their journey.

As large swathes of the global financial system continue to mobilise around net-zero emissions there is one element of the climate conversation which is under-explored and bursting with opportunity – nature-based solutions. These solutions can extract billions of tons of carbon from the atmosphere, offering some compelling options in response to climate change. It is estimated that if we invest in nature, restoring and protecting key ecosystems can provide over a third of the global emissions reduction the world needs by 2030. This can provide an important additional thread to the urgent need for absolute reduction of emissions across the global economy.

Earlier this year, member states of the United Nations Environment Assembly agreed a universal definition of nature-based solutions as ‘actions to protect, conserve, restore, sustainably use and manage natural or modified terrestrial, freshwater, coastal and marine ecosystems, which address social, economic and environmental challenges effectively and adaptively, while simultaneously providing human well-being, ecosystem services and resilience and biodiversity benefits.’

An example is in coastal development projects, where investing in mangroves and seagrass meadows can protect coastal assets from erosion and storm surges – often more effectively than grey infrastructure, with additional biodiversity benefits. In agriculture, an example is moving from monocultures to agro-forestry, where crop production sits alongside biodiversity protection and reduction of emissions.

However, nature-based solutions such as these are chronically underfunded. There is an estimated USD 4.1 trillion financing gap needed by 2050 in nature-based solutions for the world to remain on track to meet the Paris Climate Agreement. Currently only 3% of this is tapped – mainly by public financing – an amount which will need to at least triple by 2030. One small step for finance could be one giant leap for nature.

Nature-based solutions represent an exciting emerging area of conservation finance, as early-movers and innovators at financial institutions begin to explore their potential. Still a nascent area, blended finance is often used as a tool to de-risk and scale nature-based solutions, with live market examples including the Global Fund for Coral Reefs, and the Belize Blue Bond.

Positioned at the crossroads of nature and private finance, UNEP FI is also working across the industry to support banks, insurers and investors move financial flows at scale towards climate- and nature-positive solutions. We inspire our members to take action, showcasing innovative finance-based projects and mechanisms which work towards the protection, recovery and resilience of nature.

UNEP FI also helps members to connect with relevant initiatives worldwide to avoid ‘reinvesting the wheel’, including the Natural Climate Solutions Alliance (NCSA), which works to identify opportunities and remove barriers to invest in natural climate solutions. “Financial institutions play a key role in reaching the volumes of carbon credits needed. The NCSA works to identify opportunities and barriers to investment in the Natural Climate Solution voluntary carbon market and also serves as a forum for knowledge sharing and technical capacity-building to ensure natural climate solutions reach their full potential in abating climate change. The NCSA will be happy to collaborate with UNEP FI members to identify investment best practices”, said Giulia Carbone, Director of the Natural Climate Solutions Alliance.

Similarly, UNEP FI recently became a member of the Coalition for Private Investment in Conservation (CPIC), which focuses on enabling conditions that support a material increase in private, return-seeking investment in conservation. UNEP FI hosted the CPIC bi-annual meeting on 28 June at the UNEP office in Paris. With over 150 attendees, the meeting showed how the network has matured.

“To support a shift from nature-negative towards nature-positive investments, we need to support and demystify investing in nature, and work together with leading members of UNEP FI to build a pipeline of investable deals that benefit climate, nature and people. This meeting showed the progress of the CPIC network as a beehive for catalytic investments in nature.”, said Romie Goedicke, Technical and Project Manager for Nature at UNEP FI.

UNEP FI intends to build its work with the CPIC network to increase alignment and activities of its members around nature-positive project development, including in the space of nature-based solutions.

For more on how banks, insurers and investors can take action on nature and biodiversity loss, click here.

Nature at UNEP FI 

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