Funding nature's recovery is a business imperative

Essentially, the financing gap for nature means the difference between how much money is going into nature conservation compared to how much we actually need to halt and reverse nature loss by 2030. And that gap is estimated at about $700 billion each year. That amount is what would be needed to close the financing gap for nature and make sure that we're on track to deliver a nature positive economy. What we need to keep in mind is that the whole economy fundamentally depends on nature. So, that number may seem big, but compared to what nature provides to the economy, it is peanuts.

Given that we all benefit from nature, it is clearly a whole of society approach: everyone needs to play their role.  In terms of financing, you can look at it from both the public and private perspective. These are two huge buckets of financing that need to start flowing into nature for its protection, restoration, and sustainable use. 

On the public side, the biggest focus needs to be on reforming environmentally harmful subsidies. These subsidies are often  put in place with a socioeconomic reason in mind.  However, it is estimated that $2.6 trillion each year, (equivalent to 2.5% of GDP) flow to activities which are unintentionally harmful for the environment. Think of fossil fuels or some agricultural subsidies. We need to redirect that public funding to activities that have a nature-positive outcome instead of a nature-negative one, while unlocking social benefits. On the private side, the UNEP Finance Initiative estimates that $5 trillion each year of private financing go towards nature-negative outcomes. 

Both of these funding sources also rely on better data. Any investment decision - whether made by a government, an investor, a company, or an individual - needs to include information on their impact and the dependencies on nature.

At the COP16 in  Colombia, some steps forward were made. Governments came together with some positive outcomes, but unfortunately, the negotiations did not go far enough in terms of addressing the biodiversity financing gap.  There was a strong focus on resource mobilization, in particular. One of the discussions that remains to be debated in the next round of discussions in Rome at the end of February 2025 is about how funding is fairly distributed, and what funding architecture should be put in place. 

There were a few big wins. One was something called the Cali Fund. This is about access and benefit sharing of what is called “digital sequencing information” (also called DSI for short). Essentially, it means that companies benefiting from using nature as the basis of their products - like pharmaceutical companies, agri-businesses and cosmetics firms - and have been able to build their business models on the genetic wealth of nature will be expected to contribute financially and non-financially to help protect and conserve biodiversity. Furthermore, a large part of the beneficiaries of this fund will be indigenous peoples and local communities. Another success of COP16 in Cali was that for the first time, the leadership role of indigenous peoples and local communities was fully recognized in the UN system, and indigenous peoples now have their own permanent subsidiary body. That's hugely important because we all need to think - and businesses too, as they develop and implement their nature strategies - about how to embed traditional wisdom and knowledge in decision making. 

And finally, another win in Cali was that businesses and finance showed-up in force and in numbers. There  were double the number of business and finance organizations present in Montreal two years before. That is a promising signal: now that governments have adopted the Global Biodiversity Framework, business and finance are also part of the conversation on how to implement the framework.

I think every single business from any sector and any geography, needs to be taking action right now to contribute to halting and reversing nature loss by 2030. We don't have the liberty of waiting for perfect regulation to be put in place. Regulation is essential because it gives a political certainty and direction; and it gives the confidence to businesses to invest, to innovate and to start shifting business models. But there are some no-regret actions that companies need to take right now. At a high level, all companies need to be managing their impacts and dependencies on nature, simply because it is good business! 

There are four high-level actions that any business and financial institution should take right now. One is assess: assess their most material impact and dependencies on nature. The second is commit: commit to setting science-based targets, setting their ambition level for nature and make sure that they are based on science. The third is transform, which is the hardest, because it is about asking how to avoid and reduce their negative impacts and then regenerate and restore to have a positive impact. But that second bit is also really exciting for businesses because it touches on something magic in business, which is innovation and creativity. And then the fourth is disclose: disclose on all of the above so that the right information is flowing within the system. 

We would also encourage every company to develop a nature strategy - a forward looking plan of how it will contribute to a nature-positive future, including how they might invest in the protection and restoration of nature. ‘It’s Now for Nature’ is a joint and global effort to scale and speed up business action by 2030.. You can access the Nature Strategy Handbook that equips companies to ask the right questions at the board level, and look at the many companies - like GSK, L’OCCITANE Group, Decathlon, Tetra Pak, and Holcim among others that have had their strategies published. 

Through taking these actions and setting a nature strategy, then investors, consumers, regulators, capital markets -  will have access to the right information to embed nature in their own decisions, eventually driving better outcomes for society and the environment as a whole. We don't only need to increase the amount of green finance, we also need to shift current traditional financial flows to embed the value of nature and people within them.

I think CEOs that would like their company to succeed in the longer term need to have their finger on the pulse of the current trends. And you can look at it from many different angles. You can look at it from your customer base or your employee base, and realize that youth today are calling for companies to take responsibility and accountability for their actions. They want their values aligned with their job. 

You may take it from the climate lens: many companies have climate or net zero plans. We know that nature is your biggest ally in tackling climate change: if you look at the past 10 years, over 50 % of all of the human-induced emissions have been captured by nature in the land and the oceans. But we're losing that capacity. So there is an inherent reason that if we're losing nature at an unprecedented rate, and you have targets for climate, then you should be investing in nature. You may also take it from the risk management lens: we are seeing that supply chain operational risks are exacerbated by climate change. Some climate events are literally stopping operations. That is a resilience risk for business. So, if as a CEO you would like to ensure that all of these inputs - the raw materials, functioning ecosystems,  - keep providing benefits for your company (and for societies and the global economy at large);  and if you would be open to paying to increase resilience and longer term certainty, then investing in nature suddenly becomes a competitive advantage as investors become interested in the way you're managing your business effectively and for the long term.

Fundamentally, we need to shift our focus from exploitation to restoration. This is our moment as humanity to fund nature's recovery. No one of us can do this alone. But if we all work together, then we can not only reverse nature loss, but actually restore it, so that we live in a nature-positive, net-zero, equitable world.