Cali, 25 October 2024 (COP16) - Over the past year, significant momentum has built toward addressing the nature loss crisis and advancing the nature-positive agenda. The financial and business case for nature has strengthened, with the private sector increasingly committed to the Vision and Targets of the Kunming-Montreal Global Biodiversity Framework (GBF).

Given this momentum and the evolving policy landscape, it is now realistic to envision nature financing reaching maturity to meet the GBF goals and achieve a nature-positive status by 2030. Unlocking and scaling this potential, however, requires focused effort. Central to this is fostering place-based partnerships between governments, financial institutions, corporations, SMEs, philanthropists, and local communities. These stakeholders must co-create solutions tailored to national and local contexts to ensure biodiversity conservation, restoration, and sustainable development.

National Biodiversity Strategies and Action Plans (NBSAPs) provide governments with a crucial framework for reaching global biodiversity targets. Yet, the challenge remains in connecting these plans to private finance, especially in emerging and developing markets. Place-based partnerships, rooted in local ecosystems and communities, can effectively bridge this gap by aligning private financial flows with NBSAP financing and implementation.

Recognizing this need, UNEP FI and UNDP Biofin launched a Public-Private Community of Practice for Nature and Development Finance one year ahead of COP16, creating a platform for knowledge sharing and collaboration between public actors and private finance. This effort aims to help countries navigate the complex space of nature financing and access private capital for their NBSAPs. As the community grows, it is expanding its partnerships and agenda, building a coalition that ensures countries have the resources needed to meet their biodiversity targets by 2030. Success in achieving these goals—especially GBF Target 19—will depend on deeper integration and coordination between government policies to direct the types of funding that suit the characteristics of each project into the right places.

The business case for financial institutions and corporations to voluntarily invest in nature hinges on several key drivers, including innovation, value creation, and risk mitigation. Yet, scaling these investments require enabling policy and regulatory changes that provide clear frameworks, incentives, and risk-reducing mechanisms.

To overcome barriers to nature-positive financing, institutional challenges must be addressed. A significant hurdle is the misalignment between the faster pace of local credit approvals and the slower timelines of international investors, which can delay capital flows to urgent nature-based projects. This disconnect hinders timely action on biodiversity loss. By fostering place-based partnerships, this misalignment can be corrected. Partnerships between local and international actors allow for co-developed investment strategies, ensuring project financing—whether through debt, equity, or market-based investments—is aligned with both local needs and international expectations. This collaboration streamlines decision-making and removes obstacles, enabling faster deployment of capital toward nature-positive projects.

While large-scale carbon credits have successfully attracted financing, the journey to establishing diverse and scalable revenue streams for nature is still in its early stages. For NBSAPs to be fully implemented, a fundamental shift is required—from viewing nature as a free resource to recognizing it as a valuable economic asset. Emerging revenue mechanisms, such as biodiversity credits, biodiversity net gain, habitat banking, and water credits, are following a trajectory like the early development of carbon markets, providing financial incentives for conservation and restoration. Early transactions, coupled with improved integrity measures, are beginning to build market confidence. However, for these mechanisms to achieve widespread adoption, scalability and transparency are crucial. Place-based partnerships are pivotal in this process, playing a key role in assessing the feasibility and replicability of these revenue models, blending with catalytic and de-risking strategies, and ensuring inclusiveness and equity, particularly for Indigenous Peoples and Local Communities.

Another critical factor in unlocking private capital for nature-positive projects is addressing investment risks, particularly in developing markets. Complex, often poorly understood risks can deter private investors from engaging in biodiversity projects. Concessional finance, through risk-sharing tools like guarantees and first-loss capital, can catalyze investment by absorbing part of the risk, thus incentivizing private sector participation. Place-based partnerships are essential here too, as they bring together local stakeholders and environmental experts to tailor risk assessments and mitigation strategies to local contexts. Collaborative efforts also help align due diligence standards, particularly for environmental and social (E&S) risks, making it easier for private investors to engage confidently in nature-positive solutions.

Ultimately, the success of nature-positive finance depends on the ability of all stakeholders—governments, financial institutions, corporations, SMEs, philanthropists, and local communities—to work together to reduce institutional barriers, unlock diverse revenue streams, and create effective de-risking mechanisms. By doing so, they can accelerate the transition to a nature-positive economy, ensuring that countries have the resources needed to meet their biodiversity goals by 2030.

Should you be interested in joining the community of practice as it expands its mandate, you can visit https://nature-finance-communityofpractice.org and express your interest through this form.