COMMENT: Nicky Chambers of Global Canopy reflects on a pivotal week, when leaders and investors pledged a raft of new initiatives to scale up funding for nature-based solutions to climate change, from the Prince of Wales' Terra Carta initiative to the Natural Capital Investor Alliance
At this week’s One Planet Summit for Biodiversity, global leaders united around the importance of rapidly scaling up nature protection and restoration. Ensuring the finance sector drives the transition to a nature-positive economy was at the centre of discussions.
Concrete targets and commitments to financing nature featured at the summit. Governments, including Canada, France and the UK, committed to increasingly align international climate finance with nature protection. The UK government committed to allocate £3bn (of the £11.6bn it has already committed in international climate finance) to nature. The Prince of Wales announced his Terra Carta initiative, a recovery plan to put the irreplaceable power of nature at the heart of private sector value creation. The Natural Capital Investment Alliance, which launched at the summit, aims to mobilise $10bn by 2022. Leaders shared that €14bn has been mobilised for the Great Green Wall in Africa, the world’s largest reforestation project.
Protecting biodiversity globally requires up to an estimated $967bn a year – currently only up to $143bn flows into biodiversity annually
These concrete commitments are worth celebrating. But we must also recognise that they only mark the very beginning of the systemic shift that’s needed to tackle the nature crisis: protecting biodiversity globally requires up to an estimated $967bn a year, according to the new Little Book of Investing in Nature, which the thinktank I work for, Global Canopy, launched at the summit. Currently only up to $143bn flows into biodiversity annually, leaving a gap of up to $824bn.
A systemic shift in financing is the aim of the Taskforce on Nature-related Financial Disclosures (TNFD), which builds on the successful Task Force on Climate-related Financial Disclosures (TCFD). “With the TCFD we managed to shift private finance, and we need to do the same with the TNFD,” said President Macron at the summit this week. In all 73 organisations, including over 40 financial institutions from five continents, are now working together to bring together a TNFD in the first half of this year. They are supported by a technical expert group of 12 members, which I co-chair, and an observer group of 67 organisations.
The TNFD will develop an international reporting framework for nature to help financial institutions access the data they need to shift their financing from nature-negative to nature-positive. The TNFD will also consider how financial institutions can better integrate other sources of nature-related data, particularly satellites, governments and NGOs in decision-making.
Shifting private finance is essential, but transforming public finance is equally critical. While more than 80% of biodiversity financing currently comes from governments, every year governments also provide $1tn of subsidies to nature-negative activities, such as unsustainable agricultural production, fishing, forestry and fossil fuels, according to the Little Book of Investing in Nature. Overall, governments globally spend five to seven times more on nature-negative subsidies than the amount invested in biodiversity protection globally. Funding for harmful subsidies currently dwarfs that for biodiversity. But this provides an opportunity; re-directing these subsidies away from the most harmful activities by 2030 could help to fill the projected biodiversity financing gap.
At the summit this week, Norway’s Prime Minister Erna Solberg stressed the need for governments to urgently redirect public subsidies harmful to biodiversity. Eliminating or repurposing nature-negative subsidies is one of the commitments under the Leader’s Pledge for Nature, which launched in September last year and has now been signed by 82 governments, and the EU’s Biodiversity Strategy for 2030 also explicitly calls on members to phase out subsidies harmful to biodiversity. The world’s governments made similar commitments in 2010, which they have failed to deliver. They now have to prove it will be different this time.
What we need is a complete transformation of industries and sectors from nature-negative to nature-positive
The importance of tackling the nature and climate crises simultaneously was another recurring theme in the remarks from world leaders this week, including Christine Lagarde, president of the European Central Bank. To have a chance at meeting climate targets, we must protect nature so that soils, trees and oceans can absorb emissions. Ensuring a greater share of funds already committed to climate are channelled to nature-based solutions is a valuable starting point, but while protecting nature is a critical part of the climate agenda, protecting nature is also vital in its own right. Nature-related investments need to go far beyond dedicated biodiversity conservation. What we need is a complete transformation of industries and sectors from nature-negative to nature-positive. Around three-quarters of the investments in biodiversity should flow towards ensuring activities that affect nature, such as fisheries and forestry, are managed sustainably.
The finance sector is now looking to world leaders to cement the momentum behind biodiversity financing by agreeing ambitious global targets for nature later this year. The new High Ambition Coalition for Nature and People, another new initiative launched at the One Planet Summit this week, has bolstered the foundations for a strong agreement.
Critics point out that even if ambitious targets are set, world leaders have set goals for biodiversity before and failed them. None of the biodiversity targets the world set for itself in 2010 was fully achieved by the 2020 deadline. But in the last years we have seen an increasing roll-out of mechanisms to finance nature, from biodiversity offsets to a menu of green financial products. As mainstream financial institutions get behind the shift from nature-negative to nature-positive financing, it can be different this time.
Nicky Chambers is programmes and impact director at Global Canopy and co-chair of the Technical Expert Group of the initiative to bring together a Taskforce on Nature-related Financial Disclosures
The Little Book of Investing in Nature is published by Global Canopy and is available here. The book is the latest addition to the easy-to-read Little Book series pioneered by Global Canopy.
The Little Book of Investing in Nature is supported by UNDP Biofin, AFD, Cornell, IDH, Mirova, Credit Suisse, WWF Singapore.