The Kunming-Montreal Global Biodiversity Framework (GBF), adopted by 196 countries in 2022, aims to halt biodiversity loss by 2030 and fully recover by 2050. Financial institutions must play a vital role, as over 50% of global GDP depends on nature. GBF targets, such as mainstreaming biodiversity in decision-making (Target 14), mandatory disclosure (Target 15), subsidy reform (Target 18), and financial innovation (Target 19), require immediate attention. Nature loss, driven by climate change, pollution, and land-use changes, poses economic risks, with deforestation alone costing companies an average of $300 million in 2022.

Acting on nature-related opportunities

Transitioning to a nature-positive economy offers $10 trillion in business opportunities and 395 million jobs by 2030. Key financing areas include:

• In-value chain transformations: Renewable energy, circular business models, and sustainable supply chains.
• Conservation and restoration projects: Wildlife protection and mangrove restoration.
• Systemic change initiatives: Policy advocacy and subsidy reform.

Sector-specific opportunities in chemicals, construction, fashion, and agri-food could reduce impacts and unlock significant gains. For instance, tackling water-related challenges could generate $436 billion in opportunities, with companies reporting average gains of $250 million each.

Managing nature-related risks

The 2024 Global Risks Report highlights four of the top five global economic risks as linked to nature and climate. Nature-related risks include:

• Physical risks: Ecosystem degradation, such as freshwater shortages or pollinator loss.
• Transition risks: Policy shifts, legal actions, and investor sentiment changes.
• Systemic risks: Economic ripple effects from ecosystem dependencies, such as Amazon deforestation impacting rainfall and agricultural productivity.

Frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) and scenario analysis tools are helping financial institutions manage these risks.

Priority actions for financial institutions

Barriers to nature-positive financing include limited data, resource gaps, and unclear business cases. Financial institutions can:

• Adopt a nature transition assessment framework to standardise data collection and evaluate companies’ biodiversity impacts. Currently, only 2% of major food and agriculture companies disclose environmental impacts, and just 38% of firms reporting to CDP include nature-related information.
• Develop de-risking mechanisms like conservation bonds, debt-for-nature swaps, and blended finance tools to reduce financing challenges. Collaborative efforts like the Coalition for Private Investment in Conservation (CPIC) offer successful models for scaling.

Financing the transition

Private finance flows for nature-related projects have grown elevenfold since 2019, reaching $102 billion in 2023. Key areas include alternative investments ($57 billion), traded debt ($27 billion), and private equity ($7 billion). Sustainability-linked bonds and biodiversity credits are emerging tools, with green bonds tied to biodiversity increasing from 5% in 2020 to 16% in 2023. Harmonised taxonomies are essential to incentivise nature-positive investments aligned with GBF’s Target 18.

Regulations and frameworks

Key regulations include the EU Deforestation Regulation (2024), which mandates due diligence on deforestation-linked products, and France’s Article 29, requiring biodiversity risk disclosures. Voluntary frameworks, such as GRI Biodiversity Standards and CDP reporting, provide additional guidance. Tools like biodiversity footprinting and the Natural Capital Protocol support standardised assessments.

Economic and job potential

Fifteen systemic transitions across food systems, infrastructure, and energy could deliver $10.1 trillion in opportunities and 395 million jobs by 2030, requiring $2.7 trillion annually. This investment is comparable to global stimulus efforts, such as the $2.2 trillion US COVID-19 package.

Conclusion

Financial institutions must address data gaps, adopt innovative financing tools, and collaborate across sectors to meet biodiversity goals. Early adopters are leading the way, with 177 institutions managing €22 trillion signing the Finance for Biodiversity pledge, and over 108 adopting TNFD guidelines. These collective efforts are critical to mitigating risks, capitalising on opportunities, and driving the nature-positive transition.