In the two years since COP16 in Cali, the global finance sector has made significant progress in building the frameworks, standards, and instruments required to address nature loss. Despite this foundational work, a persistent gap between financial architecture and actual implementation means that significant capital continues flowing into activities harmful to nature, vastly outpacing investments in nature-based solutions.
Global Financial Imbalances and Funding Gaps Ahead of COP17
Data from 2023 reveals a stark imbalance in global financial flows. Finance directed towards nature-negative activities exceeded investment in nature-based solutions by approximately 30 to 1, according to findings discussed ahead of COP17 in Yerevan. Public budgets continue to shoulder the vast majority of backing for nature-based solutions, whereas private sector contributions represent roughly a tenth of overall capital.
Public finance is struggling to keep pace with growing demands, while gaps in tracking private investment make it difficult to measure real progress. Parties consistently identify private finance as the hardest to report, largely because contributions often go unrecorded and corporate reporting remains non-mandatory in most jurisdictions. Uneven government policies and regulations further limit the shift from voluntary initiatives to wider, systemic adoption.
Did You Know? According to 2023 data, finance directed toward nature-negative activities exceeded investments in nature-based solutions by a ratio of approximately 30 to 1.
Major financial institutions rank nature above climate
Despite the ongoing challenges in measuring private capital, market appetite for sustainability is expanding. A member survey conducted by the UNEP Finance Initiative (UNEP FI) indicates a strong level of interest from the world’s largest banks and insurers. For the first time, these major financial institutions have ranked nature as their top priority, placing it ahead of climate.
“The economic importance of nature is fast being recognised and is firmly on the agenda for banks and insurers,” said Eric Usher, Head of UNEP FI. Ahead of COP17, UNEP FI is urging international organizations, local communities, financial institutions, civil society, Indigenous Peoples, governments, and companies to work together to boost the credibility, transparency, and integrity of nature markets, as pointed out by Usher.
Expert Insight: The shift among major banks and insurers toward prioritizing nature over climate is noted. However, until governments provide the policy and regulatory certainty needed to drive action at scale, bridging the funding gap between destructive activities and sustainable solutions remains a challenge.
Turning Financial Architecture into Measurable Capital Flows
The strategic document From Cali to Yerevan: Is the Financial System on Track? points out that the primary hurdle leading up to 2030 is translating well-developed structural frameworks into tangible shifts in capital allocation that actively stem and reverse the decline of nature. To achieve this, financial institutions must redouble efforts to mobilize finance, manage nature-related risks, and improve data and reporting standards – a supportive enabling environment is necessary for this to occur.
Addressing data gaps in private nature finance
What caused the 30-to-1 financial imbalance identified in 2023?
The 2023 data reveals that finance directed toward nature-negative activities exceeded investment in nature-based solutions by approximately 30 to 1.
Why is private finance difficult to track and report?
Most jurisdictions lack mandatory corporate disclosure rules and fail to capture funding contributions, making private sector investments exceptionally challenging to monitor and account for according to participating nations.
What are financial institutions prioritizing ahead of COP17 in Yerevan?
A UNEP FI member survey indicates that the world’s largest banks and insurers have ranked nature as their top priority, placing it ahead of climate for the first time. Ahead of COP17, financial institutions are urged to redouble efforts to mobilize finance, manage nature-related risks, and improve data and reporting.