Finance for nature positive

Financial institutions are facing a critical question: Is their “nature finance” truly making a positive impact, or is it just minimizing harm? A new report, “Finance for Nature Positive: Building a working model” (September 2024), co-authored by Finance for Biodiversity, the United Nations Environment Programme Finance Initiative (UNEP FI), and the Netherlands Enterprise Agency (RVO), offers a groundbreaking framework to help financial institutions not just reduce negative impacts, but actively contribute to a nature-positive future. This report proposes a three-level approach designed to align financial flows with the ambitious goals of the Global Biodiversity Framework (GBF).

Moving Beyond “Less Harm”: A New Blueprint for Nature Finance

The report challenges the traditional view of sustainable finance by providing a clear pathway for banks and investors to move beyond mere compliance. Here’s a closer look at the proposed model:

Level 1: Compliance with the Mitigation Hierarchy

At its core, the first level focuses on “Nature Impact Mitigation finance.” This involves adhering to the well-established mitigation hierarchy, which prioritizes avoiding harm, followed by reducing, restoring & regenerating, and finally, transforming practices to minimize environmental impact. While essential, this level primarily focuses on adherence to international standards and preventing further degradation. It’s about doing “less harm,” a crucial first step, but not the ultimate destination.

Level 2: Transformative Actions for Global Biodiversity Framework (GBF) Implementation

This is where the true transformation lies. Level 2 introduces two critical and interconnected pathways:

• “Nature (Mainstream) finance”: This refers to finance that facilitates a broader economic transition towards practices aligned with achieving a nature-positive goal. Think of it as enabling the widespread adoption of sustainable business models across various sectors. It’s about shifting the entire economic landscape to be more harmonious with nature.
• “Finance for Nature Positive”: This is the game-changer. Unlike mainstream finance, “Finance for Nature Positive” is specifically designed to deliver measurable positive outcomes for biodiversity or ecosystem services, relative to a business-as-usual scenario. This isn’t just about mitigating harm; it’s about actively generating benefits, restoring ecosystems, and increasing biodiversity. This is where finance truly becomes a force for good.

The combined power of these two types of finance at Level 2 is what enables genuine alignment with the Global Biodiversity Framework. It’s the critical shift from simply avoiding negative impacts to proactively creating positive ones.

Level 3: Organization Strategy and Governance

The final level emphasizes the crucial role of a financial institution’s internal operations. It focuses on establishing a robust organizational strategy and governance framework that enables monitoring of contributions to nature-positive outcomes. This ensures accountability, transparency, and the continuous improvement of efforts. Without strong internal commitment and oversight, even the best intentions can fall short.

This three-level approach provides a clear, actionable roadmap for financial institutions to move beyond simply doing “less harm” and instead become active contributors to a truly nature-positive future. It’s a call to action for the financial sector to embrace its power as a catalyst for environmental restoration and biodiversity growth.

source:

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