Mobilizing Private Finance for Nature

Geography: All Regions
Sector: Banking & Finance

Read More: Private Finance For Nature

In September 2020, the World Bank published a new paper about private finance for nature. The detailed piece, which is available on the Green Finance Platform, argues that private finance can and must be harnessed to better protect and manage biodiversity and ecosystem services around the world. The authors underline that governments and regulators, supported by financial institutions and multilateral development banks, need to play a key role in mobilizing private funds for these purposes. In the paper, two approaches are presented:

  • The first approach, called “financing green,” assesses opportunities for financing projects that contribute to the conservation, restoration, and sustainable use of biodiversity and ecosystem services. In other words, it is about mobilizing private finance by monetizing cash flows from the provision of ecosystem services.
  • The second approach (“greening finance”) takes a closer look at directing financial flows away from projects with negative impacts on nature to projects that mitigate such negative impacts or deliver positive environmental co-benefits. This approach aims to mobilize private funds by driving better management of biodiversity risks.

After highlighting the importance of protecting nature and presenting the approaches of “greening finance” and “financing green” as well as their challenges, the World Bank paper provides several recommendations for governments, regulators, companies, financial institutions, and multilateral development banks. To mobilize private finance for biodiversity, the stakeholders are, for instance, invited to consider fiscal reforms to incentivize sustainable practices; support biodiversity reporting; and provide catalytic, concessional capital for biodiversity funds and projects. The authors also call on governments to use their COVID-19 recovery packages to build back better, for instance, by fostering a just transition and investing in green infrastructure:

 “To ensure recovery efforts are inclusive, sustainable, and resilient, it is important that projects supported by stimulus packages are assessed not only on their short-term stimulus and job creation contributions, but also their long-term sustainability – including contributions to decarbonization and the protection of biodiversity and ecosystem services.”