As the Dasgupta Review observed, many of the processes that shape the natural world are “silent and invisible”. As a result it is challenging to communicate both the use we make of ecosystem services and the economic activities which are adversely impacting nature. In order to catalyse action by the finance sector, public policy should address this barrier by setting actionable targets which provide clear direction and ambition for business and finance. This should start with the Convention on Biological Diversity adopting clear actionable high-level goal, such as the ‘halt and reverse nature loss by 2030’ proposed by Business For Nature, as well an objective of making all financial flows consistent with that goal (c.f. Article 2.1(c) of the Paris Agreement).

Such a framework would not only send a strong signal to any business whose activities contributed to nature loss, but it could also be translated into national biodiversity action plans focussed on the key drivers of biodiversity loss in each country. In order to track their achievement, national plans would need to be supported by the development of national and, in some cases, regional baselines and biodiversity finance gap assessments to assist governments in understanding where private finance will be needed and also where policy changes would be useful.

For the finance sector, such a package of national goals and baselines, supported by financing plans and ideally policy roadmaps for key sector, would allow investors to quantify the nature-related transition risks of those companies contributing to nature loss and give financial institutions the confidence and encouragement to request information from clients around nature-related risk exposure.

At the same time, establishing national targets, sectoral roadmaps and baselines will enable financial institutions to understand where opportunities lie in terms of investments helping to focus fund flows, and to determine how best to partner with public sector finance. Having agreed-upon targets and baselines would also better enable the development of standards and impact metrics that in turn could support the growth of nature-related financial products such as loans for positive nature outcomes, sustainability-linked loans with biodiversity KPIs, or discount rate loans to finance land-use transition.

Assessments of baselines, targets and finance gaps are currently carried out by the United Nations Development Programme’s (UNDP) Biodiversity Finance Initiative (BIOFIN) in 40 countries to date, including Mexico, South Africa, India and China, with Ireland being an early adopter in Europe. The assessments follow a three- step process: measuring at national level expenditure levels (public and private), costing national biodiversity goals, and crafting national financing strategies with the most promising financing options to fill the gap (including understanding where subsidies may be negatively impacting a nature-positive strategy).

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