Transforming finance and economies

Global GDP is about $125 trillion dollars, and nature supports more than half of global GDP. Global assets under management are more than $150 trillion. Yet we invest only the tiniest fraction into the protection, restoration and sustainable management of nature every year. Even worse, we finance environmentally harmful subsidies that harm nature. We must align our global, national, corporate and personal finance with nature if we are to achieve a nature-positive future.

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New ETF Focuses on 'Blue Economy' of Marine, Freshwater Resources

  • The International Finance Corporation (IFC) and various global organizations have introduced a practitioner's guide for "blue bonds" to finance the sustainable blue economy, with clear criteria, practices, and case studies.
  • The guide defines blue economy typology and eligibility criteria, suggests key performance indicators, showcases case studies, and emphasizes the need for financing to achieve Sustainable Development Goal 14 and other global sustainability targets.
  • The sustainable blue economy, covering areas like marine fisheries, low-carbon aquaculture, offshore renewable energy, and decarbonized maritime transport, plays a crucial role in addressing climate change, nature loss, and pollution, making it vital to achieve global sustainability goals and the Paris Agreement.

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Vast Fossil Fuel and Farming Subsidies Causing ‘Environmental Havoc’

  • The World Bank reports that harmful subsidies, totaling at least $7.25 trillion annually, are causing significant environmental damage, with explicit subsidies reaching over $2 million per minute. The subsidies are regressive and primarily benefit the rich.
  • The subsidies supporting environmental destruction could reach $23 million per minute when including implicit subsidies like waived taxes and the costs of pollution and nature destruction caused by farming.
  • Reforming these subsidies is crucial to redirect funding towards fighting climate change and biodiversity loss at a time when public funds are constrained. The report highlights the need for reforming fossil fuel, agriculture, and fishing subsidies and presents a roadmap for successful reform, emphasizing communication, compensation for affected parties, and credible, lasting changes.

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World Bank Issues Groundbreaking $150m Rhino Bond to Help SA Conserve Endangered Species

  • The World Bank has introduced a Wildlife Conservation Bond (WCB), or Rhino Bond, designed to provide a return to investors based on an increase in black rhino numbers in South Africa. Proceeds from the bond will be used to protect and increase black rhino populations in South Africa's Addo Elephant National Park and the Great Fish River Nature Reserve.
  • Unlike traditional bonds, the Rhino Bond offers no coupon to investors. Instead, the issuer makes conservation investment payments to finance rhino conservation activities at the two parks. Investors will receive a success payment at maturity if the rhino population targets are achieved, with a maximum "Conservation Success Payment" of $13.76 million.
  • The Rhino Bond represents a unique opportunity for investors to contribute to conservation while potentially receiving a return, aligning with the growing focus on environmental, social, and governance (ESG) issues. The bond is aimed at institutional investors and seeks to tap into private-sector investment for wildlife preservation.

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Five Changes That Will Help the Private Sector Invest in Nature - Now

  • A nature-positive economy offers substantial benefits for biodiversity, climate, public health, food security, and the economy. Nature-positive solutions present $10.1 trillion in business opportunities and could create 395 million jobs by 2030. These solutions can also contribute one-third of the emissions reductions needed by 2030 to limit global warming to 1.5 degrees Celsius.
  • Recent developments, such as the Kunming-Montreal Global Biodiversity Framework, provide global goals to protect and restore biodiversity by 2030. The Science Based Targets Network (SBTN) allows companies and cities to set science-based targets for nature and climate-action goals. The Nature Action 100 (NA100) initiative encourages investors and companies to tackle nature loss by 2030, addressing issues like agricultural commodity-driven deforestation.
  • The Task Force on Nature-related Financial Disclosures (TNFD) launching in September will help companies integrate nature risks, impacts, and dependencies into their decision-making and financial disclosures. As we approach COP28, businesses, investors, cities, and regions need to transform their operations to support rather than degrade natural ecosystems, beginning with ending deforestation and peatland loss by 2025. This requires accurate accounting of emissions related to land management and land-use change. Expanding nature initiatives, involving businesses, and increasing finance will be cruc

Championing Nature-Positive Finance: 5 Financial Institutions Prioritizing Biodiversity

  • Financial institutions like Aviva Investors, Schroders, and Robeco are taking steps to prioritize biodiversity in their strategies, aligning with global commitments to protect natural habitats and achieve harmonious coexistence with nature.
  • Aviva Investors, for example, is investing £100 million in woodland reintroduction projects to remove carbon from the atmosphere using nature-based solutions, aiming to eliminate 1.4 million tonnes of carbon emissions.
  • Other financial institutions like Banque Misr and SouthBridge Investments are also contributing to nature-positive finance by supporting climate-smart agriculture and forest restoration projects, demonstrating the finance sector's role in achieving a sustainable future in harmony with nature.

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The World's Banks Must Start to Value Nature and Stop Paying for Its Destruction

  • A report shows that major banks provided $2.6 trillion in loans linked to ecosystem and wildlife destruction in 2019, contributing to biodiversity loss.
  • Governments can take three critical actions to promote biodiversity-positive finance, including diverting harmful agricultural subsidies to nature-friendly practices, directing development banks to become global role models for reducing biodiversity impacts, and making biodiversity risk reporting a licensing condition for financial institutions.
  • The shift toward biodiversity regulation and financing is gaining momentum, with the World Economic Forum recognizing the economic importance of nature, and funds specializing in environmental, social, and governance (ESG) priorities now worth over $1 trillion, potentially exceeding conventional funds by 2025 in Europe.

Think about it!

Take a moment to reflect on some of the key issues related to the role of finance in creating a nature-positive future.

Changes in finance:

There are signs all around that finance is rapidly changing. What changes do you see, and what is the evidence?

Innovative finance mechanisms:

There are many new and innovative finance mechanisms to create nature-positive finance. What are some of the ones that have the most potential to transform the finance industry?

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Andreea Alexandra Mitrofan commented 7 months ago ago

Dig even deeper!

Use these exercises to dive deeper and explore some of the pathways toward a nature-positive future for finance.

Identify levers of change:

Transforming the world of finance will take many actions, from many different actors. Define some of the most powerful actors, and identify the tools they could use, to help create this change.

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Biniam Belete Begna commented 7 months ago

Start a conversation!

Spark meaningful conversations on social media! Share the recommended posts to inspire your network to reflect and take action.

Nature conservation can drive economic growth

The return on protecting 30% of the planet’s land and ocean is at least 1:5. Let's invest in our shared future by safeguarding our precious planet! Learn more. #NatureForLife

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It’s time to reform nature-harmful subsidies

The world spends trillions of dollars in subsidies that harm nature. It's time to redirect those resources towards nurturing the planet and securing a sustainable future for all. #NatureForLife

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