AFME and EY have today published a new report “Into the Wild: Why nature may be the next frontier for capital markets”. The report, published in the lead up to the COP15 UN Biodiversity Conference, explores how finance can be channelled to help address nature loss. With more than half of global GDP dependent on nature, natural capital financing is rising up the agenda for policy makers, investors and the financial services sector.
The global biodiversity financing gap has recently been estimated at USD 598-824 billion per annum. While growing investor demand is creating new opportunities to develop nature-related financing products, the report finds banks and other market participants face challenges in mainstreaming and scaling nature finance products. Key challenges include a lack of verifiable data and common metrics for nature and biodiversity.
The report also provides an overview of the natural capital finance products currently in the market and showcases a number of case studies of innovative practices currently being used by AFME members.
The report concludes by examining the current regulatory landscape and makes five key recommendations for policy developments that can help direct capital towards solutions to conserve and restore nature:
- Gathering and translation of nature-related data into decision-grade data for financial services;
- A strong global nature reporting framework;
- Agreement on how to define measurable, meaningful impact on biodiversity through metrics and key performance indicators (KPIs)
- Standardisation of product classifications; and
- Development of a currency for nature.