Corporate Biodiversity Funding

A $125B fund to protect tropical forests is gaining traction, reports Justin Catanoso from #COP16. At COP16 in Colombia, an idea as audacious as it is pragmatic took center stage: the Tropical Forest Finance Facility (TFFF), a potentially transformative step in conservation finance. Conceived as a new model for protecting tropical forests, TFFF aims to establish a reliable, results-based income stream for nations stewarding these biodiverse reserves—essentially treating tropical forests as stakeholders in our planet’s future. Despite a patchwork of conservation funds, financing has simply not kept pace with the rapid rate of forest loss. Enter the TFFF, structured to attract up to $125 billion from a mix of sovereign investors, philanthropies, and private sources. Its ambition is to reward countries for slowing deforestation and safeguarding tropical forests, offering an annual return of $4 billion, contingent upon rigorous satellite monitoring and adherence to conservation targets. While other funds have relied on goodwill and grants, TFFF introduces a model akin to a bond fund, rewarding investors while incentivizing nations to keep forests intact. The initiative’s architects envision a diversified portfolio, combining climate-friendly investments—such as green bonds in developing economies—with fixed-income securities in more established markets, aiming for stable returns to underwrite ambitious payouts. Penalties for deforestation are stringent: each hectare lost forfeits the equivalent of rewards for 100 hectares. Such measures aim to maintain a steady yield over an anticipated 20-year lifecycle, supporting more than 70 tropical nations in preserving, rather than depleting, their natural capital. Beyond its environmental goals, TFFF’s structure addresses the governance and transparency challenges often faced by global finance initiatives. A globally recognized body would oversee fund administration, minimizing political influence and ensuring that proceeds are distributed equitably and transparently. Payments will be tracked and verified, supported by an annual “Global Score Card” to enhance public accountability. If successful, TFFF could represent a shift from traditional conservation financing, creating an asset-backed approach where nature's essential services are finally valued. Tropical forests—indispensable for climate stability, biodiversity, and local livelihoods—have long been absent from balance sheets. As TFFF’s supporters might say, it’s high time forests were valued for their productivity as ecosystems, not just as raw materials. 📰 Catanoso's story: https://lnkd.in/gfmdvyPm Photos: various rainforests I've photographed.

The externalities era is over. The internalisation era has begun. A powerful new whitepaper from the Value Balancing Alliance demonstrates what many of us in sustainable finance have long suspected: externalities don't stay external. They usually, and to a significant degree, move from narrative into numbers and get internalised as a core driver of asset pricing, cash flows, enterprise valuation, Value at Risk and cost of capital for boards, asset owners, investors and regulators. If unaddressed, they are an impediment to economic productivity. Key findings that should change how we allocate capital: 1. Markets are already pricing externalities: Research shows ~20% of corporate externalities are already capitalised in market valuations. Firms in the top carbon burden decile face +1.7% higher cost of capital. The question isn't whether externalities matter financially- it's whether your models reflect this reality. 2. The risk is material and asymmetric: Climate Value at Risk (CVaR) and Nature Value-at-Risk (NVaR) estimates range from 6-50% of global equity value depending on transition pathways. These aren't tail risks - they're central to valuation, especially in transition-critical sectors. Nowadays, central banks and supervisors, including the Network for Greening the Financial System (NGFS) scenarios map policy and climate pathways to sectoral earnings and default/loss rates, providing input curves for "Value at Risk" and "Expected Shortfall" stress paths. The tooling up to extend climate to nature-related financial risk quantification is underway. 3. The implementation gap is closing fast: Standard setters (ISSB, CSRD, ESRS, ISO14008/14054, ICMA, OECD et al) now anchor decision-useful sustainability information into core reporting regimes, valuation principles, transition finance guidance, and investment stewardship expectations: the infrastructure for decision-grade impact valuation is becoming operational. 4. For Transition Finance, this is the breakthrough moment: Externalities accounting provides the analytical spine that converts transition commitment narratives into quantified cash-flow drivers, risk factors, and investable guardrails. It's the bridge from narrative to numbers. If your company's externalities are 50% of its market value, are you running a business or managing a liability that hasn't been billed yet? #SustainableFinance #TransitionFinance #NaturalCapital #ImpactValuation #ESG #ClimateRisk #NatureRisk

$7.3 trillion. That is the scale of global financial flows linked to direct negative impacts on nature – including $2.4 trillion in public subsidies. By comparison, $220 billion was directed toward conservation and restoration. The message from last week’s IPBES Business and Biodiversity Assessment is clear: we are actively financing nature’s destruction. For the financial sector, shifting these capital flows is a prudential necessity. Clean water, pollination, raw materials, weather regulation… These are the invisible scaffolding of our economy. Ecosystem collapse will challenge food security, disrupt supply chains, and undermine the predictability that financial markets depend on. But as long as it remains more profitable to destroy ecosystems than to preserve them, short-termist "economic rationality" will continue to obstruct corrective action. The failure lies in our regulatory and financial frameworks. Climate change and biodiversity loss are compounding systemic risks. Because all businesses contribute to this disruption, all businesses must be part of the solution. The incentives must change. WWF Switzerland furthered this point from the insurance side: climate change and nature loss are undermining insurability and widening the protection gap. Climate change acts as a threat multiplier, while nature loss strips away our capacity for adaptation. In a vicious circle, every catastrophe pushes ecosystems closer to the brink. Storms, droughts, floods, and wildfires cost EU countries over €208 billion between 2021 and 2024. Floods alone accounted for nearly half of that. Meanwhile, land artificialization increases by 1,500 sq. km each year and only 6% of EU wetlands are in good condition (European Environment Agency). The insurance sector has unique leverage. It can demand better data and shift capital toward resilient, regenerative models. This point is gaining traction; it should now evolve into systemic action. The fundemental aim must be to redirecting capital away from nature-negative activities and phase out finance for fossil-fuel expansion. Otherwise, we are quite literally funding the risk we are trying to insure against. With the IPBES assessment, our toolbox has grown. The authors lay out more than 100 concrete actions to create an enabling environment and align economic decision-making with environmental reality. As Maarten van Aalst recently noted: "Adaptation is a daunting task, but at the same time quite a doable task. It’s not rocket science." It boils down to political choices. True "simplification" should involve creating frameworks that help businesses manage complexity. Not masking that complexity in the hope it goes away. Let’s transform our businesses before the foundations they stand on are washed away.

"Nature credits are just glorified charity donations" is what most skeptics still believe. My experience building market mechanisms for biodiversity tells a completely different story.    When we founded CreditNature, many questioned whether biodiversity could ever be meaningfully valued. Today, I'm seeing corporations offer significant premiums for high-integrity nature credits that deliver verified outcomes.    Why? Because these aren't just feel-good purchases - they're strategic investments addressing material business risks.    Just yesterday, EU Commissioner Roswall unveiled a roadmap for nature credits across Europe, acknowledging the €65 billion annual funding gap for biodiversity that public money alone cannot fill. 🔗 https://lnkd.in/dgMXaSdZ   This validates what we've been demonstrating: properly designed nature credits create value far beyond their cost basis when they:    1. Connect directly to a company's operational footprint and supply chain resilience    2. Provide independently verified outcomes (not just activities)    3. Deliver multiple co-benefits from climate to community livelihoods.    In our projects, we've seen firsthand how rigorous measurement transforms perceived value. When buyers can clearly see the return on their investment - whether through reduced regulatory risk, enhanced brand equity, or supply chain security - price sensitivity dramatically decreases.    As I wrote in my recent blog on nature credits (https://lnkd.in/dbirJ7Wx), this is becoming an imperative for forward-thinking CEOs who recognise that nature risk is business risk.    What's your experience with the evolving nature credit market? Are you seeing similar value drivers in your sector?    #NatureFinance #BiodiversityMarkets #SustainableInvestment

Biodiversity-specific finance has more than doubled in 4 years but would need to be multiplied by 40 to meet the funding gap!     The Nature Conservancy and the UK Department for Environment, Food and Rural Affairs have built an extremely valuable dashboard taking stock of corporate & finance progress on the so-called Biodiversity Plan (or Global Biodiversity Framework setting global targets up to 2030). Let’s analyse its key insights:     📏 Target 15 The Plan calls for businesses to assess, disclose and reduce biodiversity risks & impacts. We do not have a clear evaluation of the % of companies who do so, but we know 620 organisations representing $20 000b in Assets Under Management have committed to report in line with the TNFD.     💰 Funding gap   The figure on the top right is especially interesting, let’s break it down:     1️⃣ The total target covers $700b/yr   2️⃣ $500b relate to harmful subsidies which should be phased out   This is covered by Target 18. Progress on harmful subisidies is also not directly assessed but we instead have figures on other topics, including another part of the Target: the number of countries with biodiversity-positive incentives in place (102).    3️⃣ $200b of finance should be mobilised for biodiversity from all sources   Target 19 covers this (and most of the bottom right corner of the dashboard). Let’s zoom in: ➡ Target 19a: $20b (dark gray in the bar chart) of international biodiversity finance flows to developing countries are expected by 2025, and $30b (an additional +$10b in light gray) by 2030   Here the dashboard can be a bit misleading as it shows two ways of estimating achievement of this target as if they could be summed (they cannot). The best estimate (in my opinion) is "biodiversity-specific" financial flows and it was $16.8b in 2023 so relatively close to the 2025 target.   The “biodiversity-related” figure is a less stringent estimate of the same thing.   These figures are only about flows to developing countries from (or enabled by) governments. So the “private finance” listed here ($1.2b in 2023) is just the part enabled by official development assistance. ➡ On top of that, $170b are expected to be mobilized from other sources (beige) to reach a $200b total by 2030.   This would come from a range of private sources.   The data presented here are very limited and cover only Nature-based Solution finance flows for climate, biodiversity and land degradation which hit $23.4 billion in 2023 from private sources and $220b in total (so 10% from private sources and 90% from public ones). ⚠ This includes a lot of funding focused on climate and not biodiversity.   ➡ This funding presents a lot of synergies between climate & biodiversity.     🔦 Conclusion: we are still very far from what is needed but financial flows directed towards bending the curve of biodiversity loss are growing rapidly and this is encouraging.

💬 "𝙲𝚞𝚛𝚛𝚎𝚗𝚝 𝚎𝚌𝚘𝚗𝚘𝚖𝚒𝚌 𝚊𝚗𝚍 𝚏𝚒𝚗𝚊𝚗𝚌𝚒𝚊𝚕 𝚜𝚢𝚜𝚝𝚎𝚖𝚜 𝚊𝚕𝚕𝚘𝚌𝚊𝚝𝚎 𝟹𝟻 𝚝𝚒𝚖𝚎𝚜 𝚖𝚘𝚛𝚎 𝚛𝚎𝚜𝚘𝚞𝚛𝚌𝚎𝚜 𝚝𝚘𝚠𝚊𝚛𝚍𝚜 𝚎𝚌𝚘𝚗𝚘𝚖𝚒𝚌 𝚊𝚌𝚝𝚒𝚟𝚒𝚝𝚒𝚎𝚜 𝚝𝚑𝚊𝚝 𝚍𝚒𝚛𝚎𝚌𝚝𝚕𝚢 𝚍𝚊𝚖𝚊𝚐𝚎 𝚋𝚒𝚘𝚍𝚒𝚟𝚎𝚛𝚜𝚒𝚝𝚢 𝚝𝚑𝚊𝚗 𝚝𝚑𝚎𝚢 𝚙𝚛𝚘𝚟𝚒𝚍𝚎 𝚝𝚘 𝚜𝚞𝚙𝚙𝚘𝚛𝚝 𝚗𝚊𝚝𝚞𝚛𝚎." A quote from the IPBES Nexus assessment released this week. So much to unpack, I limit myself here to the nexus between #economics, #finance and #biodiversity (the rest you can read here 👉 https://lnkd.in/e2KN5MSm) Economic activity and biodiversity are deeply interconnected. Biodiversity underpins key industries—agriculture, fisheries, forestry, and tourism—while providing critical services like pollination, water purification, and climate regulation. But the relentless pursuit of growth (the primary indirect driver) has caused biodiversity to plummet: 🌳 75% of land and 66% of marine environments have been significantly altered. 🐾 Over 1 million species face extinction, threatening ecosystems that support half of global GDP—$44 trillion annually. 💰 Adverse effects of economic activity on biodiversity amounts to $10-25 annually. This results in risks for that same economic system. Biodiversity loss undermines global economies: 💸 Could cost $10 trillion annually by 2050 if trends continue. 🌾 Declining pollinators risk $577 billion/year in crop production. 🌊 Ecosystem collapse raises costs across agriculture, fisheries, and energy, impacting industries and driving financial risk. To reverse this, we have a financial challenge: 🔴 Current conservation funding: $124–$143 billion/year. 🔴Required funding: $598–$824 billion/year, leaving a $500–$700 billion gap. 🔴Governments spend $500 billion annually on harmful subsidies—redirecting just 10% could halve this shortfall. And we have a paradox in this nexus: Investing in restoration and preservation yields high returns: 🌱 Mangrove restoration delivers 10x ROI in ecosystem services (flood protection, carbon storage). 🌿 Nature-based solutions mitigate climate risks, protect assets, and future-proof economies. 💸 Green finance tools—like biodiversity credits and green bonds—offer scalable investment opportunities. Two problems: 🟥 The risks are longer-term 🟥 The (short-term) benefits are non-financial The report outlines 71 actionable proposals focused on areas such as sustainable consumption, pollution reduction, improved governance, and risk management. These are vital steps in addressing pressing global challenges. However, real success requires us to confront a deeper truth: our current system—dominated by finance and short-term economic priorities—cannot deliver the transformative change needed. Tweaking the system won’t suffice. Superficial changes lead to superficial results. To achieve true sustainability, we must rethink and redesign the foundations of our economic and financial systems.

We depend on #nature during every moment of our lives, from the air that we breathe (forests and oceans), the water we drink (rivers and clouds) to the food we eat (healthy soils) and the materials we use to build our homes. And yet, nature is in trouble as well take more and more resources to feed the global economy, leading to degraded ecosystems, pollution and loss of species. We've taken nature's bounty for granted (and assumed its riches are for free) for too long. That is changing. In today's The Straits Times, Audrey Tan and I navigate the dilemma of how scientists and businesses are struggling to put a price on nature — and why this is important to stem ecological decline. https://lnkd.in/gNpZwu9J And the good news is companies and investors are increasingly seeing the value of nature and why protecting it is good for business. The ecosystem of financial support is expanding from conservation groups and philanthropy to banks, corporations and governments. The key to saving nature is putting a value on it. From nature bonds, such as rhino and coral reef bonds, to debt-for-nature swaps, carbon and biodiversity credits and more, the finance industry is bringing its expertise to the fore. It is figuring out ways to value nature and create mechanisms that conserve and protect it while also making money. And just in the nick of time. Nature is key to many supply chains, such as construction, agriculture, food and beverage and tourism. We take a look at the challenge of valuing nature, the new mechanisms, the shift towards "people, planet, profit" and the need to urgently scale up nature-positive financing. There's a US$700 billion annual financing gap for biodiversity to fill and the private sector is the key. Financing will be central to next month's COP16 Colombia biodiversity conference, so this special report is coming at just the right time. Check out the awesome graphics by our colleagues Billy Ker, Manny Francisco and Lee Hup Kheng. Thanks to Vikalp Pal Sabhlok and Will McGoldrick at The Nature Conservancy; Jan Yoshioka at Conservation International Asia-Pacific; Carlos Pagoaga at The Coca‑Cola Foundation; Dave Sivaprasad and Alia Kaz at Boston Consulting Group (BCG); Heng Dean Law and Laura Waterford at Pollination; Ling Min Hoon at GenZero; Helge Muenkel, CFA at DBS Bank; Mike Ng at OCBC; Duncan van Bergen at Calyx Global; Pablo Fernandez at ecosecurities; Francesco Ricciardi; and Alfredo Giron Nava at the World Economic Forum. #Biodiversity #ecosystems #finance #sustainablefinance #naturefinance #naturepositive #carboncredits #biodiversitycredits #deforestation #speciesloss #pollution #agriculture #food #oceans #forests World Bank #science #scicomms #bluebonds #naturebonds

The Nature Investor Nexus 🌎 A growing convergence of ecologists, technology innovators, entrepreneurs, and finance professionals is reshaping the landscape of nature finance. This new investor nexus is broadening the scope of sustainable investments by integrating advanced technologies, innovative financial instruments, and new business models, making nature finance more relevant to investors across sectors. Despite macroeconomic challenges, the nature tech sector has demonstrated resilience, with investments rising by 18% and deal volume increasing by 27% in 2023. Early-stage ventures have shown the most promise, growing by 35%, indicating strong investor interest in innovation that addresses environmental challenges while generating returns. Prominent funds such as Mirova Natural Capital, HSBC's Pollination/Climate Asset Management, and Patagonia's Tin Shed Ventures are leading the charge in attracting private capital for nature-based opportunities. Sectors such as agriculture, mining, and consumer goods, which are closely tied to natural capital, are increasingly recognizing the long-term value of incorporating sustainable practices into their business models. Frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) are encouraging businesses to assess and mitigate risks tied to nature dependencies. This shift is not only about compliance but also unlocking economic opportunities by embracing nature-positive models, which can open doors to new markets and drive sustainable growth. However, challenges remain. The sector requires more patient capital to support long-term projects, particularly those in ecosystem restoration, which typically take longer to yield financial returns. Additionally, current economic models often undervalue natural capital, making it difficult for sustainable investments to compete with traditional industries. As the nature finance ecosystem expands, enabling organizations such as professional service firms, audit bodies, and standard-setting institutions are playing a crucial role in ensuring trust, transparency, and proper valuation in this rapidly growing sector. Source: WEF #sustainability #sustainable #business #esg #climatechange #climateaction #sdgs #nature #finance #

𝗧𝗵𝗶𝘀 𝗶𝘀𝗻'𝘁 𝗺𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴. 𝗜𝘁'𝘀 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗿𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲. Nestlé. Mars (private). Unilever. They're core holdings in your equity portfolio. Can you quantify the risk to their margins if ecosystems collapse? They all depend on Nature: 🌊 Healthy oceans for fish 🌾 Fertile soil for crops 🐝 Pollinators for yields 💧 Freshwater to produce at scale Did you know the global pet food market is 𝘄𝗼𝗿𝘁𝗵 $𝟭𝟯𝟬𝗯𝗻, growing at 𝟱.𝟱% 𝗮𝗻𝗻𝘂𝗮𝗹𝗹𝘆? Mars Petcare is one of the largest players on Earth, with nearly 50 brands, several of them having billion-dollar franchises. Mars earns $𝟮𝟬𝗯𝗻 𝗳𝗿𝗼𝗺 𝗽𝗲𝘁 𝗰𝗮𝗿𝗲. One of those brands is Sheba, which depends on fish from coral reef ecosystems. 𝗡𝗼 𝗿𝗲𝗲𝗳, 𝗻𝗼 𝗳𝗶𝘀𝗵. 𝗡𝗼 𝗳𝗶𝘀𝗵, 𝗻𝗼 𝗦𝗵𝗲𝗯𝗮. According to WWF, over half of tropical coral reefs are already lost ecosystems that support a quarter of all marine species. So Sheba Cat Food (Mars) is restoring reefs off Indonesia not as marketing but as supply chain protection. This is Nature as resilience: protecting cash flow and margin. This is where the Taskforce on Nature-related Financial Disclosures (TNFD) comes in: → 𝗗𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝗰𝗶𝗲𝘀: What ecosystems does the business rely on? → 𝗥𝗶𝘀𝗸𝘀: How does Nature loss affect supply, price, brand, and regulation? → 𝗠𝗮𝘁𝗲𝗿𝗶𝗮𝗹𝗶𝘁𝘆: Where is Nature loss financially significant to enterprise value? → 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀: Where can ecosystem protection drive long-term financial sustainability? As an asset owner, ask your consultants and fund managers: ✅ Have you mapped Nature dependencies across our portfolio? (e.g. Norges, Scottish Widows) ✅ Have you commissioned a Nature risk assessment across our equities? → Deep-dive your top 10 holdings in FMCG, agriculture, and food; which are most exposed to ecosystem collapse? ✅ How are you integrating TNFD into stewardship, risk oversight, and engagement? 📌 The EU CSRD and UK SDR are raising the bar on Nature disclosures for companies and asset owners. This should be as standard as your TCFD report. We've built dashboards for carbon. Where's the equivalent for Nature? 🎥 Watch 𝗥𝗲𝗲𝗳 𝗕𝘂𝗶𝗹𝗱𝗲𝗿𝘀 on Prime Video & Amazon MGM Studios.  Set in Indonesia, it follows a team of coastal communities and marine biologists who brought a dying reef back to life, proving that Nature recovery is possible and essential to business survival. 🪸 This is why Sheba Cat Food (Mars) invests in coral reef restoration. https://lnkd.in/eMuj2YV2 #FromRiskToResilience #NaturePositive #NatureRisk #ReefBuilders #ShebaHopeGrows #TNFD

In finance, the future is worth less than the present. In nature, the future is worth more. That simple inversion explains much of the market’s structural delay in addressing the climate crisis — we’re discounting time in the wrong direction. Financial logic reduces the long term; nature amplifies it. Our new FamaGaia FIDC report shows, with data and real stories, that this logic can be reversed. We finance those who protect ecosystems and strengthen territories — from Amazon and Caatinga cooperatives to agroforestry projects in the Cerrado and Atlantic Forest. So far, 13 investments, more than 4,000 people directly impacted, and returns in line with the benchmark. More than a product, FamaGaia is a thesis: 📍 credit as a tool for regeneration 📍 impact as a strategy for value creation 📍 finance as a co-author of a just transition As COP30 approaches in Brazil, the financial sector faces a choice: to keep reacting to the inevitable — or to co-author solutions.