October 22, 2024, London: The gap between current biodiversity finance and future needs has widened to $942 billion, as increased investment has failed to keep pace with inflation, finds BloombergNEF (BNEF) in its latest Biodiversity Finance Factbook.
Some $1.15 trillion in biodiversity financial flows will be needed in 2030 to restore and maintain biodiversity, the new report explains. That’s five times the $208 billion per year flowing to biodiversity right now.
The investment shortfall comes as the threat to biodiversity reaches an unprecedented level. BNEF’s global threat index has increased by five percentage points since 2021 and risen in more than two-thirds of geographies.
According to BNEF, the top five geographies in terms of funding priority are Brazil, China, Indonesia, the Democratic Republic of Congo and – for the first time – Colombia, host of the COP16 Biodiversity Conference.
Other findings from the Biodiversity Finance Factbook include:
• Public finance is one of the biggest drivers of biodiversity conservation. Some $164.7 billion of public finance was directed to this area in 2023, a real-terms increase of $17.2 billion from 2022.
• Common forms of public finance include overseas development assistance (ODA) and debt-for-nature swaps, with the latter proving particularly popular. A record amount of sovereign debt was cancelled through debt-for-nature swaps in 2023, equating to almost half of the $4.5 billion of deal flow since 1989.
• By contrast, issuance of some private finance instruments is falling. Nature-based carbon offsets, for example, have declined 53% from 2021.
• This comes as most financial institutions lack sophistication in their approach to managing nature-related risk. Just 7.7% of financials have board-level oversight on biodiversity, and 7.5% have executive-level oversight, according to a BNEF analysis of annual reports spanning 1,784 institutions for which data is available.
Hugh Bromley, Head of Food, Agriculture and Nature Research at BloombergNEF and lead author of the report, said: “While financial investment into nature has risen since the Global Biodiversity Framework established in December 2022, it is still not on track to hit the 2030 targets agreed in Montreal. Currently, an estimated $942 billion is needed to meet the funding shortfall.
This a difficult challenge, but it is not impossible. Funding must prioritize the most biodiverse, valuable and threatened biomes across the developing world, with BNEF identifying Brazil as the top priority. This must be driven by both public and private finance – from debt-for-nature swaps to green and sustainable bonds and carbon offset issuance, among other tools. The next six years will be critical for the preservation and restoration the world’s nature systems.”
A launch event for the Biodiversity Finance Factbook is being held on October 24 in the Finance and Biodiversity Pavilion at the COP16 Biodiversity Conference in Cali, Colombia.
Contact
Oktavia Catsaros
BloombergNEF
ocatsaros@bloomberg.net
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