There are so many opportunities for investing in nature-positive solutions for the climate, but instead, money keeps pouring into the investments that destroy it.
Banks and investors seem to be stuck on the notion that investing in nature means “bees, trees and farmers”, when in fact there is an expanding world of opportunities from food systems to utilities, construction and infrastructure, a new report from the United Nations Environment Programme says.
For example, there are opportunities in systems such as concrete infused with a bacteria that enables it to “self heal” by repairing cracks with limestone that the bacteria create to potentially extend the life of buildings and reduce cost.
In apparel, fungi can be transformed into leather products to create footwear that can be digested in waste once discarded.
These observations are part of a new report from the United Nations Environment Programme, State of Finance for Nature.
“Other than in a few dedicated funds and loan products, recognition of these opportunities in the finance sector is weak but is set to grow, supported by existing and forthcoming guidance from NPI, TNFD, Global Canopy and others,” the report said.
“Innovations such as these offer significant investment opportunities in sectors that investors are familiar with and can increase the attraction of nature as an asset class for finance, whilst potentially reducing impacts on nature by, for example, creating food without land or by using nature in cities to prevent floods.”
The report had bad news for the overall picture. The world is still investing far more in harming nature than enhancing it, it said.
“…in 65 per cent of projects, NbS were more effective in reducing hazards compared to engineering-based solutions”
In fact, for every US dollar invested in protecting nature, $US30 ($A43) is spent destroying it, the report said.
In 2023, the report said, only $US220 ($A313) billion supported nature based solutions (NbS) while $US7.3 ($A10.32) trillion went into nature negative activities, with $US2.4 ($A3.39) trillion of those from public subsidies for fossil fuel, agriculture and water use and $US4.9 ($A6.93) trillion from private capital in sectors such as utilities, industrials, energy and basic materials.
…investing in NbS rather than harmful flows could unlock a trillion-dollar nature transition economy.
The damage is “accelerating climate change, biodiversity loss and pollution”, and “shifting financial flows is now one of the most powerful levers available to governments, businesses and investors.”
In order to meet targets, set by the Rio Conventions, investments into NbS must increase by more than two and a half times to $US571 ($A807.17) billion by 2030, and the harm flows need to stop or be repurposed.
Current policies are putting the world on a trajectory of temperatures increasing more than 2.5 degrees Celsius above pre-industrial levels by the end of the century. And this isn’t without its consequences.
According to the report, increases in temperatures will reduce GDP by up to 15 per cent by 2050 – which is higher than previous estimates. Droughts will also affect three in four people by 2050, and the combined damage cost of land degradation, desertification and drought will amount to at least at least $US878 ($A1241.14) billion each year.
“Poor management of nature’s wealth is driven by entrenched systems of production, energy and infrastructure that damage and extract from nature,” the report said.
How to phase out the problems
On top of the findings, the report also provides resources such as a practice framework guiding government and businesses on how to phase out harmful subsidies and destructive investments across all economic sectors. It also presents cases of why investing in NbS rather than harmful flows could unlock a trillion-dollar nature transition economy.
“A review of NbS for disaster risk reduction found that in 65 per cent of projects, NbS were more effective in reducing hazards compared to engineering-based solutions”
The report says NbS delivers competitive returns, such as restoring degraded land, which can yield $US7 to 30 ($A 9.90 to 42.41) for every dollar invested.