Session summary

Session 6B, Financing NbS: delivering money when and to where it matters, discussed how to unlock more private finance to meet the significant biodiversity funding gap of ~$600-800 billion USD per year, and likely increasing.

Lorenzo Bernasconi opened by outlining innovations to support an economic transformation. He highlighted the need to get to scale through use of a jurisdictional approach – working with national and subnational governments, and including IPLCs. He spoke of the need to work on both the demand and supply side of carbon markets, including putting in place risk mitigation measures and having better market guidance from standard setters. He also mentioned that some principles can discourage investment away from good NbS, when they overemphasise the need for removals over reductions and long-term over short-term storage, pointing to the confusion over whether and when NbS is considered long-term storage or not.

Abyd Karmali reminded us that public finance should be there to de-risk investments and that public capital needs to more surgically deployed and much better at capturing private capital at scale. He then outlined three recommendations for financing:

• Multilateral development banks should use their balance sheets to mitigate risks faced by the private sector, & should co-invest with the private sector, not compete.
• The potential of Article 6 is significant to support countries to deliver their NDCs. We should learn how to verify if actions should contribute to NDCs and which should not.
• Voluntary carbon market projects should incorporate best-practices and go beyond carbon to include other payments for ecosystem services. Diversity in revenue streams can help support the resilience of NbS projects.

Rhian-Mari Thomas presented some of the critical factors for mobilising finance for nature, pointing to the apparent lack of readily investable projects in the pipeline. She highlighted three case studies: one from the Wyre Rivers Trust Natural Flood Management that included a transaction structure where beneficiaries buy reduced flood management risk; one from Trees for Life, with 6% returns, highlighting the interest from retail investors if they can be harnessed; and one from sustainable forest plantations in South-East Asia that shows the large impact possible from incorporating investors with varying returns.

Dora Nsuwa Cudjoe brought perspectives from programs that aid NbS by bringing in IPLCS to advance climate action, biodiversity conservation and sustainable forest management. It is important to have:

• Access to flexible funds that enable expedited action.
• Priority for IPLCs needs, so that results can be delivered under their own leadership.
• In global finance mechanisms, better tracking and monitoring of risks and opportunities.

Climate Investment Funds & Dedicated Grant Mechanisms can be further scaled-up by ensuring recognition for the role of IPLCS in advancing integrated NbS within broader climate action, protecting rights of land tenure and natural capital and ensuring resources/access to financing.

Key take-homes

• A significant biodiversity funding gap remains ~600-800 billion US/ year and likely increasing.
• Jurisdictional approaches to REDD+ may help generate carbon credits at scale, verifying them, and better ensuring social safeguards.
• Overarching constraints in unlocking private finance remain (e.g. lack of capacity to ensure social safeguards materialise on the ground; as well as lack of investor risk appetite).
• Regulation and policy are critical to shore-up private sector confidence in NbS investments.
• Blended public/private finance can help channel private sector finance given lack of appetite for risk taking by investors.
• Needs include:
  – clarity on what nature+ means -> need pipeline of projects to generate these outcomes + private investor demand.
  – clarity on nature-related dependencies/risks to finance sector from biodiversity loss.
  – recognition of the critical role of IPLCs and their values/rights
  – flexible culturally appropriate forms and flows of finance – ethical flows away from high carbon investments of the past.