Key Impact Points:
- Private finance for nature reached USD 102 billion in 2024, an elevenfold increase from 2020.
- Technological advancements, especially AI, are rapidly transforming nature finance.
- Indigenous communities and wealth-holders are increasingly leading impactful nature investments.
Accelerating Momentum in Nature Finance
Private finance for nature surged dramatically, reaching USD 102 billion in circulation in 2024—up significantly from USD 9.4 billion in 2020, according to UNEP FI’s recent insights. A new iteration of the State of Finance for Nature report by UNEP, integrating fresh data, is eagerly anticipated in 2025 to further gauge progress in closing the nature finance gap.
Insurers as Catalysts for Nature
Recognition is rising that the insurance sector plays a pivotal role in unlocking private finance for nature, driven by the UNEP FI PSI Working Group for Nature, which includes 40 insurers, reinsurers, brokers, and stakeholders. The group recently published the first-ever global guidance for the insurance industry on priority nature actions.
Advances in technology, such as parametric insurance products developed by NatureX Venture Studio, are enabling new strategies in regenerative agriculture and forestry risk reduction in the Amazon. Enhanced data collection through remote sensing and analysis with machine learning will further bolster these efforts.
Leveraging AI and Earth Observation
The integration of AI with earth observation data has emerged as a groundbreaking innovation in nature finance. Projects like LEON, involving UNEP FI and 40 early-adopting financial institutions, utilize satellite data and AI to pinpoint impactful nature financing opportunities.
Efforts by TNFD and Finance for Biodiversity Foundation address significant data challenges for financial institutions, enhancing their ability to integrate nature risks and opportunities into investment decisions.
De-risking Through Public Finance
Targeted public finance mechanisms are critical for scaling nature-positive investments. The US Development Finance Corporation and similar organizations continue leveraging de-risking mechanisms like debt swaps, targeting a project market worth USD 500-800 billion.
The green bond market is also growing, with biodiversity-linked instruments increasing from just 5% in 2020 to 16% in 2023, totaling over USD 400 billion in nature-related investments.
Indigenous Leadership Gains Traction
Indigenous-led financial initiatives are significantly influencing nature finance, exemplified by the Savvy leadership of groups such as Nia Tero and the Indigenous Peoples Major Group. Initiatives like culturally aligned biodiversity finance by Indigenous communities, including projects led by Nia Tero, showcase embedding Indigenous rights within financial mechanisms.
Additionally, the new permanent body under Article 8(j) of the Convention on Biological Diversity will enhance Indigenous participation in global biodiversity decisions, reinforcing community-centric funding models.
Spotlight on Intact Nature and REDD+
Financing conservation, particularly intact ecosystems, is becoming central to global nature finance discussions. Initiatives like Brazil’s Tropical Forest Financing Facility (TFFF) leverage public-private-philanthropic partnerships, biodiversity credits, and Indigenous involvement to preserve and restore forest ecosystems.
At COP16, jurisdictional REDD+ credits gained prominence, supported by rapid fundraising initiatives like the Race to Cali, which aims to mobilize USD 1.5 billion within ten months—marking it as the fastest nature-focused fundraising drive globally.
Wealthy Investors Step Forward
Ultra High Net Worth Individuals (UHNWIs) and family offices are increasingly pivotal players in nature finance. The Nature 2 campaign seeks to raise USD 1 billion by mobilizing 2% of managed assets from UHNWIs towards nature-positive projects by the COP30 in Belem.
“Family offices also see a responsibility to do more as government ambition on nature wanes,” noted UNEP FI, highlighting a broader shift towards private capital in the biodiversity sector.
Growing Role of Private Equity and Venture Capital
Private equity and venture capital firms continue expanding their influence in nature finance, demonstrated by Mirova’s launch of a private equity platform targeting environmental themes and Mirova, NatureX Venture Studio, and Mirova leading investment initiatives in this area.
This development highlights investor comfort with complex nature-based solutions and an expanding market driven by data clarity and innovation.
Looking Ahead
As private finance momentum grows, 2025 promises significant innovations aligning financial mechanisms closely with global biodiversity goals, addressing the vital global nature finance gap comprehensively.
Related Article: NatureFinance Unveils Tool for Banks and Investors to Evaluate Portfolio Nature Impact
