Key Impact Points
- Nature-Based Solutions (NbS) can drive climate action: NbS could meet up to a third of the climate mitigation needs by 2030, presenting significant investment opportunities.
- Three critical levers for scaling NbS: The report identifies enabling environments, engaging beneficiaries in financing, and using guarantees to reduce investment risks.
- Public sector’s role is crucial: Early-stage NbS markets need public sector support to create favorable conditions for private investment.
A new study by Climate Policy Initiative (CPI), in collaboration with the Institute for Climate and Society (iCS), provides a toolbox for G20 countries to significantly boost investments in Nature-Based Solutions (NbS). The report outlines three essential levers to help scale investments in NbS: creating better enabling environments, involving beneficiaries in financing structures, and utilizing guarantees to reduce investment risks. This study, part of the G20 Sustainable Finance Working Group, will be presented at the event “How to finance the positive bioeconomy for climate, nature and people” on September 12th in Rio de Janeiro.
Leveraging Nature-Based Solutions for Climate and Economic Benefits
Nature-Based Solutions hold the potential to address up to a third of climate mitigation needs by 2030, while simultaneously delivering economic and social development benefits. However, as the development of NbS is still nascent, the report emphasizes the need to identify and overcome existing challenges in financing such initiatives.
Barbara Buchner, CPI’s Global Managing Director, stresses the untapped potential of NbS, stating, “There are significant potential investment opportunities, but the wide scope and nascent development of NbS requires us to better understand the levers to overcome existing challenges.”
Three Key Levers to Scale NbS Investments
- Building better enabling environments: Creating policies and frameworks that facilitate the flow of private capital into NbS is critical to scaling investment.
- Involving beneficiaries in financing structures: Engaging stakeholders, such as local communities and industries, ensures alignment and shared benefits from NbS projects.
- Using guarantees as risk reduction agents: Guarantees help reduce the risks associated with early-stage investments, attracting private sector interest by offering a safer environment for piloting new solutions.
Public Sector’s Crucial Role
Given that the NbS market is still in its early stages, the report underscores the importance of public sector involvement in creating favorable conditions for private investment. Guarantees can reduce the risks for private investors, making it easier to direct capital into these projects and test innovative solutions.
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“We can apply lessons from other sectors, but there is no one-size-fits-all financing approach for NbS,” explains Amanda Brasil-Leigh, Senior Program Associate at CPI. The report’s 12 case studies demonstrate how the three levers can guide public and private sector actors to increase investments in nature.
Key Themes and Case Study Focus Areas
The report highlights case studies across a range of focus areas including restoration, conservation, oceans, water, bioeconomy, and agroforestry. Additional themes explored in the report include defining and monetizing nature, fostering favorable political environments, and aligning NbS with other G20 initiatives.
Maria Netto, executive director of iCS, emphasizes the G20’s role in leveraging climate finance, particularly through nature-based solutions. “Tools like blended finance can overcome important barriers to financing for nature,” she adds.
For more detailed insights, read the full study here: CPI Toolbox on Financing Nature-Based Solutions.
