Nature finance and biodiversity credits: A private sector road map to finance and act on nature

| Report

Closing the approximately $700 billion annual nature financing gap is essential to halting and reversing biodiversity loss by 2030. Alongside the necessary governmental action, the private sector has a critical role to play in mobilizing the funding needed. To support businesses in these efforts, this road map outlines the steps to develop and implement a nature strategy and a nature finance action plan. While focusing on biodiversity credits, the considerations included in this road map are broadly applicable to other nature financing mechanisms, such as payments for ecosystem services (PES), green bonds, or nature-linked loans.

The nature strategy and the nature finance action plan should ideally be developed jointly and iteratively. However, if a nature strategy already exists, businesses can refine it during the process of developing a nature finance action plan.

A nature strategy establishes a corporate ambition to contribute to halting and reversing nature loss, in line with the vision of the Kunming-Montreal Global Biodiversity Framework (GBF). There are multiple readily available frameworks for developing a nature strategy, such as the widely used ACT-D (assess, commit, transform, and disclose) framework. An integral part of the nature strategy, the nature finance action plan operationalizes the strategy. The nature finance action plan, as outlined in this road map, aligns with the ACT-D framework and follows four steps:

Step 1: Define actions and value. In alignment with the mitigation hierarchy, identify and prioritize actions that offer both financial and nature benefits by prioritizing avoidance, reduction, and restoration before offsetting and contributing beyond own impact. Furthermore, specify an implementation plan, and prepare to make relevant disclosures.

Step 2: Identify metrics. Select robust and fit for-purpose metrics to measure the outcomes of the chosen actions. After defining actions, values, and metrics, businesses can proceed with the next steps of the action plan. This report focuses on biodiversity credits as an example, but similar steps apply to other nature financing mechanisms.

Step 3: Procure credits (or other instruments) with integrity. Establish procurement guiding principles for biodiversity credits, considering risks, budget, timeline, and other factors. Then, identify suitable credits.

Step 4: Manage communication and claims. Ensure transparent and appropriate communication, considering justified claims in relation to the purchased biodiversity credits and their use cases.

With these steps, businesses can make meaningful progress in advancing their nature-positive agendas and transitions, ensuring their economic prosperity while contributing to closing the nature financing gap.