Innovating and Unlocking Finance for Nature-based Solutions

This event hosted a discussion on the European Investment Bank upcoming report on “Access to Finance for Nature-based Solutions” highlighting the role of public and private sectors in accelerating and unblocking pathways for innovative financing Nature-based Solutions. The event was co-organized by the International Union for Conservation of Nature and the Geneva Environment Network, with the support of NetworkNature and the EU Commission.

About this Event

The vital contribution of nature and its services to social and economic development is undeniable. It is estimated that $44 trillion of economic value generation is moderately or highly dependent on ecosystem services, which corresponds to over half of traditional global GDP.

The global recognition of Nature-based Solutions (NbS) with the adoption of the multilaterally agreed definition at the Fifth Session of the United Nations Environment Assembly (UNEA-5) is now followed by the inclusion of the term in the text of four environmental conventions, including the United Nations Framework Convention on Climate Change and the Global Biodiversity Framework. Now is the time to boost the implementation of NbS interventions at scale. Currently, approximately 133 billion dollars are channeled into NbS interventions, and investments must at least triple by 2030 to achieve land degradation neutrality, climate change and biodiversity targets.

NbS finance is also substantially more dependent on the public sector, unlike in climate finance where private sector investment accounts for most capital flows. At present the business model and return-on-investment for NbS is not clear limiting interest from traditional financial institutions. Even for ‘patient’ impact investors the return-on-investment is often not clear enough to secure investment. To generate even more financially secure NbS interventions and strategies, investors need to come to the table. Donors and development partners, such as multilateral development banks, can support NbS project preparation by providing resources and technical assistance that can transition projects into more financially secure models.

Co-organised by the International Union for Conservation of Nature (IUCN) and the Geneva Environment Network – within the context of the EU NetworkNature project – with the collaboration of the European Commission, this event shared key messages from the European Investment Bank’s upcoming report of “Investing in nature-based solutions: State-of-play and way forward for public and private financial measures in Europe” followed by a discussion on the role of public and private sectors in accelerating and unblocking pathways for innovative financing NbS.

The event was followed by a reception.

Speakers

Guy HUDSON

Senior Advisor, Innovation Finance Advisory, European Investment Bank (EIB)

Karin ZAUNBERGER

Policy Officer, European Commission

Fiona FRICK

Managing Partner, CIRCE INVEST

Chris BUSS

Director, Centre for Economy and Finance, IUCN

Liesel VAN AST

Deputy Head, UNEP Finance Initiative

Veronica RUIZ

Resilience Programme Manager, IUCN | Moderator

Highlights

Live now!

Join this session offering insights on the upcoming @EIB report on “Access to Finance for Nature-based Solutions” and an overview of opportunities to unlock finance for #NbS.

📌 Palais des Nations & Online
▶️ https://t.co/nzZLMK7avb pic.twitter.com/StwdbVcCJU
— GENeva Environment Network (@GENetwork) May 11, 2023

Video

The event is livestreamed from Palais des Nations and via Webex.

Livestream from the room

Summary

Coming up soon.

Welcome Remarks / Setting the Stage

Veronica RUIZ | Resilience Programme Manager, IUCN

NetworkNature project encompasses over 40 Nature-based Solution (NbS) projects funded by the EU Commission.
This event is part of a two-day workshop on how to unlock finance and investment for NbS.
Why NbS? We are in the face of a triple planetary crisis. Nature and people go hand-in-hand. NbS can be an impactful way of tackling this crisis, support SDGs, and generate financial and social investments returns.
Despite this, NbS face multiple difficulties: gaps in knowledge, means of cooperation, and implementation, clear lack of financing as a real obstacle.
NbS will require unlocking investment, funding from diverse pool of actors.
The G20 economies invest $120 billion per year on NbS, but there is a need to triple this investment at $384 billion per year by 2025 to contribute to tackling climate, biodiversity and land degradation goals (UNEP, 2022). We need to speed up investment.

Key Messages from the Upcoming EIB Report

Guy HUDSON | Senior Advisor, Innovation Finance Advisory, European Investment Bank (EIB)

The EIB report on Nature-based Solutions (Investing in nature-based solutions: State-of-play and way forward for public and private financial measures in Europe), produced for the European Commission’s Directorate-General for Research and Innovation, aimed to look at the challenges and opportunities of investing in NbS.
The report itself has key components:
- A deep-dive of NbS actually in place in the EU compiled a list of nearly 1,400 NbS active. Whilst there are major data gaps, this is the most serious attempt of drawing up a list of NbS in the region.
  - Three-fourths of these projects were located in the urban ecosystems, followed by forestry and agriculture.
- An assessment of NbS across these ecosystems, we are able to tell the financing gap, and what needs to be done to restore these ecosystems.
- Building on these (28) databases, we supplemented this with a market survey of financial sector experts asking them about natural capital and NbS. From 200 questionnaires sent, 110 responses were received. 58 interviews were conducted with banks, insurers, asset managers, and financial investors.
Key findings:
- NbS funding is still dominated by public sources. Within the EU, over 60% of funding is derived from EU programs at around 200-250 million euros. This is reflective of how the biodiversity agenda has grown in visibility over this period. It also reflects of the raised profile of NbS and biodiversity and restoration over the past 5 years, driven by the European Green Deal, EIB’s roadmap, and climate adaptation.
- The average project size encountered was very small. This is an operational challenge for the finance sector when most projects under 10 million euros represent quite a challenge: it’s inefficient for financial investors to engage in small, non-replicable projects. Average project sites were under 2 million euros, and 44% were under 1 million euros.
- Climate change agenda provides a real opportunity for the concept of “natural capital” to gain ground. There are policy underpinnings we can build more robust business models.
There is a need for continual investments from across the spectrum: from the seed stage, investment capital, technical assistance, early growth capital, and flexible debt instruments and innovative aggregators of projects (putting projects together), in the hopes of mainstreaming natural capital and NbS into larger investment programs.
Crucially, grants will continue to be essential in this space. Streamlined coordination with EU and national grants combined with financial instruments continue to be very important.