Heavy reliance on private finance alone will not deliver conservation goals

Abstract

The Kunming-Montreal Global Biodiversity Framework envisages an increasing reliance on large-scale private finance to fund biodiversity targets. We warn that this may pose contradictions in delivering conservation outcomes and propose a critical ongoing role for direct public funding of conservation and public oversight of private nature-related financial mechanisms.The repeated failure to achieve global biodiversity targets is often attributed to a global biodiversity funding gap 1 . Investment in nature is allegedly 5-7 times lower than required to reverse biodiversity loss 2 . A range of financial tools have been designed to incentivise private funds into the delivery of conservation outcomes 3 , and sustainable finance and policy circles now emphasise the need to 'mainstream' these nature-related financial instruments to close the alleged financing gap. Scaling up the investible appeal of nature-related asset classes aims to mobilize financial flows of mainstream institutional investors, including asset managers, pension funds, and insurers 4,5 . This view explicitly prioritises the financing role of private institutional investors over that of governments, whose role would be more to improve the risk-return characteristics of private biodiversity investments 2,4-7 . In our view, these policy narratives have underplayed the inherent conflict between achieving ecological outcomes and attracting large-scale financial flows. Here, we argue that successful nature-related investments will require more, rather than less, of a role for the public sector.The Kunming-Montreal Global Biodiversity Framework (GBF), agreed at the Convention on Biological Diversity's COP15 in December 2022, embodies an increasing reliance on large-scale private finance. The agreement proposes more ambitious plans for private than for public financing: high-income countries agreed to increase public biodiversity-related spending in low-income countries to USD $30bn/year by 2030, while 'mobilising' at least USD $200bn/year primarily through 'leveraging private finance, promoting blended finance… [and] stimulating innovative schemes such as… green bonds, biodiversity offsets and credits' 8 .

Carbon and ecosystem service markets in rangelands and grazing systems are a wicked problem: multi-stakeholder partnership or roundtable as a vehicle forward?

“…Among other issues that may be addressed with the use of a multi-stakeholder partnership or roundtable approach, and which were noted within the data, was leveraging private sector money to support these systems. How can we leverage industry finance to fill the funding gap (Kedward et al 2023)? Is this listening to what the private sector is driving for?…”

Biodiversity finance as a technology of power: Discourses of innovation and regulation in an Australian case study

“…For one, it means that biodiversity will only attract private finance where the rate of financial return is deemed satisfactory by investors. As pointed out by several participants, this space for symbiosis is narrow (Kedward et al, 2023;Dempsey and Suarez, 2016). Consequently, there is limited scope for systemic change, which is arguably necessary for survival (Boyer, 2021):…”

“…What has occurred in more recent times is an expectation that the private sector can fill the shortfall or "gap" in finance needed to effectively protect and restore global biodiversity (Bigger et al, 2021;Deutz et al, 2020;UNEP, 2021). In doing so, the private sector would play a major -if not the primary -role in biodiversity governance (Auld et al, 2009;Kedward et al, 2023).…”

Short‐term solutions to biodiversity conservation in portfolio construction: Forward‐looking disclosure and classification‐based metrics

“…Investments with poorly designed metrics have rightly been criticised for 'green washing' (Tuhkanen & Vulturius, 2022), potentially misleading investors and creating the appearance of socially and environmentally responsible investment without encouraging effective outcomes (Kedward et al, 2023). Both providers of metrics and managers of portfolio construction and design who use these metrics have significant discretion in creating and adjusting their models, with limited oversight (Bloomberg Law, 2022).…”

“…Our goal is to encourage private capital investment that slows and reverses biodiversity declines through businesses acting to mitigate their impacts and taking proactive steps towards nature-positive goals (Milner-Gulland, 2022). We stress that such actions are a complement, and not a substitute, for more rigorous public policy to conserve biodiversity and to restrict financial flows into activities that damage biodiversity (Kedward et al, 2023).…”