The UN Environment Programme (UNEP) and partners have published an evidence-based snapshot of the scale of nature-negative finance flows, which, at nearly USD 7 trillion per year, dwarf finance flows to Nature-based Solutions (NbS), which are estimated at USD 200 billion annually.

The 2023 edition of the annual State of Finance for Nature report is themed, ‘The Big Nature Turnaround: Repurposing $7 Trillion to Combat Nature Loss.’ It estimates the scale of public and private nature-negative finance flows and identifies NbS as cost-effective investment opportunities that provide multiple benefits. 

The report reveals that nature-negative finance flows from public sources were almost USD 1.7 trillion in 2022, which is more than ten times greater than public finance flows to NbS, estimated at USD 165 billion. Nearly 90% of these flows are directed to fossil fuels and agriculture, at 69% and 20%, respectively, according to the report. For example, last year saw a twofold increase in fossil fuel subsidies to consumers, from USD 563 billion in 2021 to USD 1,163 billion in 2022.

For the first time, the report estimates global nature-negative finance flows from private sources. These amount to USD 5 trillion per year – approximately 5% of global gross domestic product (GDP). Nature-negative flows are 140 times larger than tracked private investments in NbS – an estimate that does not include indirect impacts. As per the report, construction, electric utilities, real estate, oil and gas, and food and tobacco are the five industries that channel most of the negative financial flows. They represent 16% of total private investment flows in the economy – but 43% of nature-negative flows.

The report finds both public and private finance flows to NbS will need to increase dramatically to close the gap between current finance flows and the investment needed to meet the Rio Conventions’ targets of limiting global warming to 1.5°C, protecting 30% of land and sea by 2030 (30×30 target), and achieving land degradation neutrality (LDN) by 2030.

Recommendations for actions relate to “greening finance,” “financing green,” and supporting green and inclusive financial systems. The report calls for:

• Reducing public and private nature-negative finance flows;
• Scaling public funding and private investment in NbS; and
• Ensuring a just transition to a green and inclusive financial system for vulnerable groups, women, and Indigenous Peoples.

The report estimates that tripling NbS finance flows to USD 542 billion by 2030 “can make a massive contribution to reach Rio targets.” This solution, it argues, requires a dual approach that encompasses 1) efforts to continue to upscale investment in NbS for climate and nature conservation and restoration, and 2) greater emphasis to create incentives to realign finance away from nature-negative activities towards creating nature-positive outcomes.

“Investing in nature-based solutions provides a strategic and cost-effective avenue to address the interconnected challenges of climate change, biodiversity loss, and land degradation while at the same time making tangible headway towards the [SDGs],” said Jochen Flasbarth, State Secretary in the German Federal Ministry for Economic Cooperation and Development (BMZ), which funded the report.

UNEP, Global Canopy, and the Economics of Land Degradation (ELD) initiative, launched in 2011 by the BMZ, the UN Convention to Combat Desertification (UNCCD), and the European Commission, released the report on 9 December 2023 in the margins of the UN Climate Change Conference (UNFCCC COP 28) in Dubai, United Arab Emirates (UAE). [Publication: State of Finance for Nature 2023: The Big Nature Turnaround: Repurposing $7 Trillion to Combat Nature Loss] [Executive Summary] [Publication Landing Page] [UNEP Press Release] [Finance for Nature] [SDG Knowledge Hub Story on State of Finance for Nature 2022]