Finance Solutions for Nature 2025

Introduction Nature is undervalued in the global economy The case for investing in the full value of nature remains as urgent as ever. While some components of nature – such as food, timber and ecotourism are priced and traded in global markets, the value of many critical ecosystem services remains undervalued. Carbon sequestration, water filtration, flood protection and pollination are often treated as “free” inputs, despite underpinning our economies and societies. The result is a persistent gap in how nature’s most critical functions are valued in economic and financial decisions. The consequences of this imbalance are severe. The World Bank estimates that while produced capital per person rose by over 47% from 1995 to 2020, renewable natural capital per person declined by 20%, reflecting sharp falls in biodiversity and ecosystem services.1,2 Over half of global GDP is now at risk of significant disruption from nature loss.3 In 2022 alone, nearly $7 trillion flowed into nature-negative activities, including $1.7 trillion in harmful public subsidies and $5 trillion in private- sector impact – far outpacing the $200 billion invested in nature, of which less than 20% was from private sources.4 A new paradigm is emerging to combat this challenge. The natural capital approach extends the economic concept of capital to the environment, conceptualizing stocks of natural resources as conventional goods worth restoring, maintaining and enhancing for their productive flows.5 This approach includes both accounting – embedding nature in national and corporate balance sheets – and valuation – pricing nature’s contributions into cost- benefit and investment analysis. Over 90 countries and 100 global businesses are now integrating these tools to help manage long-term risks, boost resilience and align investment decisions with the real economy’s dependency on nature.6 While produced capital per person rose by over 47% from 1995 to 2020, renewable natural capital per person declined by 20%. Credit: Martina Beshparova Finance Solutions for Nature: Pathways to Returns and Outcomes 6