Nature Positive Financing the Tranisition in Cities

Who finances (actors) How it finances (instrument) Public Multilateral development banks Official development aid (ODA) and development financing Blended finance/public-private partnerships, e.g.:Inter- governmental organizationsCentral banks and supervisory bodiesFoundations, NGOs, company corporate social responsibility (CSR) Grant-funded conservation projects (Government- or NGO-funded) Payment for ecosystem servicesSustainability-linked bonds/loans Insurance products Nature impact funds Biodiversity certificates/credits, carbon credits +Nature venture capital and equity investing (e.g. early-stage tech, new products/business models)Nature-focused use of proceeds (loans, project finance)Real economy corporatesNational and regional governments Subsidies Sovereign bonds ProcurementPhilanthropy Financial institutions Banks Investors InsurancesPrivate Conservation bond (e.g. rhino bond, blue bond) Nature infrastructure Debt-for-nature swapKey financers and mechanisms for nature finance FIGURE 2 Source: World Economic Forum and Oliver Wyman. Globally, national, regional and local governments invest close to $2.5 trillion a year across essential services in cities, such as transport, power, water and telecommunications.21 The trajectory of current investments will still, however, fall short of the $94 trillion forecast required by 2040 to meet infrastructure needs in just 50 countries globally. A 2017 World Bank article, Forecasting infrastructure investment needs for 50 countries, 7 sectors through 2040, estimates an $18 trillion shortfall, with 39% of the need in China, India and Japan. A large portion of governments’ infrastructure investment is concentrated in cities, offering a considerable opportunity for cities to influence the impact of this development finance in nature. As such, it is critical for cities to understand the mechanisms through which they can influence and guide urban investments across public and private sectors. Local governments looking to mainstream nature can introduce environmental impact assessments, nature-related due diligence criteria and strengthen nature governance. Stronger policy and regulatory frameworks, clearer representation of nature advocacy groups, and use of impact assessments can help minimize harmful investments and shift existing finance flows towards nature-positive solutions across all sectors.National, regional and local governments Given their prominent role in urban development finance, governments can play a crucial part in ensuring that urban development is aligned with Sustainable Development Goals and limits harm to nature by prioritizing interventions that ensure a net- positive impact. City governments can ensure all financial flows adopt or consider nature by using: 1. Policies and incentive mechanisms that encourage positive actions or discourage negative actions. Incentive mechanisms such as compliance hurdles, taxes and fees, and offsets are frequently used to manage impact on nature. 2. Natural capital accounting and valuation mechanisms to develop and implement green budgeting mechanisms and embed nature into accounting processes. Introducing nature valuation can help illustrate the actual costs and benefits of major infrastructure projects and make the value of natural capital visible so it can be compared to other investment types.2.2 Nature mainstreaming in cities $2.5 trillion a year is invested by national, regional and local governments globally in essential urban services. Nature Positive: Financing the Transition in Cities 12