Nature Positive Financing the Tranisition in Cities

Valuing natural capital within the appropriate policy and regulatory frameworks establishes the right environment to promote the use of nature credit markets and create an asset class within which nature and nature benefits can be traded. Private sector Private finance makes up 18% of the total spending on nature-positive action globally, totalling approximately $25 billion. Finance from private sources is focused on safeguarding and minimising risk, and for that reason financiers increasingly see an opportunity in introducing sustainable business practices, implementing biodiversity credits and offsets and creating sustainable supply chains. Under the existing market conditions, however, private investment cannot be expected to increase significantly without greater public-private collaboration and changes to regulatory structures and policies. Companies taking nature into account typically incorporate changes into their internal structures and operations by changing policies and processes, rather than by modifying the impact of their businesses on the environment. For example, companies may incorporate nature into their governance and decision-making processes or develop technology that limits the negative impact on nature (e.g., renewable energy sources).However, private sector participation in urban development is driven first and foremost by returns on investment, as with all investing. If return on investment (ROI) is not forthcoming, then private investment is unlikely to increase. As such, investments are primarily focused on solutions with profitable outcomes, and environmental and societal outcomes may be deprioritized. Multilateral development banks Given the alignment of MDBs with Sustainable Development Goals, these institutions have long since adopted nature and climate considerations into their project evaluation processes, and continue to develop and promote environmental assessments, valuation and accounting standards across public and private sectors. MDBs can have a clear influence in shifting cities’ actions towards becoming more nature positive by providing technical assistance and incorporating nature considerations into their financing process. Within technical assistance and capacity-building programmes, MDBs help governments to implement structural reform in cities, introduce novel financial instruments and build capability in sourcing and assessing projects. Private finance makes up 18% of the total spending on nature- positive action globally, totalling approximately $35 billion. 13 Nature Positive: Financing the Transition in Cities