Nature Positive Financing the Tranisition in Cities

For the purpose of this report, the analysis of MDB urban nature spend encompasses all approved project finance that has impacts on nature, noting that all MDB investments have environmental due diligence assessments to ensure harm is limited. Without quantified impacts, investments cannot be categorized as nature positive. This analysis serves as an initial step towards understanding direction and magnitudes of urban nature finance flows. It aims to support the standardization of terminology and the development of traceability mechanisms for nature-positive finance and nature mainstreaming. By doing so, it seeks to identify investment opportunities and expedite the transition to nature-positive cities more effectively. Urban nature’s share in global development finance Analysis of public MDB project data illustrates the financial flows from MDBs that is invested in nature finance (including both nature mainstreaming efforts and nature-positive finance).31 Overall analysis illustrates that urban nature finance makes up only a small portion of the total MDB nature finance flows. Approved MDB spend on projects related to nature in the urban realm has made up, on average, less than 10% of the total approved project expenditure for nature over the last decade. Despite the growing need for urban nature investment, MDBs are either investing in other areas, focusing in rural area, or both. Findings suggest that nature investments by MDBs are largely conducted outside cities. Spending on urban nature sector Global trends, innovations and crises, such as the COVID-19 pandemic, the emergence of new renewable energy technologies, and the rising costs of goods and services, show a considerable influence in MDB spending on nature over the past decade when comparing spending before and after the pandemic (see Figure 4). A sectoral breakdown reveals that investments in nature do not solely come from a designated budget line for nature, but instead stem from expenditures across various sectors, all of which interact with nature. Figure 5 illustrates the key sectors relevant to the environmental agenda in cities and the changes in MDB financial flows from 2018 to 2023.Total Nature Urban nature112.6 112.6109.9 91.293.4112.5 102.8 56.9117.5 32.5 26.9 19.428.2 29.6 6.94.48.05.0 4.47.59.625.037.044.049.853.1 4.3 3.822.1 2.8Data for 2024 is not complete and shows only finance for projects approved between January and July 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Units in $, billions, by yearApproved total, nature and urban nature project spend by selected banks (2015-2024) FIGURE 4 Source: World Economic Forum analysis of publically available MDB project data from: Asian Infrastructure Investment Bank (AIIB); Asian Development Bank (ADB), Inter-American Development Bank (IDB), African Development Bank (AfDB), European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), World Bank Group (WBG). Nature Positive: Financing the Transition in Cities 19