Nature Positive Financing the Tranisition in Cities

Limitations to cities’ enabling environment TABLE 3 Enabler Limitation Impact on nature mainstreaming Impact on nature- positive finance GovernanceSiloed governance Engaging with cities involves engaging with numerous siloed departments. Nature is a cross-sectoral issue affecting multiple departments and industries, yet city governments are often not well resourced to operate across departments or bring appropriate scale to projects.Fails to address nature holistically, limits impact of solutions by creating changes in siloes rather than adopting cross-sector approaches where necessary.Hinders implementation of projects that require multistakeholder engagement, particularly those that require engagement with local communities. Policy and regulationUnattractive investment proposition An attractive policy and regulatory landscape can be a strong pull factor for greater nature finance. Cities often have confusing or poorly integrated policies, however, which create a barrier for investment, particularly from the private sector. Fails to curb or mitigate nature- negative investments across urban development projects.Limits the quantity of nature finance by failing to implement incentives to attract external finance. FinanceCreditworthiness Creditworthiness is one of the critical factors that lenders use to assess the viability and risk associated with an investment. Public and private sector lenders are unlikely to invest in cities that have a tenuous credit history and are likely to default on loans, limiting access to external finance. Limits the level of urban development cities can conduct and available funding for nature innovation.Creates difficulties with sourcing supplementary finance for co-financed projects, resulting in project delays or cancellations. Nature accounting and valuation Evaluating the socioeconomic and environmental benefits of solutions is considered one of the greatest challenges in investing in nature. Natural capital accounting plays a crucial role in addressing these challenges by providing a framework that enables government decision-makers to make informed decisions. It facilitates sustainability assessments, helps in the development of effective policies, and supports investments aimed at preserving and enhancing nature.Limits the level of urban development cities can conduct and available funding for nature innovation. Limits private sector investment and effort to mainstream nature across all investments and hampers development of innovative solutions to enhance nature outcomes. Undervalues the impact and bankability of solutions, resulting in withheld funding and under-used balance sheets.51,52 Data and analyticsNon-standard taxonomies The absence of a standard taxonomy for nature hinders consistent data use and sharing across organizations. This issue is exacerbated by the absence of uniform measurement units for key concepts like biodiversity, which encompasses genetic variety and species count, both of which can vary significantly by region. Ecosystems are dynamic and influenced by changing abiotic factors such as geographical features e.g. rocks, mountains, valleys, rivers, using simple metrics like species count or genetic diversity per unit area creates inadequate measurements.53 Limits standardization of data and creates more isolated operations by promoting confusion around standard terminology. Results in limited or complete lack of data to use as a baseline for current nature- positive initiatives or for funding applications. Nature Positive: Financing the Transition in Cities 28