Nature Positive Financing the Tranisition in Cities

1.2 Aligning on a definition for nature finance The growth of urban centres, poses a risk to biodiversity and natural habitats, not only because uncontrolled sprawl can encroach on natural sites but also because urban infrastructure development drives up the demand for raw materials and natural resources. Cities allocate less than 0.3% of their infrastructure budget to nature-based solutions. Harnessing the potential of nature-based solutions could lead to an investment opportunity as large as $113 billion by 2030.12 Investment in nature alone is, however, insufficient to address global biodiversity loss. It is also necessary to address the impact of the $6.7 trillion being funnelled into nature-negative industry practices.13 By redirecting financial investments and effectively integrating nature-positive principles in decision- making, there is the possibility to affect change on a grand scale. Urban centres can tackle three of the primary industrial drivers of biodiversity and ecosystem loss: land use, infrastructure development and energy creation. By adopting nature-positive criteria in the expansion and development of these industries, cities can significantly mitigate their impact on global biodiversity while also unlocking substantial economic benefits – projected to deliver $10.1 trillion in annual business opportunities and create 395 million new jobs by 2030.14 Urbanization and city life rely on nature, and a conscious investment in urban development can not only protect cities and people from natural disasters but also support the conservation and protection of natural systems from the increasing resource demand of urban centres.15,16 Nature-negative flows have been shown to exceed nature-positive flows globally, highlighting the relevance of mainstreaming nature considerations across sectors to limit harm. While current nature- positive flows from across public and private sources equate to $200 billion, $6.7 trillion a year is directed to activities that negatively impact nature.17 The landscape of investment in nature is broad and nuanced. For the purpose of this report, urban nature finance refers to all financial investments in cities that directly involve or impact nature. Under urban nature finance sits: Nature mainstreaming: the adoption of nature considerations into business-as-usual operations through decision-making processes, governance structures or new and innovative technologies. Nature mainstreaming takes a system-level approach to minimize harm and impact on nature across all spheres, sectors and industries. Examples of nature mainstreaming include the adoption of nature considerations in investment processes and governance structures (green finance), or technological innovation across sectors for more efficient resource use, including the reuse of waste material, biowaste recovery, or monitoring systems to conserve nature (green technology). These latter innovations may become nature-positive once sufficient scale is reached, and a clear correlation can be drawn between the investment and impact in nature regeneration or protection (net positive impact). Nature-positive finance: refers to investment into solutions that have a measurably positive impact on ecosystems and biodiversity against a set baseline (colloquially called “financing green”). Examples of nature-positive finance could include rehabilitating a forest, introducing a series of wastewater treatment plants to treat and divert waste from freshwater ecosystems, or restoring ecological corridors alongside the implementation of a car-free zone in a city. The measurability of impact is vital to distinguish nature-positive finance from nature mainstreaming. Both types of nature finance are applicable across a broad spectrum of industrial sectors, including agriculture, construction, infrastructure and utilities management. Only after deploying both in tandem will the nature-positive transition in cities be enabled. Some global bodies have aligned on a definition for nature positive, including multilateral development banks (MDBs). MDBs have developed a common set of principles for tracking nature-positive finance and a taxonomy to better assess the impact of their investments. This is the first step in defining, mapping and redirecting financial flows towards interventions aimed at halting and reversing nature loss while achieving measurable biodiversity outcomes. MDBs’ aligned definition of nature- positive finance is “... finance that supports actions that protect, restore or enhance sustainable use and management of nature, or enables these actions, contributing to the implementation of the KMGBF and its broad ambition to halt and reverse nature loss by 2030, with a view to full recovery by 2050.”18 Investment in nature alone is insufficient. It is necessary to address the impact of the $6.7 trillion being funnelled into nature- negative flows. Nature Positive: Financing the Transition in Cities 8