Executive summary This briefing paper developed by the World Economic Forum’s Nature Action Agenda, in collaboration with International Institute of Green Finance (IIGF), explores opportunities for Chinese financial institutions to integrate nature considerations more deeply into their portfolios. Over half of global GDP is highly or moderately dependent on nature, with China particularly vulnerable – 65% of its GDP is at risk from nature loss. Yet, nature degradation persists, driven mainly by land- and sea-use changes, climate change, resource exploitation, pollution and invasive species. Public finance currently dominates biodiversity funding, while private sector involvement remains limited and often lacks effective risk management practices. To mobilize private finance for nature as a powerful complementary source to public funding, policy plays a key enabling role by providing regulatory frameworks, tax incentives and risk mitigation tools that encourage private-sector participation. The Kunming-Montreal Global Biodiversity Framework further emphasizes the need for updated national biodiversity strategies. This paper presents a landscape review of China’s policy and market progress compared to key economies – Europe, Japan and the United States (US) – analysing sustainable finance policies across countries and throughout the finance ecosystem. Key observations include: –Varied approaches: Europe and China utilize top-down policy frameworks, while the (US) and Japan rely on bottom-up, market-driven strategies. –Convergence of policy and financial instruments: Climate-related issues are comprehensively addressed across all economies’ policies and financial instruments in market, leading in maturity. Biodiversity is gaining recognition in sustainability policies; however, policy depth varies among economies, and market-based mechanisms are still in early stages. Despite growing policy support and market expansion globally and in China, sustainable finance for nature remains in the early stages of development. The allocation of funds to nature- related themes beyond climate remains limited, and financial institutions continue to face significant barriers to scaling nature finance. To better understand these barriers, this paper draws on interviews and workshops with 17 leading Chinese financial institutions. These engagements identified three core challenges: 1. a lack of credible, accessible nature-related data; 2. limited evaluation and pricing methodologies for nature-related impacts; and 3. underdeveloped business models with uncertain financial returns. Addressing these challenges requires continued policy support to create robust market infrastructure, including disclosure systems, taxonomies and incentives for nature finance. In the meantime, Chinese financial institutions have begun exploring pathways: –Leveraging emerging technologies such as artificial intelligence (AI) and satellite monitoring to improve real-time availability of biodiversity data and reduce risk assessment costs. –Utilizing existing corporate data and sustainability disclosures to infer nature-related risks and opportunities, especially in the absence of standardized biodiversity metrics. –Piloting innovative instruments, such as blended finance structures, insurance-backed risk-sharing mechanisms, and new forms of collateral like carbon credits, as a referable tool for nature credits – to enhance the bankability of projects that favour nature-positive outcomes and expand capital access, particularly for small and medium- sized enterprises (SMEs). These early efforts lay the groundwork for scaling private finance for nature in China and globally, helping to bridge the biodiversity funding gap while supporting a resilient and sustainable future.Nature-Related Sustainable Finance in China: A Brief ReviewJune 2025 3

Nature Related Sustainable Finance in China 2025