Nature Related Sustainable Finance in China 2025

Current global funding landscape for biodiversity conservation (2019) FIGURE 1 Domestic budgets and tax policy Public finance ($74.6-77.7 billion) Green financial products Public-private partnership ($3.8 -6.3 billion)Sustainable supply chains Private finance for nature ($5.5-8.2 billion)Nature-based solutions and carbon markets Public-private partnership ($0.8-1.4 billion) Biodiversity offsets Public-private partnership ($6.3-9.2 billion) Natural infrastructure Public finance ($26.9 billion)Philanthropy, conservation Private finance for nature ($1.7-3.5 billion) Offcial development assistance Public finance ($4.0-9.7 billion)54% 7%19%4%6%6%1%3% To support mobilizing more private finance for nature in China, this briefing paper aims to conduct a landscape review of China’s policy progress and market trends in mobilizing private finance for nature in the global context, and explore opportunities to enhance the much- needed enabling conditions for scaling tangible financial solutions. Compared to general financing channels, finance for nature and biodiversity often has longer investment return cycles and ecological restoration benefits whose economic returns are not directly evident.12 To address this, policy plays an essential role in enabling private capital in addressing nature’s decline. Governments must pursue policies – such as regulatory frameworks, tax incentives and risk mitigation mechanisms – that encourage private sector participation. These policies can help monetize the benefits of nature, create environmental markets and provide the necessary incentives to mobilize private funds.9 The Kunming-Montreal Global Biodiversity Framework calls upon all parties to update their National Biodiversity Strategies and Action Plans. Consequently, countries are increasingly focusing on policies related to nature. This paper analyses the current landscape of policies enabling private finance for nature from two perspectives: 1. A cross-country comparison of key economies: Analysing the focus and status of sustainable finance and ESG-related policies in China, Europe, Japan and the US, to illustrate a comparative picture of the progress made in China. 2. An analysis across the sustainable finance ecosystem: Analysing the coverage of value chain issues – from sustainability- related regulatory requirements for funders, environmental stress-testing by asset managers and environmental disclosure requirements for financiers, to environmental disclosure requirements for investee companies. The analysis also includes Policy as a key enabler Source: Global Canopy, The Little Book of Investing in Nature. 5