Unlocking trillions for nature: how private investment can drive a greener, prosperous future

With Sandra Valenzuela, CEO, WWF Colombia - in advance of Finance Day at COP16, we argue that unlocking private, return-seeking investment in nature is the best solution to the twin climate and nature crises.

This article is an English version of the Spanish original published in Forbes Colombia .

Encompassing the forests and rivers of the Amazon, the mountains of the Andes, mangroves along the Pacific and Caribbean coasts, and the savanna of the Orinoco river basin, Colombia is the second most biodiverse country in the world. It is also a pioneer in catalysing private finance for the protection of nature.

In June, BBVA Colombia, the International Finance Corporation, and BID Invest launched the world’s first biodiversity bond securing $70 million for conservation and economic development. It is an initiative that could inspire similar instruments elsewhere that also attract investors seeking both environmental and financial gain. And governments, companies, and financial institutions gathering at the Convention on Biological Diversity’s Conference of the Parties (COP16) in Cali, Colombia, should strongly encourage this trend.

More than half of the world’s economic outpu t – $58 trillion in economic value generation – is moderately or highly dependent on nature. Transitioning to a nature-positive economy could generate annual business opportunities worth $10 trillion and create 395 million jobs by 2030. And protecting nature could avert $2.7 trillion in annual economic losses.

These now familiar figures from PwC, the World Economic Forum, and the World Bank, respectively, underscore a fundamental truth: we live in a nature-dependent economy.

For some in the private sector, valuing and investing in nature is becoming the new norm. For example, over 400 companies have now adopted the Taskforce on Nature-Related Financial Disclosures’ reporting recommendations; and over 200 companies representing $1.1 trillion in revenue have called on policymakers at COP16 to help drive corporate action on nature.

Why then, as climate and ecosystem breakdown continue to worsen , pushing us toward dangerous tipping points, are many financial institutions still investing in harmful activities and failing to finance climate and nature action at the necessary scale and speed?

The Amazon region as a whole is an important carbon sink but if deforestation continues at current rates , it could become a source of emissions within ten years, leading to severe impacts on local communities, wildlife, and global climate stability.

While governments have committed to providing $200 billion a year for nature under the Kunming-Montreal Global Biodiversity Framework (GBF), the world needs to close an annual $700 billion financing gap for nature. This may sound daunting but is less than 1% of total global GDP, and much less than the $7 trillion a year - including $5 trillion in private investment - that pour into activities such as fossil fuels and industrial agriculture and exacerbate the twin crises of nature loss and climate change.

Redirecting this money and unlocking increased private sector investment in nature, would ensure a living planet for generations to come. Doing this requires both ‘greening finance’ - by reforming financial system rules to deliver on nature, climate and sustainable development goals, including by accounting for the true value of nature and addressing nature- and climate-related risks; and ‘financing green’ - by investing in activities that heal rather than harm.

Finance sector support for conservation in Colombia is low. But the good ‘financing green’ news is that private finance for nature globally has surged to over $102 billion from just $9.4 billion in 2020. If this trend continues, private nature finance could grow to $1.45 trillion by 2030 which would be a gamechanger for global biodiversity and help close the nature finance gap.

Maintaining momentum requires scaling innovative financial instruments like the BBVA biodiversity bond that crowd in private investment. These instruments include outcome bonds , sovereign debt conversions such as debt-for-nature swaps , green equities, biodiversity credits, blended finance, and private venture capital. For now, realising the full potential of such instruments and private sector investment in nature requires concessional and early stage finance from public sources that derisks private investment.

Together with partners, WWF is working to shape instruments that deliver impact in land-, sea- and riverscapes that matter, and ensure that growing investment serves both national and local priorities, especially in emerging markets where funding needs are greatest.

In Colombia, with support from private sector and civil society partners, the government has developed the Herencia Colombia initiative, securing $245 million in public and private finance to permanently protect 42 million hectares of iconic land- and seascapes.

Alongside it, WWF, IDB LAB and partners have created the HECO Invest to identify investment opportunities for loan, equity and grant funding, and enable private sector investment in nature in Colombia and beyond. Using secure technology to ensure traceability and investment monitoring, the platform is mobilising resources to deliver on the GBF and drive positive impact.

And elsewhere the Dutch Fund for Climate and Development (DFCD) supports pioneering anchor companies in Colombia that promote nature-based solutions, regenerative agriculture, and the bioeconomy. These include Colorquimica , an innovative pigment manufacturer developing natural dyes for the food, pharmaceutical and cosmetic sectors, and Alsec, a sustainable dairy company that supports community-led social enterprise.

Given the scale of investment required, securing private, financial return-seeking capital for the sustainable management of natural resources is arguably the best solution to the climate and nature crises.

Public and private sector leaders at COP16 have the opportunity to trigger a step change in financing nature for a fairer, greener future by properly valuing nature, and by derisking private investment.

We live in a nature-dependent economy. Whether or not we prosper in one depends on what we do over the next five years to finance a global economy that works with nature rather than against it.

This article is an English version of the Spanish original published in Forbes Colombia .