Every year, both the public and private sectors worldwide invest almost $7 trillion in activities that have a direct negative impact on nature.
This is equivalent to about 7% of global gross domestic product (GDP), according to the latest Nature Finance report released at the recent COP28 conference by the United Nations Environment Program (UNEP) and colleagues.
The report shows that investments in nature-based solutions will reach around $200 billion by 2022, but financial flows for activities that directly harm nature will be 30 times higher.
This figure highlights the alarming gap between financing environmental solutions and capital flows that harm nature, and highlights the urgent global need to address environmental crises, climate change, biodiversity and land degradation.
Nature-based solutions
Unfortunately, nature-based solutions are underfunded. Annual negative investments in nature ($7 trillion) outpace funding for environmental solutions that promote a balanced climate and the health of land and nature by more than thirty times.
To have any chance of achieving the Sustainable Development Goals, these numbers must change and the true custodians of the land, such as indigenous people, must be the main beneficiaries.
The results, based on analysis of global investment flows, show that environmentally damaging private capital flows amount to $5 trillion per year, 140 times more than the $35 billion of private investment in environmental solutions.
Negative financial flows
The five sectors with the highest concentration of negative financial flows (construction, electricity, real estate, oil and gas, food and tobacco) account for 16% of the total investment flows in the world economy, but account for 43% of the total investment flows in the world economy. The world economy has negative ones Capital flows related to the destruction of forests, wetlands and other natural habitats.
This year’s report is a stark reminder that maintaining the status quo poses a serious threat to our planet and highlights the urgent need to move to sustainable business practices and stop funding and supporting the destruction of nature.
Regulatory pressure in key areas such as deforestation is becoming increasingly stringent. This means that companies and financial institutions that continue to address this issue must take full advantage of the excellent data, guidance and regulatory frameworks that already exist to immediately commit to a positive future in the environment.
$7 trillion in subsidies are bad for the environment
Government funding for environmentally damaging subsidies in four sectors (agriculture, fossil fuels, fisheries and forestry) was estimated at $1.7 trillion in 2022.
Reforming and rebalancing environmentally damaging subsidies, particularly fossil fuels and agriculture, was a key theme at the leaders’ summit in Dubai.
Consumer subsidies for fossil fuels just doubled, from $563 billion in 2021 to $1.163 trillion in 2022.
Harmful effects on nature
Both public finances and private investments as well as the redistribution of environmentally harmful financial flows must be significantly improved.
While public financing will continue to play an important role, private financing has the potential to increase the share of natural resource financing from 18% today to 33% in 2050.
The widespread destruction of nature not only worsens the climate crisis, but also pushes us beyond the boundaries of our planet.
Investing in green solutions provides strategic and cost-effective solutions to address the challenges of climate change, biodiversity loss and land degradation, while ensuring measurable progress towards the Sustainable Development Goals.
Nature-based solutions
Nature-based solutions offer significant investment opportunities because they are cost-effective and offer many benefits.
Investment opportunities for sustainable land management could quadruple by 2050, and the long-term viability of sustainable food and raw material production is expected to boost private investment.
Protecting diverse ecosystems is extremely cost-effective: it covers 80% of the additional land needed for nature-based solutions, but will only receive 20% of the additional funding in 2030.
Given the scale of the global recession, the recovery offers enormous opportunities to improve the functioning and resilience of ecosystems and to provide the ecosystem services on which all humanity depends.
With information from: