Looking at the world today, at the many urgent challenges, from the pandemic to the energy and food crises triggered by Russia’s unjustifiable attack on Ukraine, one might would be tempted to think that choosing between tackling these crises and the preservation of nature is a dilemma.
In fact, I believe there should be no trade-offs. Especially if we leverage on the complex connections between biodiversity, climate, development and wellbeing.
According to the World Economic Forum, $44 trillion of economic value generation – over half the world's total GDP – is dependent on nature and the nature-based economy: forestry, water, oceans and agriculture.
This is our natural infrastructure. And, it is as important for development as the infrastructure we build. Preserving and increasing the value of these assets, by conserving and restoring nature is just smart economics!
It is smart economics because the financial value nature for individual countries can be higher than that of infrastructure projects. Take, for example, the value of pollination for local agriculture, or the preservation of coral reefs for the fishing industry and tourism.
The understanding of this value and the connection between biodiversity, climate and development led the Multilateral Development Banks to sign the Joint Statement on Nature, People and Planet in Glasgow last year, and over 100 financial institutions and capital market players to sign the “Finance for Biodiversity” pledge.
I believe these are important steps as finance can become an enabler for transformation, by meeting a huge funding gap. Just in the European Union, the funding gap is estimated at €6 billion a year, at least. The global shortfall is estimated at $700 billion annually between now and 2030. Public funding and the support of philanthropies is essential. But, as it is the case for all SDGs, you cannot be successful without the private sector.
Attracting private finance to nature ─ no small feat. Ecosystems do not lend themselves to traditional investment vehicles. Nature often requires sizable upfront investments for benefits that accrue over time, diffusely or indirectly, and often in the form of avoided future costs that are not accounted for on balance sheets.
In addition, much of the world’s precious natural capital is found in some of the most fragile places, where conflict, poverty, and weak governance can make deploying funds exceptionally challenging.
Many carbon-rich and biodiverse landscapes may be in a “natural state” now. But, the protection of those landscapes requires frameworks to reward protection and stewardship in these settings.
We also need innovative mechanisms for financing nature that help capture nature’s many value streams, bring new funders to the table, and align incentives.
Ladies and gentlemen,
Despite the many challenges, investing in nature has never been more necessary, nor has it held such an opportunity.
The opportunity lies in the rapid evolution of carbon markets, coupled with innovation in nature finance and technologies to measure and monitor ecosystem services. Investors, donors and communities are learning more and more about the potential business case for nature, and its potential impact.
At the European Investment Bank, the EU's climate bank, we mainstream biodiversity in everything we do. We support operations, together with local communities, to halt and reverse the decline of biodiversity.
At the same time, we implement robust Environment and Social Standards that apply to all our projects, globally.
What was once called the sewer of Germany`s industrial heartland has become now a small paradise.
We are not only financing nature investments inside the EU, but nature is a priority outside of the EU as well. For example, we have invested in the Land Degradation Neutrality Fund.
This is a first-of-its-kind impact investment fund targeting sustainable land use and ecosystem restoration projects in developing countries. This includes support to building sustainable coffee value chains in Peru, thereby reducing land degradation and increasing forest cover.
Another example is our backing of the EcoEntreprise Fund: this is a largely female-run fund that supports indigenous communities to build businesses that enhance and protect the relationship between the forest and the people in countries like Ecuador. All this while supporting quality jobs and leadership opportunities for women.
Ladies and gentlemen,
Looking forward, financial institutions and the EIB will do their part for nature-based investments as we aim at improving our impact for the preservation of the environment.
I am looking forward to discuss with you how we can accelerate this investment agenda together.
After meeting with EU finance ministers on Friday at an informal gathering of the Economic and Financial Affairs Council in Ghent, Belgium, EIB President Nadia Calviño held a press conference to discuss the EIB Group's ambitious plans with a focus on eight core priorities.