Taskforce sets out suggestions to embed nature into financial markets

The recommendations were announced as part of the Taskforce’s recent report, ‘Making Nature Markets Work,’ launched on Thursday (10 August) during the Amazon Summit, where leaders from eight Amazon rainforest nations deliberated on tactics to combat deforestation.

According to research from the World Economic Forum and WWF, more than half of the global GDP ($44trn), is exposed to risks linked to nature loss.

To combat nature loss, the Taskforce suggests aligning global economic and financial systems with an equitable nature economy; harmonising financial actions with government policies; and ensuring accountable food commodity markets.

It further proposes reinforcing economic benefits for nature-rich regions and local communities; addressing nature crimes; and establishing a universal nature measurement agreement to avoid greenwashing.

The Taskforce argues that, unlike clean energy solutions in climate change efforts, nature lacks technological fixes, and therefore, transforming nature markets hinges on policy incentives, regulations, and governance frameworks.

The Taskforce was set up by NatureFinance and consists of notable members including the Green Finance Institute, the International Union for Conservation of Nature (IUCN) and representatives of indigenous peoples.

Taskforce on Nature Markets member said: “We can’t stop at placing a value on nature. A real transition requires not only financing change through low carbon and nature-based solutions but changing our financial and economic systems to truly service people, planet, and prosperity at the same time.”

According to the report, the ‘nature markets’ are propelled by four factors: public awareness and inherent appreciation of nature, heightened recognition of its vulnerability, growing awareness of economic reliance on it, and the influx of accessible biodata revealing nature’s true state.

These markets encompass asset, intrinsic, credit, and derivative sectors, enabling the trade of ecosystem assets, services, efforts for enhancement, and ecosystem-related financial products.

The report suggests that pricing nature globally could enhance preservation, investment, and restoration.

According to a report from Trucost, the yearly unvalued expense of nature exploited by the worldwide economy, encompassing factors like greenhouse gas emissions (GHG), water and land use, wild species utilisation, pollution, and waste, is approximately 13% of global GDP.

Global resource extraction has maintained stability at around 100 billion tonnes for several years, encompassing all raw materials. However, a recent Circle Economy report forecasts a rise to 170 billion tonnes of resources extracted by 2050, based on current trends.

According to an analysis from The World Counts, global biodiversity has declined by 70% since 1970.

The UK and France launched the Global Roadmap for Biodiversity Credit Markets in June this year, highlighting five challenges for equitable biodiversity and broader nature credit markets. These challenges include measuring nature’s state, fostering consistent, impactful credit demand with financing, guaranteeing an ample, high-quality credit supply for positive outcomes, ensuring equitable rewards for developers, sovereigns, Indigenous Peoples, and local communities, and establishing robust, participatory governance and broader institutions.

The report advocates moving beyond financial risks, urging financial institutions to align investments with the climate and nature commitments of their host countries’ governments.

Globally, UN nations agreed on a new Global Biodiversity Framework in December 2022, aimed at halting land and water deterioration, restoring 30% of degraded ecosystems on land and sea by 2030 and unlocking new finance streams for nature recovery.