Nature-capital financing is on the rise- our head of nature investments, David Sternlicht, lends his insights into staying ahead of the curve.
Nature-capital financing is on the rise- our head of nature investments, David Sternlicht, lends his insights into staying ahead of the curve.
by David Sternlicht
Natural-capital investing is an exciting new landscape with a lot to come on the horizon.
However, like all frontiers, there can be many challenges when it comes to navigation. As a primer, there is a growing movement to mobilize capital to solve the nature crisis. A recent report estimated a global “nature financing gap” of about $711 billion annually by 2030. That is the amount of investment needed to halt and reverse biodiversity loss. Now, the current annual funding for biodiversity and nature protection is $166 billion globally, with the lion’s share (76 percent) stemming from government funding. The corporate sector, accounting for only $29 billion of that annual flow, is lagging. While that might sound dire, it does mean that there is an enormous opportunity for the $100 trillion professionally managed assets market to bridge the gap. As this opportunity gains momentum, we’ve found that many investors are interested in exploring how nature capital investing could potentially deliver returns AND close a financing gap that is vital to our future.
Curious about this emerging asset class? Ethic’s head of nature investing, David Sternlicht, offers some insight into the trends he and his team are keeping an eye on.
- We are seeing the emergence of corporate disclosure requirements on the nature indicators that matter most. The Task Force on Nature-related Financial Disclosures released a risk management and disclosure framework. This is crucial for standardizing the methods by which companies identify, assess, manage, and disclose nature-related aspects, providing transparency for investors interested in setting targets for halting nature loss.
- The Nature Positive Initiative is seeking to bring greater alignment on nature-related language across public and private sectors. By defining and developing concrete impact goals, this initiative fosters clarity crucial to helping various entities align their actions in protecting and restoring nature.
- New technologies are transforming nature monitoring and reporting and offer a fuller range of tools for measuring impact. These recent advancements could enable more cost-effective data collection, enhance transparency in designing and monitoring nature-positive projects and offer investors more confidence that they’re investing in projects with integrity.
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