Blog by Ola Janus, Banks and Nature Campaign Lead for BankTrack

The United Nations biodiversity conference, COP16, which broke up last November in Cali without agreement on finance, concluded at the end of February in Rome. “We achieved the adoption of the first global plan to finance the conservation of life on Earth”, wrote the COP’s president, Susana Muhammad, Colombia’s outgoing environment minister, at 11.10 pm on Thursday, February 27th. 

The Finance Roadmap collectively agreed upon in Rome by the 196 parties to the Convention on Biological Diversity (CBD) includes a Resource Mobilisation Strategy, a Financial Mechanism and a Planning, Monitoring and Reporting Framework. After the grandiose failure of the previous Strategic Plan for Biodiversity for 2011-2020, agreed upon in the Japanese city of Aichi, which saw no single Aichi Target fully achieved, the lesson seems to have been learned. Securing adequate financing in advance is crucial to implement the goals and targets of the Kunming-Montreal Global Biodiversity Framework (GBF) – an ambitious global deal to stop and reverse biodiversity loss by 2030. 

The GBF itself is a comprehensive plan to tackle the root causes of biodiversity loss, including unsustainable consumption (Target 16), harmful subsidies (Target 18), and reducing harmful financial flows and negative impacts of finance (Targets 14 and 15). The Resource Mobilisation Strategy (RM) now approved provides a solid yet flexible basis for governments to develop their own strategies to increase finance for nature and to incorporate GBF targets, including finance targets, in national regulation. The goal is to incentivise businesses and financial institutions to transparently report on, and progressively reduce nature-related risks and impacts. It also seeks to mobilise more finance for biodiversity conservation and restoration, globally amounting to US$ 200 billion annually over the next five years, including US$20 billion in international assistance. 

The biodiversity finance gap

The RM puts a lot of emphasis on the need to mobilise new and additional financial flows from all sources to bridge the “biodiversity finance gap”.  It is hard to estimate the amount of money needed to stop and reverse biodiversity loss, but researchers have put the figure at US$700-950 billion annually over the next decade. 

In this context, the RM goal to mobilise US$ 200 billion annually for nature from all sources over the next five years is clearly insufficient. However, in the wake of recent cuts to development spending in the US, UK and elsewhere it represents a significant achievement in multilateral cooperation that stands in contrast to last year’s failed climate and plastics negotiations. Still, without sufficiently ambitious funding commitments from governments, there is now a strong expectation on the private financial sector to fill the funding gap. This is also expressed in Target 19 of the GBF, which includes a call for the participation of private finance to “invest in biodiversity, including through impact funds and other instruments”.

But it is not just the quantity of finance that matters: the quality is even more crucial. Nature restoration or conservation projects are highly vulnerable to exploitation and greenwashing. They must be developed with an approach that centres on human rights, especially those of Indigenous Peoples, and local communities and which adheres to social and environmental safeguards, as the RM and supporting documents make clear. 

Double-materiality of nature-related risks 

GBF Target 15 requires banks to conduct double materiality assessments of nature-related risks, identifying both risks material to the bank and bank's impacts on nature, “in order to progressively reduce negative impacts on biodiversity”. Several commercial banks such as Oxbury Bank (UK), ASN Bank (Netlernalds) or Danske Bank (Denmark) have already started to conduct such assessments. Apart from the moral responsibility for banks to understand their impact on nature, and to act upon it, there is also a pragmatic business imperative: financial and economic systems need nature to work.

The fact that most businesses highly rely on nature to provide them with resources and a range of so-called ‘ecosystem services’ means they are also highly exposed to nature-related risks. This is already clearly on the radar of financial supervisors tasked with ensuring the stability of the financial system. The Network for Greening the Financial System (NGFS), a global coalition of over 140 central banks and financial supervisors focused on addressing climate-related and environmental risks, acknowledges the growing importance of focusing on nature-related risks. Due to their potential impact on financial stability, natyre-related risks should be considered under the mandates of the central banks and financial supervisors. A 2023 report by the European Central Bank (ECB) underscores the importance of this, by revealing that most EU companies and banks would face substanxtial financial risks if climate change and biodiversity loss led to the collapse of natural ecosystems. In 2025, the ECB therefore plans to ensure that banks under its supervision fully account for climate and nature-related risks, with non-compliant banks facing binding requirements and potential penalties. Innovative financial institutions that seek to fully understand the nonlinear nature of climate and nature-related risks, will be much more resilient and therefore much less exposed to the unpredictability ahead. 

Finance for nature destruction

Bridging the “finance gap” through mobilising new sources of finance for nature without stopping financial flows to harmful business sectors is like trying to fill a bathtub with the drain wide open. UNEP estimates that private nature-negative finance flows amount to US$5 trillion annually, “140 times larger than the US$35 billion of private finance flows to nature-based solutions.” 

The biodiversity finance gap will remain huge unless harmful financial flows that are actively driving nature’s destruction are reduced. The top priority should be to stop financing business activities that cause the most harm to the environment and society. This is easier said than done, as the global economy is currently built on continuous and ever-expanding extraction, consumption and waste disposal. Central to the issue is the growth imperative—the belief that endless economic growth is necessary for financial stability, job creation, and improved living standards. This belief is embedded in mainstream economic models, corporate strategies, and government policies. Growth, as currently defined, depends on high levels of resource extraction and waste production. In this context, harmful investments aren’t just flaws; they are essential to maintaining this current system, as they channel capital into industries—like fossil fuels, industrial agriculture, and mass deforestation—that drive economic growth at the expense of nature. Successfully implementing the GBF requires shifting economic focus from endless growth to lasting well-being—a transformative change of immense magnitude.

The good news when confronting this daunting task is that banks are not just passive elements of the system, they are its active co-creators. Banks, as central drivers of economic activity, have many leverage points they can use to drive systemic change from within the system. What if banks measured success in terms of long-term ecological stability and social well-being instead of growth and annual profits? What if bank risk assessment models were aligned with planetary boundaries? What if the strength of the portfolio was measured in its resilience to climate change? While these ideas may seem radical to some, there are already around 70 innovative, value-driven banks putting them at the heart of their business models, transforming finance from within.

Building banking that works for nature

Making value-based banking mainstream is key to building a future where both people and the planet can thrive. It’s about shifting priorities from short-term gain to long-term well-being. Future dialogues between finance and environmental ministers from developing and developed countries promised by the RM hold great potential for addressing other leverage points in the financial reform, which is necessary to achieve goals and targets of the GBF. But as for today, how can major commercial banks show leadership in nature under these structural limitations and regulatory uncertainties?

In this context, the new Finance Roadmap provides a powerful compass. Once banks assess the risks and understand their impacts, they should develop an internal Nature Transition Plan. If done well, this should provide clarity and direction, helping banks navigate their nature strategy amidst uncertainties. The priority objectives of these transition plans should be oriented towards reducing the key drivers of biodiversity loss within banks’ portfolios. For certain sectors, this can happen through effective client engagement, but for others, exclusions are necessary.

When engagement fails to bring about change in clients’ harmful or illegal behaviour, cutting ties with such unethical businesses (see our Dodgy Deals page) signals robust ESG risk management. Increasingly, financial institutions recognise the reputational and even legal risks of financing nature destruction and are shielding themselves from exposure by publicly blacklisting clients linked to serious harm to nature and people. Transparency and reporting are also part of the list, together with the long list of basic human rights standards. The exclusion of a company by one or more financial institutions signals that these institutions assess the ESG risks associated with the company as too high to justify investment or credit. Are banks that continue to support harmful businesses taking unjustifiable risks, or are they simply failing to measure them properly? Either way, it’s a problem.

Additionally, many of the industries that are the main drivers of biodiversity loss today from their very nature cannot be made sustainable – for example, large-scale industrial livestock, fossil fuel extraction or large-scale monoculture plantations. Banks that care about nature and the successful implementation of the GBF should therefore phase out their support for these industries altogether.

Not by coincidence, these nature-destroying industries are also highly vulnerable to climate risks. For example, recent research by Friends of the Earth and Profundo shows that climate risks could drive $5.4 trillion in losses for global meat, dairy, and feed corporations within the next 25 years. Banks should quickly take notice and incorporate these factors into strategic risk assessments.

Many high-impact activities of other business sectors can also be done in ways that respect human and non-human life, minimizing harm to nature while still delivering returns. For example, switching to organic and regenerative agriculture and agroecological models offers a practical means to sustain commercial opportunities in agriculture by adapting to evolving climate conditions, with multiple added benefits, including lower pollution, and lower negative social and environmental impacts of increased carbon storage. Commercial banks should focus on  investing in innovation that supports a future in harmony with nature, while moving away from the outdated industrial model that no longer aligns with the planet’s long-term wellbeing.

The most innovative financial mechanism is ethical banking

To truly implement the GBF, we need to make only one significant change in global banking. We need banks to incorporate a values-driven approach to investing.

The real challenge is not just about increasing private investment in nature-based solutions. It is about making a positive impact on nature, a fundamental part of every single financial deal. The ‘future in harmony with nature’ that the GBF envisions calls for nothing less. Many businesses are already proving that it is possible to produce goods without polluting rivers, the atmosphere or our bloodstreams. Sustainable, nature-neutral or even nature-positive ways of producing already exist – and they need to be scaled up. 

Commercial banks have the means to drive change – or they can keep fuelling the destruction. One thing is sure, their choices will be closely tracked and exposed.

Notes:

The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) has identified five main direct drivers of biodiversity loss: land and sea-use change, direct exploitation of organisms, climate change, pollution, and invasive alien species. The Global Biodiversity Framework (GBF) addresses these drivers through its goals and targets, many of which are aligned with reversing their impacts.

• Land and sea-use change: Target 1 emphasises integrated spatial planning to maintain ecosystem integrity, while Target 2 calls for the restoration of degraded ecosystems. Target 3 (30x30) aims to protect at least 30% of land and oceans.

• Direct exploitation of organisms: Target 5 ensures the sustainable harvesting, trade, and use of wild species, while Target 9 promotes sustainable management in agriculture, forestry, and fisheries.

• Climate change: Target 8 incorporates nature-based solutions to mitigate climate impacts and enhance ecosystem resilience, supporting both biodiversity and climate adaptation.

• Pollution: Target 7 seeks to reduce pollution, including excess nutrients, pesticides, and plastic waste, to levels that are not harmful to biodiversity and ecosystem functions.

• Invasive alien species: Target 6 aims to prevent, reduce, and eradicate invasive species to minimise their impact on ecosystems.