Governments, corporations and financial institutions invest 30 times more in activities harming nature than in activities that can save the world from climate change impacts, reveals a new study.
Close to $7 trillion each year in activities have a direct negative impact on nature from both public and private sector sources. The amount is equivalent to roughly 7 percent of the global Gross Domestic Product (GDP), it adds.
Dubbed "State of Finance for Nature", the report was released by the UN Environment Programme (UNEP) and partners at the COP28 on Saturday.
The report finds that in 2022, investments in nature-based solutions totaled approximately $200 billion, but finance flows to activities directly harming nature were more than 30 times larger. It exposes a concerning disparity between the volumes of finance to nature-based solutions and nature-negative finance flows. It underscores the urgency to address the interconnected crises of climate change, biodiversity loss, and land degradation.
“Nature-based solutions are dramatically underfunded. Annual nature-negative investments are over 30 times larger than financing for nature-based solutions that promote a stable climate, and healthy land and nature, said Inger Andersen, Executive Director of UNEP.
“To have any chance of meeting the sustainable development goals, these numbers must be flipped – with true custodians of the land, such as Indigenous Peoples, among the chief beneficiaries,” she said.
The findings are based on an analysis of global financial flows, revealing that private nature-negative finance flows amount to $5 trillion annually, 140 times larger than the $35 billion of private investments in nature-based solutions.
The five industries channeling most of the negative financial flows – construction, electric utilities, real estate, oil and gas, and food and tobacco – represent 16 per cent of overall investment flows in the economy but 43 per cent of nature-negative flows associated with the destruction of forests, wetlands, and other natural habitats.
The report identifies a significant financing gap for nature-based solutions, with only $200 billion allocated in 2022, led by governments, who contributed 82 per cent ($165 billion), while private finance remains modest at $35 billion (18 per cent of total nature-based solutions finance flows).
To meet the Rio Convention targets on limiting climate change to 1.5C, as well as the Global Biodiversity Framework target to set aside 30 per cent of land and sea by 2030 and achieve land degradation neutrality, finance flows to nature-based solutions must almost triple from current levels ($200 billion) to reach $542 billion per year by 2030 and quadruple to $737 billion by 2050.
Niki Mardas, Executive Director of Global Canopy said, “This year’s report is a stark reminder that continuing with “business as usual” poses a severe threat to our planet, reinforcing the urgent need for a transition to sustainable business practices and to stop the financing of nature destruction.
“The net is tightening, with increased regulatory pressure in key areas like tackling deforestation, it means that those companies and financial institutions still driving the problem now need to make best use of the excellent data, guidance and frameworks already available to urgently commit to a nature-positive future," he added.
Government spending on environmentally harmful subsidies in four sectors - agriculture, fossil fuels, fishery, and forestry - is estimated at $1.7 trillion in 2022.
As leaders gather in Dubai this week, reforming and repurposing environmentally harmful subsidies, particularly to fossil fuels and agriculture, will be critical. Fossil fuel subsidies to consumers alone doubled from $563 billion in 2021 to $1.163 trillion in 2022.
Chief Executive of Change Initiative M Zakir Hossain Khan told The Report, “Now or Never. In this COP28, the least developed countries along with other negotiating groups need to create pressure on those countries that are subsidizing fossil fuels to stop subsiding.
“If the developed countries don’t agree, a carbon tax should be imposed. The carbon tax must be imposed collectively. Otherwise, for a single country It will be tough for a single country to fight against them and then continue global trade, “he concluded.
