The State of Finance for Nature Report 2023 concluded that “Finance flows to Nature-based Solutions (NBS) need to almost triple from current levels (US$200 billion) to reach US$542 billion per year by 2030 and to quadruple to US$737 billion by 2050 to meet Rio Convention targets.”
So how are we going to achieve this?
A pan-European research project led by University of Limerick (UL) has received €4.98 million in funding under Horizon Europe Pillar 2 Cluster 6: Food, Bioeconomy, Natural Resources, Agriculture and Environment is looking at ways to unlock finance to help achieve our environment and climate goals.
Led by Associate Professor John Garvey from the Department of Accounting and Finance in the Kemmy Business School, the BIOFIN consortium comprises 14 partners across 10 EU countries.
BIOFIN (Biodiversity Restoration Using Large-Scale Finance) is a three-year project and uses a systems approach to identify the barriers to mobilising mainstream finance to protect and restore biodiversity.
The research will act as a catalyst of nature-positive investments and the proposed work will significantly contribute to resolving biodiversity challenges. The submission received the maximum score for impact from the European Commission.
BIOFIN will create a unifying framework and technology that creates improved conditions for nature-positive investments and will develop new tools and knowledge to help redirect financial resources from destructive economic activity (such as the continued use of fossil fuels) towards nature-positive investment.
The current financial system values certainty of rules and regulations coupled with efficiency for outcome transparency and low monitoring costs.
However, activities that protect and restore biodiversity such as nature-based solutions, are frequently unique, involving multiple actors working on a small or local scale that result in positive but complex outcomes.
This research will look at changing the system to establishing a categorisation of nature-based solutions (NBS) alongside a menu of good governance structures and a library of stakeholder engagement.
This will draw on expertise and best practice in natural capital and economics to streamline decision making and accelerate transaction completion by standardising the investment process and creating the enabling conditions for large-scale finance.
To accelerate nature-positive business models, a data analytics and underwriting engine will be established to advance conventional project appraisal and risk assessment and account for, and model expected outcomes.
Associate Professor John Garvey said: “We will assess and validate our approach across diverse real-life case studies or learning sites. Our findings and approach will initiate a twin green and digital transition that resolves the current transaction complexity and create the conditions to enable large-scale investment that are required if the EU is to achieve its biodiversity goals.
“Our outcomes will identify remaining gaps in the Taxonomy and support policy forming through evidence-based recommendations and we will co-design, develop and establish pathways for skills and knowledge accelerators for the European financial services industry.”
