Valuing and investing in natural capital can deliver prosperity for all on a healthy planet. By Margaret Kuhlow, Leader, Global Finance Practice, WWF International.
There is growing global recognition that delivering the transition to net zero, tackling climate breakdown, and building lasting social, economic, and environmental resilience relies in no small measure on investing in nature and forging a global economy that is nature-positive as well as net zero.
This is encouraging — but we currently have neither a North Star for action on nature akin to the Paris 1.5°C target for climate, nor the policies, incentives, or finance necessary to realize the nature-positive ambition.
And while we already know what many of the solutions are — including significant reform of international economic and financial systems for sustainable management of the global commons — there is no clarity or alignment on how to implement them.
Building a nature-positive economy requires a clear and credible roadmap, and a powerful and influential alliance of actors from across society that is capable of both developing it and ensuring it is taken seriously.
That is why this week, at Stockholm+50, WWF and partners are calling on political leaders, finance ministries and economic policy-makers, business and civil society to set a course for an equitable transition to a net zero, nature-positive economy.
Recipe for reform
Around the recent IMF and World Bank Spring meetings, there was much debate about how to make our global rules-based systems and institutions fit for purpose, able to address multiple and compound crises.
Achieving consensus around a new Bretton Woods framework and economic and financial architecture, let alone delivering implementation, will take time but in our view, reforms must include changing the ‘rules of the game’ so that we move away from a global economy based on the pursuit of indefinite production and consumption responsible for climate and ecosystem breakdown.
We must acknowledge that our economies are dependent on and embedded in nature. Natural resources and nature’s services must be properly valued, and environmental externalities properly disclosed, priced, and built into financial markets.
To drive capital toward low-carbon, socially inclusive, nature-positive activities, governments must integrate nature into decision-making, aligning economic and fiscal policies with international climate, nature, and development goals, and including natural capital stocks and risks in national accounting and reporting.
GDP must be complemented with new yardsticks of progress that track well-being and prosperity across generations, and that encourage investment in natural and social capital, and respect for planetary boundaries.
Investment in net-zero, nature-positive activities should increase, and environmentally harmful subsidies be repurposed to help close the $4.1 trillion financing gap in nature by 2050. And corporate reporting on climate- and nature-related risks needs to be standardized and made mandatory.
The IMF and World Bank’s governance and missions must be renewed to recognise both the economic power of emerging markets, giving a greater voice to underrepresented countries, and the need to attract private investment in public goods such as improved public health infrastructure, climate adaptation, and nature-based solutions that address societal challenges.
And as many countries increase borrowing to recover from the pandemic, and struggle with the growing food crisis, now is the time to expand the global financial safety net, nurture green sovereign-debt markets, and promote new financial instruments such as nature-performance bonds that link debt restructuring with climate and nature outcomes.
North Star for nature
Delivering this scale of change will not be straightforward. To have a chance of success, any roadmap for a nature-positive economy will not only need to offer a compelling vision, a credible strategy, and a convincing economic case, but also demonstrate widespread political buy-in, from economic and financial policymakers as well as businesses, civil society, and citizens.
An inclusive process that brings together leaders from across government, the private sector, Indigenous peoples and local communities, and society at large, could meet this challenge and help catalyze transformative change — but only if the context is right.
The first step must be agreement on a new global goal for nature under the UN Convention on Biological Diversity when world leaders gather in Kunming later this year. We need a North Star for nature that drives national and regional action to halt and reverse the loss of nature and put it on a path to recovery by 2030, and that unleashes a thriving nature-positive economy.
Leaders gathering in Stockholm and Kunming must initiate a virtuous cycle of nature-positive innovation and investment. The right enabling policies will encourage action from companies and financial institutions, and public finance should lead the way. Setting the direction for the new economy, governments can provide certainty for future investment, and incentivise companies and financial institutions to pursue business models and portfolios that work with nature rather than against it, and which in turn drive further policy and governance reforms that serve lasting prosperity and resilience. We cannot wait another 50 years.
To find out more, join WWF and partners at our event at Stockholm+50.