The rapid decline in the state of nature poses potential risks to the growth and stability of the global economy, which in turn may affect the financial sector. Global and national policy architecture to address the nature crisis has been fast developing in recent years under the UN Convention on Biological Diversity (CBD), with government which are CBD parties expected to develop and update National Biodiversity Strategies and Action Plans (NBSAPs) to detail actions to achieve the four goals and twenty-three targets of the Kunming-Montreal Global Biodiversity Framework (GBF). Going into the 16th Conference of the Parties (COP) of the UN CBD in October 2024, signatory governments need to deliver ambitious, detailed, and coherent policies to structurally reorient relationships between nature and economy, in line with global goals to halt and revere nature loss.

Frameworks, guidance and tools for private sector action on nature-related priorities reflect approaches that have been developed in the climate sphere. However, key conceptual and scientific characteristics of nature loss, and actions to abate it, affect how private sector actions on nature can be measured and compared – and the relevance of climate-based approaches. These include the non-fungibility of impacts on nature, and actions taken to address these impacts; the highly localized characteristics of nature; the multitude of metrics and indicators needed to robustly assess and portray changes in the state of nature; and the complexity of relationships between nature loss and climate change.

For goals and targets of the GBF to be achieved, aligned and coordinated actions by different public sector, private sector, and civil society stakeholder groups will be required – a misalignment of expectations for financial institutions, or other actors, may generate risks and lead to frictions. Governments must play a foundational role, by developing and implementing policies that directly address the drivers of nature loss, and create economically viable opportunities to reduce negative impacts on nature. The goals of a transition towards a nature-positive economy, which is being proposed as an analogous objective to ‘net zero’ within the nature sphere, will not be achievable without ambitious leadership from governments. Voluntary actions by the private sector can have important impacts on sustainability priorities; however, in the absence of clear policy and price signals, voluntary action on nature-related priorities by private sector actors faces limits. In this context, it is critically important that COP16 discussions on targets relating to finance appropriately reflect the roles of private financial institutions as supporters of actions to halt and reverse biodiversity loss by their clients, counterparties, and investees – rather than the primary drivers of such actions.

To help advance dialogue on the role of private financial institutions at COP16, this Discussion Paper examines key open questions in the nature finance sphere. Topics discussed in this paper include:

• The foundational role for government policy
• The role for private sector actors
• Nature transition pathways
• Conceptualizing nature-related finance
• Insights from the implementation journey – risk management and business strategy
• Balancing tradeoffs and leveraging synergies
• Responses from supervisors and central banks