Earth Today | Getting nature in the black
Private finance a key part of the solution
Published:Thursday | February 5, 2026 | 12:10 AM
REDEFINING THE role of private finance is seen as key to reversing the current chronic underinvestment in nature, reflected in the US dollar 30:1 ratio in favour of investments spent destroying it.
“I n 2023, finance directly harmful to nature reached US$7.3 trillion, while investments in nature-based solutions (NbS) amounted to only US$220 billion – a ratio of more than 30:1. To meet global commitments under the Rio Conventions, NbS investment must increase by more than two and a half times to US$571 billion by 2030, while harmful flows must be phased out and repurposed,” reveals the recently published State of the Finance for Nature report of the United Nations Environment Programme (UNEP).
According to the 2026 report, titled Nature in the Red: Powering the trillion-dollar nature transition economy, it is necessary to look at private finance as part of the solution, beginning with an examination of how businesses operate and putting an end to harmful environmental practices.
“ This represents a more pragmatic and scalable approach: minimising negative impacts while strategically investing in transitional opportunities that align financial returns with environmental outcomes,” the report said.Also required is a focus on “impact mitigation finance”, which entails investments in sustainable supply chains; circular economy efforts that keep materials and products in use for as long as possible through reuse, repair, and recycling; as well as financing for companies that are moving away from harmful practices. This, according to the report, is with the recognition that “preventing environmental damage is typically more cost-effective than attempting restoration after irreversible loss occurs”.
“ This approach opens substantial markets in emerging nature-positive sectors, including clean technology, sustainable materials and regenerative agriculture, where private capital can simultaneously drive innovation and scale solutions,” said the report, authored by representatives from the Frankfurt School of Finance and Management, the Helmholtz Centre for Environmental Research, UNEP, and UNEP/Global Canopy, with technical contributions, guidance, data and peer review provided by representatives from several other entities globally.
At the same time, the evolution of climate finance to address prevailing climate change challenges is said to have some important lessons.
“ Unlike climate finance, which had decades to develop sophisticated frameworks and markets, nature-related finance must accelerate rapidly to address the alarming pace of ecosystem degradation and biodiversity loss. The climate finance sector’s development of ‘financed emission’ methodologies provide a crucial template for understanding the nature-related impact of financial portfolios,” the report explained.
Also important is getting the different stakeholders on side and reading from the same hymn book even as they begin to reconsider how they value nature’s assets.
“ The narrative around finance for nature has evolved with the emphasis shifting from finance for restoration activities towards the much greater task of comprehensive economic transformation aligned with net-zero, nature-positive and social justice outcomes. This evolution emphasises the need for a much more significant transformation of how governments, companies and financial institutions value natural assets and integrate nature-related considerations across portfolios and decision-making processes,” it added.