4 things you need
to know about
sustainable finance
for nature
Insights from the 6th GLF Investment Case Symposium
Introduction
On 7 March 2023, we hosted our 6th Investment Case Symposium, GLF–Luxembourg Finance for Nature: What comes next?. Held in Luxembourg and online, the event brought together 4,657 participants from 162 countries to pave a greener path forward for finance.
Here’s what we learned from the conversations that day, categorized into four main themes.
Sustainable finance is blended finance
Neither governments nor the private sector can solve the climate and biodiversity crises alone. That’s where blended finance comes in, often in the form of public-private partnerships. Policymakers and bankers must engage with stakeholders to understand how they can work together to achieve impact.
It takes time to bring in the commercial capital, but that initial catalytic capital that allows the blending to happen is critical.
Ebenezer Arthur Founder and CEO of Wangara Capital Partners
Banks and private investors will play a key role in financing the transition to a low-carbon and nature-positive economy. Similarly, governments, donors and philanthropic investors can contribute by leveraging private investments in nature-based solutions.
National governments can sharply reduce emissions with the aid of nature-based solutions and carbon pricing. They must also work with international development finance providers to mobilize capital and channel resources to local communities in the Global South.
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Most impacts are invisible because we don't measure and report on them. This results in a disconnect between the financial sector and real-world impacts on the economy and society. Only what gets measured gets managed.
Lennart Duschinger Sustainable Finance Advisor, Ministry of Finance, Luxembourg
A green eagle eye
As sustainable finance grows, accusations of greenwashing are more rife than ever. That’s why we need mandatory verification and audit systems and clear regulations and standards for sustainability to facilitate green investing. That includes standardizing financial products like green bonds and carbon finance to promote their adoption.
However, small and medium enterprises may not have the resources to comply with new standards – which is where financial institutions and governments are uniquely positioned to support them.
Green living starts with a seed
It’s not enough to simply buy greener products – we need to green every single stage of the supply chain, from the extraction of raw materials to home delivery.
To do that, policymakers must create appropriate regulations to ensure transparency, traceability and sustainability in all commodity supply chains. They must also eliminate subsidies for unsustainable agriculture and invest in sustainable and regenerative projects instead.
When there are more agroforestry trees in cocoa production, that represents benefits, but it can also bring some challenges for the farmers, such as lower productivity. Some compensation needs to take place.
Camila Olmedo Mendez Sustainability Manager at ECOM Agroindustrial
Meanwhile, banks and corporations should support companies and smallholders in complying with sustainability standards. They may also invest in restoration and agroforestry to reduce their own financial risks.
Regulation can make the market reliable and create the right atmosphere for development and investment.
Maria Elena Acevedo Representative to the Public-Private Partnership for Sustainable Finance, Central Bank of Paraguay
*Answered by attendees of the 6th Investment Case
Buying our way out
It’s time for new financing solutions to build the green economy of the future. Think forest funds, microfinance, and payments for ecosystem services: these are just a few of the innovative financing tools the world needs now.
It’s also time to ramp up existing forms of financing, including funding for community-led initiatives and investing in human capital to enable grassroots projects to develop organically.
Governments should also start integrating restoration into public budgets and investment funds, while companies and financial institutions must step up efforts to transition to net zero and adopt equitable business models.
Listen in to learn how sustainable finance can work for women.
We see so many announcements by the governments and companies, directing the money to preserve nature, but this money never reaches the final destination – the Indigenous Peoples who are at the front of the crisis.
Laura and Tashka Yawanawá Indigenous Leaders
We have an opportunity to rethink our relationship with nature, transform our economies, and make them greener, more sustainable, and fairer... Sustainable finance is a key tool to build low carbon & resilient economies.
Yuriko Backes Minister of Finance, Luxembourg
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