The State Secretariat for Economic Affairs (SECO) will provide CHF 5 million in funding for the NatureFinance project. This will enable financial institutions in developing countries to give biological diversity more consideration when financing economic activities.
The project was on the agenda at the 15th UN Biodiversity Conference (CBD COP-15), which ends today. Switzerland is among the countries that have committed to fighting the loss of biological diversity and set themselves the “30 by 30” target: protecting 30 % of the planet’s land and water for nature by 2030.
NatureFinance will focus on SECO priority countries Peru, Colombia, South Africa and Indo-nesia, as their high level of existing biological diversity makes them particularly suitable to be pilot countries. The project aims to encourage financial institutions to give more consideration to ecological opportunities and risks when making decisions on financing, which should in-crease cash flow to sustainable sectors and companies. Instruments and methods to assess ecological risk will be further developed, and financial institutions will receive training on how to use them. This in turn will provide the basis for establishing global standards. SECO will pro-vide CHF 5 million over the next four years to support international partners as they carry out the project.
Loss of biological diversity a threat to the global economy
The loss of natural capital, such as minerals, soils and biological diversity, has accelerated in the last ten years to reach unprecedented levels. According to a study by the World Economic Forum, half of global GDP – approximately USD 44 trillion – is moderately or highly depend-ent on nature, rendering the global economy vulnerable to the consequences of nature loss. Swift and comprehensive action is essential to stopping the loss of natural capital and creating new incentives to preserve biological diversity.
Financial institutions play a central role
The financial sector has a central role to play in this process. Financial institutions’ decisions influence which companies receive capital as well as the impact that their activities will have on nature. The loss of natural capital also carries a risk for financial institutions, as they could lose the money they invest in companies that are dependent on natural resources.
Most financial institutions still do not have the necessary tools or methods to include natural capital in their credit analyses. SECO aims to help close this gap through the NatureFinance project.