Polski
Business and economics, In this issue, Issue 2/2026
Nature at a disadvantage. UNEP report on the state of environmental finance
Feb
Global financial flows are largely directed toward activities that negatively impact nature, threatening ecosystems, economies and human well-being, according to the latest edition of the State of Finance for Nature report prepared by experts from the United Nations Environment Programme (UNEP).
A big turnaround is needed on the topic of conservation
According to the report’s authors, the global community faced a unique opportunity to make a major turnaround in conservation. This notion was coined for an earlier edition of the 2023 State of Finance for Nature report, and reflects UNEPU’s call to redirect trillions of dollars of investment from environmentally damaging activities to nature-based solutions.
The aforementioned opportunity stems from the fact that awareness of the world’s nature crisis has never been so great. Since 1970. 73 percent of wild populations have irretrievably disappeared from the face of the Earth. Meanwhile, at least half of the modern economy depends on ecosystem services. If the bleak predictions of rising global temperatures come true, global GDP could fall by 25 percent by 2050. Over the same period, the total cost of desertification, soil degradation and droughts could reach $878 billion. annually.
It is therefore necessary to act, and as soon as possible. UNEP experts emphasize that environmental awareness of the financial sector is growing, and businesses and lawmakers are starting to get better at identifying and assessing risks and opportunities related to nature.
Financial flows harmful to nature
The report shows that in 2023, global public and private sector investments that had a direct negative impact on nature amounted to $7.3 trillion. Nearly one-third of this sum was accounted for by so-called EHS, or environmentally harmful subsidies (EHS) from the government, while the fossil fuel sector was supported with $1.1 trillion.
However, the greatest environmental damage was caused by private financial flows, which focused primarily on utilities ($1.6 trillion), industry ($1.4 trillion), energy ($0.7 trillion), and the production of basic materials, including fertilizer and agricultural inputs ($0.7 trillion).
According to analysts, it is the interplay between public subsidies and private financing that is the key factor driving nature-damaging financial flows. Subsidies lower the cost of capital and risk, encouraging private investment in activities with high negative environmental impacts. As a result, capital markets respond to distorted price signals, further perpetuating unsustainable business models and delaying the shift of investment toward solutions that benefit nature.
Nature-based solutions – more popular, but still underinvested in
By comparison, in 2023, public and private financial flows for nature-based solutions (NbS) amounted to just $220 billion. That’s 5 percent more than the previous year, but only 1/13th of the investment in environmentally damaging sectors.
The lion’s share of these positive financial flows was domestic public investment ($190 billion), focused primarily on sustainable agriculture, forestry, fisheries and biodiversity. The largest amount was invested in Asia ($93 billion), North America ($59 billion) and Europe ($34 billion). Of great concern is the decline in NbS spending in Africa, which is down as much as -76 percent between 2022 and 2023.
As a positive, it should be noted that the value of public green bonds and sustainability-linked bonds reached 2023. 15.9 billion dollars, an increase of more than four times compared to 2019. Official Development Financing (OFD) has focused primarily on meeting the goals of the Rio Convention on Combating Desertification.
Private financial flows accounted for only 10 percent of all investments in nature-based solutions, but their level increased by 8 percent over the previous year, with biodiversity offsets accounting for the largest portion, mobilizing some $7.1 billion. In contrast, the value of carbon offsets in the voluntary carbon market (VCM) declined markedly, from $828 million in 2022 to $355 million. 2023.
Financial gap vs. economic potential
The UNEP report shows that in order to achieve the Rio goals, annual financial flows for NbS must increase more than 2.5 times – to $571 billion in 2030, and then to $771 billion in 2050. Investments in restoration, followed by sustainable land management and conservation, will be crucial in the coming years.
The authors emphasize that investing in NbS is not only an environmental imperative, but also a long-term, high-return strategy that strengthens economic resilience and intergenerational well-being. One dollar invested in ecosystem restoration yields a return of 7 to 30 times the economic benefits. It has also been suggested that private companies can create more than 395 million new jobs within natural markets.
Nature at the center of financial decisions?
UNEP experts propose a pragmatic approach to the problems of environmentally unsustainable financial flows. The nature-transformation curve they have developed takes the shape of an X, in which increasing investments of a nature-beneficial nature intersect with decreasing spending on environmentally damaging activities, outstripping them in the long run.
Achieving this vision requires that national and corporate climate transition plans be consistent and create synergies. In particular, care should be taken to integrate NbS with National Biodiversity Strategies (NBSAPs), Nationally Declared Contributions (NDCs), Land Degradation Neutrality (LDN) strategies, and others.
The report’s authors also propose that nature be introduced into the framework of central banks and financial regulators. Indicators of the impact of activities on biodiversity could become an integral part of investment portfolio management. This would entail systematic assessment, monitoring and public disclosure of nature-related risks, impacts and opportunities by large companies and financial institutions.
Investments in nature-based solutions are worth expanding, demonstrating their cost-effectiveness and ability to generate revenue. For example, incorporating NbS into green-gray infrastructure increases public benefits from nature (e.g., flood control, urban cooling, recreation), and further reduces costs (e.g., in treating stormwater, providing clean drinking water, avoiding health care costs). In the utility sector, transmission power lines can be used as wildlife corridors, and offshore wind farms can be populated with corals, enriching biodiversity.
Not all benefits of NbS can be expressed in monetary terms – the worldviews and values of local communities are also worth using in the assessment. Global financial flows should reflect the total benefit to people and nature in the long term.
MAIN PHOTO: Victor Bouton/Unsplash
In writing the article, I used:
United Nations Environment Programme (2026). State of Finance for Nature 2026: Nature in the red: Powering the trillion dollar nature transition economy. Nairobi. https://wedocs.unep.org/handle/20.500.11822/49119
