Financing nature – private sector flows are key

SINGAPORE has taken a global leadership position on climate change, adopting strong policy and market mechanisms to push towards a net-zero world. At the same time, the nation’s financial institutions have been active in making climate-aligned investments. Until recently there has been a focus on the role that nature-based solutions can play in addressing climate change, but the broader importance of nature to local and global economies is now receiving increased attention.

Around the world, we are witnessing the rapid degradation of natural capital assets such as clean waters, healthy soils and carbon-storing rainforests. In Singapore, we recently saw an oil spill that deposited more than 400 tonnes of fuel into the city’s waters and onto its beaches, forcing tourism and recreational-activities operators to shut down as a massive cleanup effort got under way. Had the spill been larger, it is not hard to see it having a catastrophic impact on local businesses and supply chains.

As companies increasingly grapple with understanding and responding to their exposure to nature loss, the scale of the nature-repair task is daunting. The United Nations’ Kunming-Montreal Global Biodiversity Framework sets a target of US$200 billion funding per year to be spent on nature repair by 2030. In response, the global financial sector is urgently considering the part it will play in providing the finance that is required.