Alice Stuart, Postdoctoral Researcher at the Leverhulme Centre for Nature Recovery explores some of the work being carried out within the CBA Reimagining Nature Finance fellowship to understand financial flows to nature.
How much finance is flowing in service of life? This feels like it should be a relatively straightforward question, and an important one, particularly in light of the growing calls to upscale nature finance. Countries worldwide have committed to dramatic increases in financial flows to nature, both through Target 19 of the Kunming-Montreal Global Biodiversity Framework and individual national policies, but what does this actually mean and how will we know when it’s happened?
Understanding financial flows to nature is essential, not only to track our progress towards commitments and targets, but also to know if what we are doing is working and where change is needed. Current estimates of nature finance (such as the UN’s State of Finance for Nature 2026) reveal global trends, including the extent to which financial flows in service of nature continue to be dwarfed by flows that are directly harmful. Whilst this lets us know how far we have to go, the assumptions and generalisations required to create a global estimate mean they are unable to show what is happening on the ground, preventing them from being used to set or direct local and for national policy. To address this gap, we asked the question:
What happens if you try to map an entire country’s nature finance flows?
Our new preprint presents much of my last eight months working with Sophus zu Ermgassen to track nature finance flows in the UK using publicly available data. The headline is that we found just over £1bn in total trackable financial flows to nature, with most of this coming from public sources (mainly agri-environment schemes). Perhaps surprisingly, these schemes are funded year-on-year by the sale of green bonds and gilts, so could be argued to be of private origin (more on this later). More interesting to me than the overall numbers, however, was the difficulty in coming to them, even for a country with strong nature finance commitments and relatively good financial transparency.
First, you need to work out what counts. Nature finance definitions tend to be either circular, fuzzy, or both, generally along the lines of “finance that contributes to the goals of the Kunming-Montreal Global Biodiversity Framework”. Although this works in theory, in practice it makes it very difficult to classify flows that might indirectly benefit nature at some unknown time in the future. To address this, we took a very narrow definition, focusing on funds disbursed through schemes or transactions that were specifically focused on investment in ecosystems and/or species. This has the disadvantage of excluding some financial flows but allows us to be more confident in our estimate.
Next, you need to find the information. This often requires navigating many individual websites and reports, often to find no numbers at all (particularly for private finance). Or, and perhaps more alarmingly, numbers that on the surface look relevant but upon digging include no direct investment in nature, for example mainstream banks’ sustainable finance figures, which largely consisted of sustainable mortgages and loans for electric vehicles. In other cases, such as agri-environment schemes, only some of the headline figure reported was directly invested in nature, requiring analysis of the individual actions funded to estimate the relevant proportion. This is not always possible; many flows will report the amounts, but without transparency around what has been funded it is impossible to know the contribution to conservation goals.
Then, once you have the numbers, you need to work out how to combine them. Inconsistencies in reporting mean the figures given cover different time periods (both in terms of the years reported for and the period reported, whether financial or calendar year), or represent different aspects of a flow (budget, all costs, disbursements, awards, etc.), all making it complicated coming to a final figure.
Finally, you need to consider the actors involved and the interactions between them. Otherwise, if finance is flowing between multiple actors included in the analysis, it is likely to result in double counting. Only by considering the interactions can you assess the interlinkages between funding sources and understand the bigger picture.
So, given these difficulties, what can we learn from this analysis?
The first learning is the difficulties. This work gives us empirical evidence that more transparency of reporting is desperately required to understand the likely conservation impacts of nature finance flows and build a more cohesive and effective nature finance ecosystem. Secondly, even with gaps, this analysis gives us a better understanding of financial flows for nature:
Public finance remains the dominant source of investment in ecosystems and species in the UK, largely through agri-environment schemes and carbon-storing habitat creation grants, showing a focus on investments with multiple benefits for people and nature. This means what the government pays landowners for will be one of the largest drivers of conservation in the UK.
Private financial flows for nature (or at least those in the public domain) are much smaller, particularly when you only consider returns-seeking finance.
However, there are widespread transparency issues around private finance so that it is impossible to properly quantify current private investment in ecosystems and species. Transparency is particularly poor when considering operational expenditure, which may be massive (particularly where industries are subject to environmental regulations), resulting in a potentially incredibly valuable source of finance for nature being overlooked during policy and priority setting.
Finally, the lines between public and private finance become blurred when you look hard enough. Government reporting suggests public spending on nature through agri-environment schemes and grant programs is funded year-on-year through the sale of green bonds and gilts (fixed income investment instruments issued by the Government). Previously, it has often been assumed public finance for nature is raised through general taxation, but the use of green bonds and gilts means it could be argued to be of private origin, with investors paid through general government taxation rather than profit from the biodiversity actions.
Whilst the results are limited to the UK in geographic scope, their relevance isn’t. Given the UK’s increasing focus on harnessing private finance, the lack of transparent private financial flows indicates a systemic difficulty in aligning private financial interests with those of nature. Further, the results speak to the need for a radical increase in transparency of financial reporting, both to know what is currently being done and to know how it must change to better align with life.
First published on the Circular Bioeconomy Alliance website
Image: HeyKun/Adobe Stock