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Unlocking Nature's Value: Pioneering Sustainable Investments with Innovative Financial Tools

Nature's utility, cash flow, and scarcity make it a vital asset class, driving sustainable investments through blended finance and innovative instruments like sustainability-linked bonds. 

BwB Vice President, Ede Borbely, covered these topics at the 10th UNDP BIOFIN regional dialogue session for Europe, Asia and the Pacific last week in Georgia.

Some of the highlights of Ede’s presentation included:

Valuing Nature

Nature is an essential asset class, but assigning value to its utility, availability, and revenue-generating potential is a major challenge. Understanding how to include ecosystem services on balance sheets improves awareness of the crucial role of nature in human activities, supports more sustainable resource use, and encourages investment in safeguarding the natural environment.

Financing Solutions for Nature-based Investments

Collaborative forms of financing such as blended finance can help lower barriers to entry for investing in nature and support a long-term strategy. Programmes such as the UNCCD’s Drought Resilience Initiative are spearheading this approach and developing tools that can help standardise environmental risk-return models.

Sovereign Sustainability-Linked Bonds

Innovative thinking around conservation finance by governments and public sector institutions can catalyse private investment flows. For example, countries such as Uruguay and Chile have issued Sovereign Sustainability-Linked Bonds (SSLBs) for forestry-related outcomes. By tying the cost of borrowing to environmental targets, SSLBs help drive sustainable practices and grant freedom to the user on how proceeds can be deployed to achieve the agreed KPIs.

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