This article is sponsored by Pure Strategies
Although half of global GDP is reliant on nature, more funds are directed to environmentally harmful subsidies (PDF) than is spent on protecting the nature needed for business and humanity. Despite growing interest from companies to fund interventions for climate strategies and business resilience, the private sector accounts for only 14 percent of current spending on nature-based solutions.
Company funds can be directed to support innovative projects, technologies and policies for biodiversity conservation and fill the financial gap of about $598 billion to $824 billion needed per year globally for the protection of nature. Timing is prime for businesses to take on greater funding and collaborative leadership roles, but scaling private support to the level needed for effective outcomes will require good decisions and building on best practices.
New drivers for corporate funding emerging
Corporate funding of conservation organizations has traditionally focused more on general support and a philanthropic strategy. This has been shifting as companies establish climate targets, determine supply chain goals and look for more specific nature interventions to engage in with partners.
There is growing momentum for these public-private partnerships to be even more project-focused while addressing the impacts and opportunities of businesses. Driving this transition, in part, is the progress underway through a series of biodiversity-related international events and activities that are engaging the private sector.
Key among these developments is the UN Convention on Biological Diversity’s Global Biodiversity Framework which envisions that “by 2050, biodiversity is valued, conserved, restored and wisely used, maintaining ecosystem services, sustaining a healthy planet, and delivering benefits essential for all people.”
As this framework moves toward agreement by numerous governments later this year, the role of business in realizing the vision will have more emphasis than ever before. This includes a call for businesses to explore and report their dependencies and impacts on nature, and to take appropriate action to avoid, reduce, restore, regenerate and transform these impacts. Implementation of the framework will also identify greater opportunities for private sector to invest directly in nature.
Another opportunity for business stems from the Taskforce on Nature-related Financial Disclosures (TNFD), which recently released its beta version of a disclosure framework. This framework, aligned with the Taskforce on Climate-related Financial Disclosures, offers guidance and analytical support on documenting nature-related risks and opportunities. The TNFD aims to help shift corporate finance from damaging nature to investing in a future that is “nature-positive” for humans and the planet.
Further, the Science Based Targets Network, an initiative parallel to the Science Based Targets initiative for Climate, is developing guidelines for companies to assess their business-related impacts on nature and prioritize actions that will improve conditions for biodiversity and ecosystem services.
Five key learnings for corporate funding of nature projects
Companies looking to fund and scale nature projects will want to keep in mind that these efforts require some unique considerations to be effective. As corporate engagement has increased directed giving to non-profits, the following lessons have emerged:
- Place-based solutions: Businesses’ relationship to nature is connected to specific locations, from geographic sources of raw materials to operation facilities and downstream use sites. However, studies point out that knowing where businesses have impacts is a critical gap; less than 20 percent of companies know where their raw materials are sourced. Businesses need to engage with the value chain to understand the locations of impacts and use exinternal or industry-level data to fill the gaps. This key step in identifying physical locations of dependence and impact along the value chain can help with prioritizing actions to reduce impacts and support nature.
- Intersectional strategies: Funding effective projects and interventions can be channeled in ways that enhance and restore the ecologicalphysical and social aspects of actual the physical locations that businesses rely on for products, services or resources. This also increases resiliency in the supply chain. Numerous tools are available to ensure that social considerations are followed. These include ethical instruments, such as the Union for Ethical Biotrade (UEBT), and standards, such as the Social and Environmental Standards developed under the United Nations Development Programme. Natura & Co, for example, partners with UEBT to support the company’s work with communities and conservation projects in the Amazon.
- Community engagement: It is critical to work with, learn from and empower the local communities and Indigenous peoples who are living within and near the areas that a business impacts across its value chain. It has been shown that these communities have an extensive role in looking after some of the world’s most precious natural resources. Without their partnership, the lasting effects of a project can be compromised and overall impact diminished. Starbucks, for example, is working with farmers in its coffee-sourcing regions to reduce water pressures on communities.
- Consider the long-term: It takes several years to assess needs, get a project off the ground and realize results. Thus, projects need long-term, multiple-year commitments for financial stability and ongoing management success. In addition to funding a project over multiple years, a company may also consider working with a consortium of organizations to build on collective strengths, knowledge and networks. For example, partnerships with other investors and institutions who have relevant experience can provide leverage and opportunity for scaling up, such as the Forest Solutions Group within the World Business Council on Sustainable Development which focuses on the sustainability of working forests.
- Criteria-driven decision-making: Deciding on which organizations to partner with and what projects to support can be enhanced by establishing requirements or criteria for screening and evaluating options. Some questions to guide strategic thinking could include: What are the aims of funding? What outcomes are desired? Are they measurable and tracked through the project? Is the project in the intended geographic location? Does the organization have the expertise needed, and are they working with local partners and communities? Decisions can be managed internally or with external support, such as One Percent for the Planet, a process that helps businesses improve the efficiency and efficacy of their financial and other contributions to conservation.
While more companies are engaging in conservation and nature projects, there is still a large gap in funding. The emerging drivers are likely to bring more interest from companies and it will be important to scale up actions this to help address global challenges with protecting nature. To be successful, companies can leverage existing best practices to support meaningful place-based projects that progress towards a nature-positive future.