This month, John Gillespie is joined by Jessica Smith, the Nature Lead at UNEP Finance Initiative, joins us. Jessica leads initiatives that aim to mainstream nature-positive finance, ensuring that economic activities contribute to the preservation and restoration of ecosystems. Her work involves collaborating with governments, financial institutions, and other stakeholders to develop innovative financial instruments that support sustainable development goals.

In our conversation today, we'll explore the latest trends in nature finance transactions, explore why nature and biodiversity are becoming critical areas of focus for investors, and discuss the innovative market solutions shaping this space. Jessica will also share insights on upcoming reports, critical discussions expected at COP 16, and the evolving perspective of the financial sector towards nature-positive strategies.

John: So, what are the trends in nature finance you're noticing?

Jessica: We're seeing more and more asset classes—like real estate, infrastructure, and energy—start to incorporate nature strategies and key performance indicators (KPIs). Separating nature-positive impact finance from the broader mainstream finance is becoming important. 

John: Interesting! But why is everyone suddenly so focused on nature and biodiversity regarding investments?

Jessica: Shifting towards a nature-positive economy opens enormous business opportunities. Nature-based projects can be incredibly rewarding—not just in terms of money but also in making a positive impact and boosting your reputation. It’s a win-win.

John: That makes sense. So, what kind of new, innovative ideas are popping up in nature finance?

Jessica: We're seeing some pretty creative stuff, like biodiversity credits. It’s clear there’s a growing interest, and it’s also showing that we need to work together—especially with financial institutions bringing in experts who understand nature to make this work.

John: Are there any new reports or data coming out that we should monitor?

Jessica: Yes, we’re about to release an academic poster with some extra info and submit a framework to a journal. This framework will help identify and measure asset classes, which should be helpful for annual reports and filling the gaps in private finance data for nature.

John: The upcoming COP 16 conference sounds essential. What’s on the agenda there?

Jessica: Finance will be a big topic, especially figuring out the right mix of public, private, and market-based tools to close the nature finance gap. We’re expecting many financial institutions to show up, and there will be a detailed program covering all kinds of finance-related biodiversity issues.

John: How are financial institutions viewing nature and biodiversity investments now?

Jessica: They’re starting to really see the value. There’s definitely more advanced thinking going on, and they’re asking for specific, targeted guidance. It’s a shift from acknowledging nature’s importance to actively seeking nature-positive financial strategies.

John: What kind of returns are we talking about for nature-based projects?

Jessica: Some studies suggest returns could be as much as 20 times for these projects, though that might not apply across the board.

But the benefits are pretty straightforward—financial returns, positive impact, and a better reputation.

John: What’s been the challenge in getting data on private finance for nature?

Jessica: It’s been tough to get a complete picture. Public sector data is more accessible, thanks to published datasets from groups like the OECD. However, when it comes to private finance, we need new methods and frameworks to fill the gaps.

John: What’s the bigger picture when we start bringing nature into finance?

Jessica: It’s all about reducing risks—legal, reputational, you name it. Plus, it aligns with changing fiduciary duties and helps us move towards more sustainable, regenerative economies.

John: How did the UBS Nature Finance Conference play into this?

Jessica: It was a big moment to preview what’s happening in nature finance. The conference highlighted the momentum and innovation in this space. And we will dive even deeper into these discussions at the upcoming scientific conference.

John: It sounds like the focus on nature and biodiversity in financial institutions has really evolved.

Jessica: Absolutely. It’s gone from us telling them that nature is vital to them coming to us, asking for specific advice. Now, the conversations are much more detailed, and there’s a real push to integrate nature-positive strategies into their financial practices.

John: Thank you, Jessica, for your time. As always, it’s been great speaking with you. Enjoy Climate Week!

*Based on a summarised discussion between John and Jessica*