3 reasons 2025 is the year for nature-positive finance

This year at the World Economic Forum’s Annual Meeting, nature is high on the agenda. The 2025 theme “Collaboration for the Intelligent Age" highlights the potential for intelligent systems to address the planetary crisis and forge a nature-positive, net zero and resilient future. Business leaders, policy-makers and civil society will meet to discuss safeguarding the planet and regenerating Earth’s global commons, tackling issues across climate change, biodiversity, pollution, resource security and use of land and water.

Financial institutions are among the most vocal advocates for nature action – more than 194 have signed the Finance for Biodiversity Pledge and are committed to transforming their relationships with biodiversity. They increasingly recognize the mounting risks for the global economy posed by nature loss. Nature-related impacts by fossil fuels, agriculture and fisheries sectors alone could create costs to the global economy of $10-25 trillion annually, underscoring the severe risks posed by failing to act decisively. Delaying biodiversity action by a decade could significantly inflate costs, potentially doubling the financial burden compared to immediate intervention.

Conversely, investing in nature-based solutions offers substantial long-term benefits, with potential savings projected at $104 billion by 2030 and $393 billion by 2050. Furthermore, transforming economic systems could unlock $10.1 trillion in annual business opportunities, though realizing this potential would require an estimated $2.7 trillion in yearly investments. Financial institutions not only recognize the urgency of addressing biodiversity challenges, but they also see the vast opportunities to lead in shaping a sustainable, nature-positive future.

In setting roadmaps to meet commitments, many financial institutions are unsure exactly how to scale nature financing to meet global needs. Given the complexity of nature and the lack of a single globally applicable metric — like CO2e emissions used for climate — it can be tempting to wait for better data or standards before acting. Nevertheless, significant progress has been made in recent years, and there are immediate, no-regret actions financial institutions can take today. In fact, there are 3 key reasons the year 2025 is set to become a pivotal year for nature financing:

196 countries adopted the Global Biodiversity Framework (GBF) in December 2022 with a global goal to halt and reverse biodiversity loss by 2030. The GBF sets out 23 transformative targets — including protecting 30% of land and oceans, aligning financial flows with biodiversity objectives, reducing harmful subsidies by $500 billion annually and mobilizing $200 billion annually. This consensus acts as a new North Star or South Cross to financial institutions, their leadership and their clients. With just five years to go until the 2030 target, 2025 must be the year for action.

To date 17 sector-specific pieces of guidance have been published, analysing impacts, dependencies and business opportunities for nature, including in the Mining & Metals, Offshore Wind, Ports and Automotive sectors launching at the 2025 Annual Meeting in Davos. Additional specific guidance for sectors and commodities is increasingly available from organizations like TNFD and UNEP-FI. As consensus grows around the steps key sectors need to take towards nature-positive goals and contribute to the GBF targets, financial institutions can better plan and make decisions supporting their clients and portfolio companies.

Innovative financing mechanisms too are rapidly expanding, creating opportunities for financial institutions to drive the nature-positive transition. Private sector funding for nature has grown from $9.4 billion to over $102 billion in the past four years, driven by alternative investments, traded debt and private equity. Sustainability-linked loans and biodiversity-focused bonds have also increased, with biodiversity-focused bonds rising from 5% in 2020 to 16% of issuances in 2023. Additionally, blended finance models and natural capital investments are emerging as effective tools to accelerate progress.

As hundreds of financial institutions have made net zero commitments since the Paris Agreement, they have invested significant time and resources into developing teams, capabilities and approaches to integrate climate into their businesses. Mobilizing operations for a global bank, for example, to meet net zero and sustainable finance targets requires new expertise, governance, tools and risk frameworks – all of which must be embedded at a business, function and regional level.

However, the foundations that financial institutions have built for climate, which are now mature, can be expanded to nature as well, with limited net new resources required. In fact, sustainability teams within banks, asset managers and insurers are increasingly working on nature already to meet climate goals. For example, many financial institutions — including Legal & General, ING, HSBC, Standard Chartered, Barclays — have set policies on deforestation and circularity to support net zero commitments and are using capabilities developed in the process to turn their attention to other critical topics such as pollution and water.

Many financial institutions cite a lack of data as a major challenge to tackling action on nature. However, data providers have recently begun offering sophisticated tools and datasets to support sector-, company- and location-specific analysis of nature risks embedded within portfolios.

Likewise, corporate disclosures — both mandatory and voluntary — are increasingly becoming available as a source of information for financial institutions on their clients and portfolio companies. Data availability is expected to increase with the implementation of new policies, such as the EU’s Corporate Sustainability Reporting Directive (CSRD) as well as with new commitments under the Task-force on Nature Related Financial Disclosures (TNFD). The TNFD Framework is driving the availability of high-quality nature data by providing a standardized approach for identifying, assessing and managing nature-related risks, fostering consistency in disclosures and innovation in metrics and tools. Similarly, the EU’s CSRD, which companies are expected to report on starting this year, is set to significantly increase the availability of comparable and standardized data by requiring detailed disclosures on climate, biodiversity and ecosystems.

As nature becomes increasingly integrated into climate frameworks – bolstered by a growing global consensus, established climate capabilities and enhanced data availability – financial institutions are uniquely positioned to drive impactful change. The World Economic Forum Financing the Nature Positive Transition initiative works closely with a community of leading financial institutions to implement solutions and drive action in nature-positive financing.

This year at the IMF and World Bank Spring Meetings in April, the World Economic Forum will publish a report in collaboration with Oliver Wyman outlining a practical approach for evaluating clients’ impact on nature, including nature-related indicators that provide a starting point for meaningful action.

With the right goals, capacities and data in place in 2025, financial institutions will be ready to channel capital into nature-positive solutions. Our focus at the Forum will then shift to developing financing blueprints, identifying investable opportunities and creating tools to support their implementation. This is the year for deploying capital into nature – and we are working closely with financial institutions towards that goal.