Abstract:

Investing in natural capital is crucial for sustainable socioeconomic development, as over half of global GDP significantly depends on nature and biodiversity. However, natural capital, which includes essential natural resources such as forests, water and soil, is in significant decline today. This insight report aims to provide a framework for evaluating how innovation can mobilize more investment for natural capital.

Current economic models incentivize the exploitation of nature to drive growth in physical and financial output, including goods derived from nature such as crops and minerals. On the other hand, the broader benefits derived from ecosystems – including water filtration, pollination, cultural significance and protection from extreme weather – are largely undervalued and unpriced in the global economy. This has created limited incentives for investors beyond the public sector to invest in natural capital.

The good news is that there are new incentives for private investors to engage in opportunities that seek to restore, maintain and enhance natural capital. Innovative financial instruments, new business models and advanced technologies have created an emerging nexus of investors, ecologists and economists working together to systematically invest in natural capital. This report explores the need to elevate and scale these innovations.