MDBs to launch ‘common principles for nature-positive finance’ at COP28

EBRD also planning to publish nature approach in the UAE regarding action on nature protection, investment and disclosure. 

A group of multilateral development banks (MDB) will publish a set of principles for “nature-positive finance” at COP28, the European Bank for Reconstruction and Development’s (EBRD) director of environment and sustainability, Adonai Herrera-Martinez, has told Responsible Investor. 

The 10 MDBs – which include the EBRD, Asian Development Bank, Inter-American Development Bank (IADB) and World Bank – issued a landmark statement on nature two years ago at COP26, committing to mainstream it into their policies, analysis, assessments, advice, investments and operations.

This was subsequently formalised into a working group on nature, which meets every month to share experience and knowledge on the topic. The current co-chairs are the IADB and European Investment Bank. The EBRD and World Bank will take over next year.

Nature-positive finance tracking

In Dubai this week, the working group plans to publish “common principles for nature-positive finance tracking”, which set out how the MDBs will identify, define and track their nature-positive finance activities.  

Herrera-Martinez told RI that the motivation behind the report was the need to scale up nature-positive action and the MDB commitments under the COP26 joint statement.

The group hopes the principles will also be used by other public and private players in the market, including investors.  

The document will not categorise what explicit activities fall under nature-positive, but Herrera-Martinez said it will “set up conditions that need to be met”.

“There is a lot we can learn from our climate experience, and in some ways nature is able to leapfrog and go faster because it is going second

Adonai Herrera-Martinez

The principles will define “nature-positive finance” as activities that support actions that conserve, restore or enhance the sustainable use and management of nature, as well as activities that enable these actions, such as policies or incentives.  

The document will also outline specific criteria for a project to call itself “nature-positive finance”. The activity must make a significant contribution to nature – so fall into one of the above activities and clearly contribute to at least one of the Kunming-Montreal Global Biodiversity Framework targets – and avoid any significant harm.

Finally, the activity must have “quantitative nature-positive indicators” – such as hectares of recovered land or increased population of threatened species measured – and monitoring plans to report on the delivery of nature-positive outcomes.  

The working group plans to develop a joint taxonomy that will outline what activities can be considered nature-positive and nature-enabling. The latter refers to “all other activities that directly or indirectly help reduce drivers for biodiversity loss but do not strictly fit into the definition of nature-positive”, Herrera-Martinez told RI.

He added that the nature working group mirrors much of the work undertaken by the MDB climate group, which the EBRD is also part of.

For example, the common principles document can be seen as the nature equivalent of the Joint Report on Multilateral Development Banks Climate Finance, while the upcoming taxonomy is complementary to the taxonomy for climate finance.

“There is a lot we can learn from our climate experience, and in some ways nature is able to leapfrog and go faster because it is going second,” Herrera-Martinez said.

“However, there are differences, as it is more complex – for example, when it comes to metrics – and the reality is that outcomes in nature are local, rather than global for climate. We also have to be aware that with some climate action there is a risk of trade-offs with nature.”  

EBRD develops nature approach 

At COP28, the EBRD also aims to publish a nature approach document covering the actions to take across three areas: protection, investment and disclosures. 

Herrera-Martinez said the bank will explore investment in areas such as reforestation to avoid landslides or nature-based solutions for wastewater treatment – “in essence using nature as the infrastructure to solve environmental problems”. 

“The most important element is the creation and enhancement of revenue streams for nature-positive action, so supporting business models that rely on nature and incentivising them to recover nature and expanding sustainable practices, as well as supporting high-quality carbon credit/removal transaction and biodiversity credits.”  

The EBRD also plans to work with commodity trade and retail distributor companies to enhance governance principles to make sure best practices on nature are applied in their supply chains. 

“They are not the ones directly doing the work, but they have value chain power to facilitate better practices by producers,” said Herrera-Martinez. “We have been engaging these companies on environmental issues, particularly climate, for years. But we’re now trying to specifically call for them to push for better practices for the management of biodiversity – for example, better regeneration of soil and organic farming.” 

The EBRD is also looking at the sustainable aquaculture sector, he added.

On disclosure, the bank plans to outline how it will update its environmental and social policy. 

Details have yet to be made public, but Herrera-Martinez said there is a consensus that the EBRD will use data it collects from projects “as a public good” and share it with the Global Biodiversity Information Facility (GBIF). 

The GBIF is an international network and data infrastructure funded by the world’s governments that aims to “provide anyone, anywhere, open access to data about all types of life on Earth”.

“Everyone sees this as a low-hanging fruit that MDBs should be doing,” said Herrera-Martinez. “We should be systematically requiring our clients to share biodiversity data with the GBIF.”