Transforming nature finance

Governments, funds, NGOs and various stakeholders are finally recognising what Indigenous Peoples and local communities have been emphasising for years: the existing nature finance system is broken, and there is an urgent need for a transformational approach to financing solutions for nature.

IIED's approach to nature finance is heavily influenced by our commitment to the principles for locally led adaptation, which respond to calls from the Least Developed Countries (LDC) Group and others to ensure that local communities have access to the resources they need to drive and control climate adaptation action at the local level.

Through our nature finance work, we are demonstrating that these principles can be applied to nature-related activities to ensure that nature finance reaches the local level, and local communities are at the heart of action to protect and halt the loss of biodiversity. There is a lot to learn and share between nature and climate finance, and this is a growing area of collaboration both within IIED and with partners.

The Kunming-Montreal Global Biodiversity Framework (GBF), agreed at the 15th Convention for Biological Diversity (CBD COP15) (PDF) in December 2022, included ambitious new targets to finance the protection of nature and biodiversity. IIED and partners advocated for locally-led action to be at the heart of the GBF, and will monitor progress towards the implementation of the GBF finance targets and related targets in the run up to COP16 in 2024.

IIED works with partners to mobilise and deliver nature finance effectively to the local level and enhance the visibility and capacity of community-led financial mechanisms. We achieve this through collaborative targeted research and impactful advocacy. This page presents a summary of our nature finance work.

Our nature finance work with partners

Our nature finance work falls under three broad categories that are complementary and interconnected:

1. Increasing the volume and diversity of international finance for nature and ensuring it is nature positive

Recognising the substantial gap in international finance for nature, it is critical to look for diverse approaches to mobilising finance and to ensuring all finance flows support nature and people-positive outcomes.

Examples of our current work include:

• Biocredits emerging as a new innovative way to finance nature and people. Also known as nature certificates, biocredits are a coherent unit of biodiversity/nature that can be bought or sold
• Increasing global awareness on the triple crisis of increasing debt, climate change and biodiversity loss that has resulted in a rising interest in debt for climate and nature swaps.

2. Getting finance for nature to the local level

Much of the international nature finance system continues to operate business-as-usual approaches, with local actors not in control of, or equitably engaged in, the design and implementation of activities that affect them. It is also difficult to accurately track where nature finance flows and if finance promises are being met.

IIED is working with partners to provide evidence and advocate for changes that support locally-led action to protect land and marine-based nature – where finance and decision-making power is shifted to the local level to support local solutions and implementation – which are increasingly recognised as being central to effective, efficient and just achievement of nature, climate and development goals.

Examples of our current work include:

• The Forest and Farm Facility (FFF), a partnership between FAO, IIED, IUCN and Agricord, provides direct financial support and technical assistance to strengthen forest and farm producer organisations (FFPOs)
• Designing and administering a small grants initiative as part of the People and Conservation Learning Group (PCLG) to fund locally-led activities supporting people and great ape conservation across three great ape range states: Cameroon, Democratic Republic of Congo and Uganda
• Designing incentives for local fishing communities in Myanmar’s Ayeyarwady Region to engage in more sustainable practices, demonstrating how finance could be channelled to the local level for fisheries management
• Redesigning a compensation scheme for households in Bangladesh affected by fisheries regulations, contributing to a more cost-effective and equitable payments for ecosystem services-like programme, with greater potential to incentivise sustainable practices
• Working in partnership with the International Indigenous Forum on Biodiversity (IIFB), our nature finance research includes findings that Indigenous Peoples and local communities (IPLC) representatives hold just 11% of board seats on funds that have been set up to deliver funds to their communities to help them tackle the biodiversity crisis, and
• The Reversing Environmental Degradation in Africa and Asia (REDAA) programme that catalyses research, innovation and action in sub-Saharan Africa and South and Southeast Asia, by offering grants and technical support to fund work that is locally led and helps people and nature to thrive in times of climate, resource and fiscal insecurity.

3. Recognising the value of funds generated within local communities and supporting its mobilisation

Additionally, we are gradually learning more on the extent to which funds mobilised by local community organisations, from village savings and loans associations (VSLAs) to saving and cooperative credit organisations (SACCOs), are achieving impacts at scales that are unappreciated in the climate adaptation and nature conservation space.

IIED is working with partners to learn and support the processes through which local communities and producer organisations mobilise their own funds to establish internal financial mechanisms, and to increase their visibility and capacity to receive external finance.

Examples of our current work include:

• IIED’s work on biocultural heritage territories that has supported Indigenous and traditional peoples to establish collectively governed landscapes and related micro-enterprises that pay a percentage of revenues into communal funds, to provide a self-financing mechanism for biocultural heritage territories in centres of agrobiodiversity.