Environmental & social challenges: An opportunity for the finance sector to step up

By Marina Antonopoulou, Nature Conservation and Climate Director at Emirates Nature-WWF

It’s becoming clearer by the day that a paradigm shift in our relationship with nature is required to build back from the COVID-19 pandemic. More than ever, we need to move toward sustainability — where our economic welfare goes hand in hand with social and environmental resilience and stability.

The Intergovernmental Panel on Climate Change (IPCC) warns of the grave pressures that threaten “a liveable future” for humanity. The Gulf region is particularly vulnerable to multiple climate hazards such as warmer weather, less precipitation, droughts, storms and rising sea levels — all of which will affect human well-being.

Petrol tanker waiting for its cargo, Fujairah port, United Arab Emirates, Indian Ocean. © Michel Gunther / WWF

Climate change is also known to weaken the resilience of marine ecosystems. As well as its place in the heart of the region’s rich, diverse cultural heritage, a healthy sea provides a foundation for various economic sectors including fisheries, shipping, tourism and recreation.

In the context of the ocean-based and maritime sectors, maintaining a healthy marine environment depends not only on government policies, but on the actions of players in the sectors that impact it the most. The finance community has a vital role to play, along with a real opportunity to take the lead in driving innovation for mobilizing private capital toward climate — and nature — positive investments.

There’s a growing realization that so-called ‘nature-based solutions’ (NbS) are fundamental to addressing so many of the environmental and societal challenges we face. When it comes to climate change, research suggests that, globally, NbS could provide around 30% of the mitigation needed by 2030 to stabilize warming below 2°C.

So what can the finance community do? As the International Development Finance Club — which gathers 26 national and regional development banks from all over the world — has recently stated in a position paper, there’s a need for a massive increase in capital to unlock the potential of nature and mainstream NbS.

Earth Hour celebrations in Abu Dhabi, UAE. © Adrian Watkins / WWF-UAE

In February, a coalition of businesses, NGOs and government representatives was formed with the aim of unlocking more private investment in marine and coastal projects as interest in NbS grows, with a specific target of US$500 million by 2030. Participating in the initiative are AXA, Bank of America, Willis Towers Watson (WTW), Palladium and WWF. The initiative has already committed significant investments toward sustainability, and has illustrated that the valuable benefits of NbS can be structured to generate revenue, thus offering potential investment returns.

The World Economic Forum has calculated that more than half the world’s GDP depends on nature — while less than 0.2% goes back into preserving the ecosystems that generate it, most of it from public and philanthropic sources. This isn’t sustainable. According to the UN, if the world is to meet its climate and biodiversity restoration targets, we’ll need to close a funding gap of US$4.1 trillion by 2050. This means tripling the money going into NbS by 2030, and the private sector stepping up to play a full role.

Worldwide, where unsustainable economic development and and growing populations are putting an ever-greater strain on limited energy, water and natural resources, marine-based NbS projects offer society many potential benefits. These include economic diversification, increased responsible ecotourism revenues and recreation opportunities, support for fisheries, which underpin the livelihoods and food security of many coastal communities, and coastal storm and flood defenses.

Crucially, in contrast to traditional conservation funding, certain NbS models — often including blended private and public finance — can offer funders genuine opportunities for returns, achieving environmental, philanthropic and commercial goals alike. Nature-based solutions will be a critical to the creation of truly sustainable economies.

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