Area of investment and support

Area of investment and support: Integrating finance and biodiversity for a nature positive future

We aim to develop the solutions needed to embed the values of biodiversity into financial decision making.

We will support researchers from environmental, economic and social science disciplines, at any career stage. We encourage collaboration with relevant finance sector organisations.

Budget:
The total UKRI budget is £7 million (£5 million from NERC, £2 million from Innovate UK)
Duration:
This programme runs from 2022 to 2026, with two phases: Phase 1 was announced in May 2022 with projects commencing January 2023, phase 2 will commence in January 2024
Partners involved:
Natural Environment Research Council (NERC), Innovate UK

The scope and what we're doing

The ‘Integrating biodiversity and finance for a nature positive future’ programme will develop the solutions needed to embed the values of biodiversity into financial decision making.

This investment will build a national multi-stakeholder community that can drive the development of knowledge, tools and skills to incorporate biodiversity-related risks and opportunities into planning, reporting and investment decisions for the finance and business sectors.

Our economy and our environment are inseparable. Environmental science plays a vital role in identifying environmental problems and their cost to the economy and society.

The UK is a world leader in environmental science and understanding how our environment is changing. NERC is leading the way in building understanding of coupled economic and environment systems, enabling us to judge the balance of economic growth and environmental sustainability that will be fundamental to the future of humankind.

The environmental science community has the capacity to fill knowledge gaps and provide environmental data and evidence to develop tools to incorporate biodiversity, as an asset or value, into private finance. In doing so, the community and financial sector can work together to help reverse the global trend of biodiversity depletion. This will be achieved through a change in business and consumer behaviour for a nature-positive future.

The UK government 2023 Green finance strategy (GOV.UK) incorporates both nature and climate adaptation into its green finance policy framework.

Integrating finance and biodiversity for a nature positive future will:

  • achieve better understanding of the complex interlinkages between biodiversity, finance and society and what it means for resilience (environmental and economic) and economic prosperity to support a roadmap to ‘net zero biodiversity loss’
  • deliver robust models and scenarios, leading to a more sustainable financial services industry in anticipation of a developing regulatory system (for example, UK firm-level net zero transition plans)
  • develop new or merge existing datasets that link research to business and build biodiversity into a next generation of financial instruments
  • raise the profile of UK leadership to leverage developing international initiatives
  • mitigate risks and highlight opportunities to address interacting stressors simultaneously, for example biodiversity interacting with climate change and driving ambitions for net environmental gain

Programme format

NERC is investing £5 million (at 80% full economic cost) in the Integrating finance and biodiversity for a nature positive future programme in two phases.

NERC Phase 1 (the Integrating finance and biodiversity for a nature positive future funding opportunity) has been implemented with 12 scoping projects awarded, and a coordination and integration function to bring the awards together. Read about the scoping projects in the news story: New research will integrate biodiversity and finance.

NERC Phase 2 will establish an interdisciplinary research and innovation network consisting of a virtual hub and associated spokes or partnerships. The network will provide leadership by delivering and supporting a portfolio of activities informed by and built on Phase 1 outcomes.

Innovate UK will invest £2 million for funding for SMEs and larger corporates. Details will be available at a later stage.

Why we're doing it

Biodiversity is a crucial consideration in how we think about, act on and measure economic growth and prosperity. The World Economic Forum Global risks report 2022 puts loss of biodiversity in the top three global risks and the UK government 2023 Green finance strategy (GOV.UK) recognises it as a financial risk.

The finance system has a key role in shaping how the global economy responds to the intertwined challenges of biodiversity loss and climate change. We must unlock private finance that protects nature and disincentives harm.

Integrating biodiversity into finance frameworks and identifying a nature-positive future is a national policy and international leadership ambition for government that will impact private finance.

In the current economic system, the cost of depleting biodiversity (as defined ‘sensu lato’ by the Convention on Biological Diversity) is hidden, and the benefits biodiversity provides to human wellbeing and the economy are not fully understood.

This lack of knowledge means that business behaviour is not incentivised through financing and investments to either:

  • minimise degradation of biodiversity and the services it provides to society and the economy
  • develop potential to increase the value of biodiversity and nature-related services, therefore creating a ‘nature positive’ future.

Having access to decision-grade data will allow financial institutions and business to incorporate biodiversity-related risks and opportunities into their strategic planning alongside climate, risk management and asset allocation decisions.

The Integrating finance and biodiversity for a nature positive future programme will support networks that will be responsive to the needs of private finance as the biodiversity-finance nexus and wider green finance agenda develops.

The programme recognises that co-design and partnership across researchers, finance sector, business and policy is a must. It will support a holistic approach to fill the knowledge gaps and working in partnerships to help develop the solutions needed to embed the values of biodiversity into finance.

Collaborations between the worlds of finance, academic research and business innovation will accelerate the change we all need to restore and protect our biodiversity for a more resilient planet and economy.

Past projects, outcomes and impact

See the phase 1 funding opportunity: Integrating finance and biodiversity for a nature positive future

Outcomes of related area of investment include:

Who to contact

Domnica Radulescu, Senior Programme Manager

Email: naturepositive@nerc.ukri.org

Last updated: 17 August 2023

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