Published: Off the charts? Reasons to be skeptical of the growth in biodiversity finance
As a postdoc in Mistra BIOPATH, Jens Christiansen focusses his research on the intersections between finance and the natural environment in an age of mass extinction. How do financial institutions respond to extinction risk and which financial innovations emerge to mitigate ecosystem degradation?
This paper is co-authored with Audrey Irvine-Broque, Jessica Dempsey, Sara Nelson, Elizabeth Shapiro-Garza, Patrick Bigger and Mine Islar. It is published in Current Opinion in Environmental Sustainability - Special Issue: Biodiversity Finance.
What is the purpose of the paper?
The approach is to critically examine claims about the rapid growth of private biodiversity finance—especially equity investments and debt instruments—and assess whether these financial flows truly support biodiversity outcomes. We investigated how biodiversity finance is being calculated whether private capital flowing to biodiversity is actually growing and where (geographically) these flows are occurring.
The authors find that reported increases in biodiversity finance are often driven by conceptual innovations and expanded definitions, not by real increases in money directed toward biodiversity protection. This leads to overestimation and misplaced optimism in private‑sector solutions.
How does it contribute to halting and reversing biodiversity loss?
The paper contributes indirectly—not by proposing conservation interventions themselves, but by exposing structural weaknesses in current biodiversity finance mechanisms that, if left unaddressed, undermine effective biodiversity protection.
Key contributions include:
Revealing that many investments labeled “biodiversity-related” do not fund biodiversity outcomes but instead reflect firms managing financial risks rather than ecological harm.
Demonstrating that only small fractions of green or biodiversity bonds actually fund biodiversity projects.
Showing that private finance overwhelmingly targets the Global North, even though funding is most needed in the Global South, where biodiversity is richest.
By clarifying these gaps, the paper strengthens efforts to halt biodiversity loss by helping policymakers and practitioners avoid false solutions and re‑orient funding toward mechanisms that meaningfully support ecosystems.
What can financial decision‑makers learn from the findings?
To start with, that growth in biodiversity finance is often statistical, not material. Expanded definitions allow even tech companies (e.g., Nvidia, Microsoft, Deere & Co) to be counted as “biodiversity‑related,” despite limited or no ecological impact.
Then, to bear in mind that standards and metrics are inconsistent. There is no unified framework across equity funds, bonds, or impact investing. Many funds assess biodiversity only as a financial risk, not as an ecological priority.
Another key learning is that private finance is highly dependent on public finance. Many deals—such as green bonds or debt‑for‑nature swaps—are viable only because public institutions (World Bank, DFIs, multilateral funds) provide guarantees, concessional loans, or blended finance. “Pure play” biodiversity funds show lower returns relative to risk, suggesting that biodiversity cannot easily be packaged as a profitable financial asset class.
How can the findings push the transition from knowledge to action?
The paper provides several points for moving from inflated narratives to practical, evidence‑based action. It highlights that measurements and transparency need to be improved as weak reporting allows “biodiversity‑related finance” to obscure reality. The paper shows the need for unified, outcome‑oriented standards, especially around biodiversity impacts—not just outputs like area protected.
The authors introduce the concept of “animated suspension”—constant activity without real progress. Recognizing this helps policymakers and NGOs stop mistaking financial buzzwords for ecological gains. By highlighting geographic imbalances, the paper also underscores that action must target regions where biodiversity loss is greatest—often places underserved by private finance.
Real biodiversity outcomes will require stronger regulation of harmful financial flows, public sector investment, debt and tax justice, and rethinking financial structures that drive biodiversity loss.
What are the policy implications of the paper?
A crucial insight from the paper is that financial markets are unlikely to deliver biodiversity conservation at scale without regulatory and public‑sector leadership.
Private biodiversity finance is overestimated, unevenly distributed, and insufficient. Policies must not assume that market‑based mechanisms can fill the biodiversity funding gap. Policies should address financial drivers of biodiversity loss, such as unsustainable agricultural lending, extractive industries, and harmful investment portfolios.
Without credible metrics, policymakers cannot assess whether biodiversity finance is delivering results. The paper calls for better indicators, mandatory reporting, and transparency.
Governments must scale public finance, including grants, debt relief, and ecosystem‑aligned taxation, since many biodiversity instruments rely overwhelmingly on public guarantees anyway.
Policies should ensure that biodiversity finance flows to where it is needed most—the Global South—while avoiding neocolonial conditions embedded in some debt‑for‑nature swaps.
Link to the publication: https://doi.org/10.1016/j.cosust.2025.101544