State of Finance for Nature 2026

The United Nations Environment Programme (UNEP) has released the State of Finance for Nature 2026 report.

About the State of Finance for Nature Report 

• Overview: The State of Finance for Nature (SFN) is an annual global assessment led by the United Nations Environment Programme (UNEP), in collaboration with partners (such as the Economics of Land Degradation Initiative and Vivid Economics). 
• First Publication: 2021,  “State of Finance For Nature: Tripling investments in nature-based solutions by 2030”.

Key Findings of the Report

• Nature-Negative Finance: In 2023, US$7.3 trillion flowed into nature-negative activities, while only US$220 billion went to Nature-based Solutions (NbS).
  • Ratio of harmful to positive finance: over 30:1.
• Triple Planetary Crisis: UNEP warned that this imbalance is fuelling the “triple planetary crisis” of climate change, biodiversity loss and pollution.

• Sources of Nature-Negative Finance
  • Private Capital: Around $5 trillion of nature-negative finance came from private investment, concentrated in high-impact sectors such as utilities, industrials, energy and basic materials.
  • Harmful Subsidies: An additional $2.4 trillion flowed through environmentally harmful subsidies, largely supporting fossil fuels, agriculture, water use and Transport and construction.
  • Fossil fuels continued to receive the largest share, accounting for 47 per cent of such subsidies, followed by agriculture and water use at 17 per cent each.
• Investment Gap: UNEP stressed that investment in NbS must increase by at least 2.5 times, reaching $571 billion per year by 2030, to meet global climate (Rio Convention targets) and biodiversity commitments.
• Areas of Positive Momentum:
• • Decline in Harmful Private Investment: Private investment in sectors most harmful to nature, including oil and gas, fell from $990 billion in 2020 to $519 billion in 2023, a 48% reduction.
  • Growth in NbS Finance: Overall public and private finance flows to NbS reached $220 billion in 2023, marking a 5% increase over 2022.

• Nature Transition X-Curve:
• • This report introduces the “Nature Transition X-Curve”, a practical framework guiding governments and businesses:
    • Phasing out nature-negative finance
    • Scaling up nature-positive and NbS investments
  • Emphasizes systemic economic transformation, not isolated projects.

Key Recommendations

• Subsidy Reform: Reforming and repurposing environmentally harmful subsidies is identified as one of the most powerful levers for financing the nature transition.
  • Redirect savings towards NbS, Climate adaptation and Biodiversity conservation.
• Regulatory Alignment: Governments must align fiscal policies, regulations, and incentives with the true economic value of nature and ecosystem services.
  • Treat NbS as economic infrastructure, not environmental charity.
• Disclosure and Transparency: Require companies and financial institutions to disclose Nature-related dependencies, impacts, risks, and opportunities 
  • It is essential to shift investment behaviour and capital allocation.
• Blended Finance and De-risking: Expanding blended finance mechanisms and de-risking instruments is crucial to mobilise private capital at scale.

About Nature-Based Solutions (NbS)

• As per UN Environment Assembly,Nature-Based Solutions are Actions to protect, conserve, restore, sustainably use and manage natural or modified ecosystems, which address social, economic and environmental challenges effectively and adaptively, while simultaneously providing human well-being, ecosystem services and resilience and biodiversity benefits.
• Significance of Nature-Based Solutions:
• • Climate and Biodiversity Benefits: NbS play a critical role in mitigating climate change, arresting biodiversity loss, and enhancing ecosystem resilience, while simultaneously improving human well-being.
  • Multiple Co-Benefits: Certain NbS generate simultaneous benefits for climate, biodiversity, ecosystems, and livelihoods.
    • For example, improved management of peatlands delivers significant climate mitigation and adaptation benefits, while preserving habitats and maintaining soil fertility.
  • Cost-Effectiveness: Nature-Based Solutions are cost-effective investment options, offering long-term ecological and economic returns through multiple ecosystem services.

Check Out UPSC CSE Books

Visit PW Store

DOWNLOAD PDF