Historic Nature Law Passes in Europe: Now We Need to Finance It
This week, Europe made history by passing a new Nature Restoration Law. This law aims to improve Europe’s environment by restoring 20% of its natural areas by 2030. Campaigners (people who work to bring change) celebrated this important decision, although some countries like Hungary and Italy initially did not support it.
Why is this Law Important?
Europe’s Environment in Crisis:
- 81% of habitats (places where plants and animals live) are in poor condition.
- 63% of species have low conservation status (not well protected).
Healthy nature areas, like soils and trees, absorb carbon. Carbon is a big contributor to global warming (the rise in Earth’s average temperature). When nature is unhealthy, it releases carbon instead of absorbing it. This makes climate change worse.
Benefits of Restoring Nature
Restoring damaged ecosystems by fixing things like rivers, lakes, wetlands, forests, grasslands, and marine habitats will:
- Improve nature’s overall health.
- Help with long-term food security (making sure there is enough food for everyone).
- Help mitigate climate change (slow down climate change).
Business and Finance’s Role
In today's world, companies are starting to recognize the importance of nature for the economy. Many companies are now sharing how their activities impact nature. One tool they use is the Taskforce on Nature-Related Disclosures (TNFD), which helps companies be transparent about their environmental impact.
TNFD:
- Focuses on companies disclosing risks and impacts.
- Requires companies to be transparent about their entire value chain (from raw materials to finished product).
- Adopted in September 2023, it quickly gained many supporters.
For example, in France, a law since 2021 requires institutions to disclose biodiversity risks. In Switzerland, from 2025, banks and insurance companies must assess nature-related financial risks. This shows a growing trend to integrate environmental considerations in financial decisions.
Making the Law Work: The Financial Challenge
Passing the law is just the start. Implementation (putting it into action) will need a lot of money. According to a UN report, the $200 billion spent globally on nature solutions is overshadowed by trillions spent on activities harming nature.
The law includes provisions (rules) on funding through public and private sectors:
- Countries must include biodiversity goals in their national budgets.
- Within the next year, they need to report on gaps and solutions, including funding strategies.
Business Opportunities and Risks
Companies and investors need to think of nature and climate together:
- Risks: Understanding and measuring nature-related financial risks.
- Opportunities: Restoring nature can provide investment opportunities.
For example, restored ecosystems can reduce costs associated with natural disasters like floods and hurricanes. This makes nature restoration also a financial asset.
Examples of Innovative Solutions
We already see practical examples:
- Debt-for-nature swap: Ecuador traded debt for funds to conserve marine life.
- Insurance for natural assets: Protecting mangroves, corals, and seagrass, which are essential for marine life.
We also encourage banks and investors to incorporate nature into their climate plans with tools like the “Lets Discuss Nature with Climate” guide. This helps financiers (people handling money) have informed conversations with their clients about environmental and climate goals.
Conclusion
Financing nature restoration is challenging but achievable with innovative solutions. These efforts benefit both the environment and the economy, offering exciting opportunities for sustainable growth.
By understanding and supporting these initiatives, we can all contribute to a healthier planet and a brighter future.
