Challenge
Nature underpins economies in tangible, measurable ways, and its rapid loss carries huge costs for governments, economies, and communities. Biodiversity loss is now ranked among the top three most severe risks by the World Economic Forum’s Global Risks Report, and is projected to cost the poorest countries 10 percent of their gross domestic product (GDP) annually by 2030. These trends are further exacerbated by the changing climate, which can trigger feedback effects and ”tipping points,” which, if exceeded, can lead to significant and irreversible changes. Implementing the Kunming-Montreal Global Biodiversity Framework requires $700 billion annually, while current spending falls short, reaching $120-140 billion, much of it in the form of domestic public spending. The private sector will need to play a critical role in closing this large funding gap.
Approach
The World Bank Group takes a multi-pronged approach to generate knowledge, create tools, scale up investment, and mobilize private sector finance to help countries manage their natural resources in a sustainable manner. These aspects are interconnected: knowledge and tools drive innovation and investment, which in turn can help attract private capital and generate know-how and tools. This creates a virtuous cycle that can lead to sustainable economic and social development.
In the domain of analytical support, the World Bank provides knowledge, decision-support tools, and analytics to inform policy dialogues and investments. For example, the Changing Wealth of Nations (CWON) program provides the most comprehensive wealth database available. This database incorporates assets such as human capital and natural capital, covering 151 countries and providing insights on the sustainability of economic progress, allowing it to complement Global Domestic Product (GDP) as an economic measure. With the World Bank’s support, the Central Bank in Malaysia is conducting the first nature-related financial risk assessment, deepening the understanding of the interactions between nature and financial institutions. The Geospatial Platforms and Sovereign ESG Data Portal make more data and analytics accessible to client countries and financial institutions and help improve the market recognition of nature-related financial risks.
In the realm of investing in and mobilizing finance for nature, the WBG is one of the leading financiers of nature globally. In FY24, the World Bank’s active portfolio included $4 billion of direct investments in biodiversity and ecosystem services. This portfolio integrates nature considerations into economic policy, development programs, and strategic sectoral investments in nearly 60 countries, supporting the implementation of the Kunming-Montreal Global Biodiversity Framework. To mobilize finance, particularly private capital, the WBG utilizes tailored financial instruments, such as thematic bonds, outcome bonds, sustainability-linked loans, and political/credit risk guarantees to unlock financing by tapping into capital markets, harnessing result-based financing tools, and de-risking private capital investments.
Results
As a leading multilateral financier of nature, the World Bank offers a range of knowledge products, direct financing, and tailored financial instruments to scale up public and private investment in nature. This combination of approaches used in the WBG active portfolio in 2024 has contributed to bringing about 45 million hectares of landscapes and seascapes under enhanced conservation and management.
- Foundational knowledge and analytics, such as the Changing Wealth of Nations and the Economic Case for Nature, support the economic rationale for investment in nature, integrating it into economic and financial decision-making. The global integrated Earth-economy model presented in the Economic Case for Nature report has influenced the incorporation of natural capital data and analytics into the World Bank’s country-specific macroeconomic models that inform Country Climate and Development Reports (CCDRs), and country dialogues and operations in countries including Kenya, Ethiopia, India, Rwanda, Uganda, Brazil, and Malawi.
- Through the Global Program on Sustainability, the World Bank has helped 30 countries develop and apply natural capital accounts to date. In FY24, four countries (Ghana, Maldives, Nepal, and Bangladesh) used nature analytics to inform projects worth around $50 million, including landscape restoration efforts in Ghana and sustainable fisheries management in the Maldives. For example, in Ghana, analysis to map out ecosystems and produce datasets for natural services accounts has informed a landscape restoration project and is informing national policy documents. In the Maldives, the analysis of fisheries has helped support sustainable fishery management project. Assessments and recommendations for the sustainable use of fisheries resources have guided the implementation of the Transforming Fisheries Sector Management in South-West Indian Ocean Region and Maldives project.
- About $600 million of private capital is expected to be mobilized through the World Bank environment-related operations approved in FY22-24, including through the deployment of innovative financial instruments. For example, the World Bank supported Seychelles in issuing the world’s first sovereign blue bond using guarantee and concessional funds. World Bank’s technical assistance also facilitated the issuance of the first emerging market sovereign green bond in Fiji and the world’s first green sukuk in Malaysia. In 2022, the World Bank launched a first-of-its-kind outcome-based bond (“outcome bond”) to support financing of black rhino conservation activities in South Africa. As of December 2024, after just two and a half years of implementation, the Rhino bond has achieved a rhino population growth rate of 8%, double its target of 4%, while improving the land management of over 154,000 hectares.
- Another example is the $350 million Uruguay Green and Resilient Growth Performance-Linked Development Policy Loan, the first-ever performance-linked loan by the World Bank with the loan pricing directly linked to reductions in methane emissions intensity. Under the loan term, Uruguay has committed to reducing methane emissions by at least 33 percent between 2025 and 2029 and by at least 36 percent between 2030 and 2034.
Collaborating across the World Bank Group
Working collaboratively, the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) developed the Nature Finance Tracking Methodology to systematically track and promote contributions to the Kunming-Montreal Global Biodiversity Framework. The Global Challenge Program on “Forests for Climate, Development, and Biodiversity” is being undertaken by the World Bank, IFC, and MIGA jointly to develop both public and private sector solutions in financing global forest-related investments by mobilizing financing at scale to meet future investment needs.
Partners
The WBG is strengthening its partnerships with technology organizations such as NASA, the European Space Agency, and the Group on Earth Observations, to integrate modern digital technologies, including artificial intelligence to better measure the nature impact of our work. Collaboration with the bond investors and the Global Environment Facility (GEF) enabled the Rhino Bond in South Africa; The bond investors’ forgone coupon payment was provided to the project as upfront capital investment and the GEF funded a potential performance-based payment.
The WBG is also increasing its collaboration with other Multilateral Development Banks (MDBs) on a range of subjects, from climate finance reporting to nature finance tracking, and, recently, to promoting circular economy approaches. Moreover, the WBG and the Inter-American Development Bank launched a groundbreaking partnership in August 2023, combining the WBG’s global knowledge and experience with the IDB’s strong engagements with Latin American and Caribbean counties to boost support for net-zero-deforestation efforts in the Amazon, strengthen the Caribbean’s resilience to natural disasters, and bridge the digital-access gap across the region.
Looking Ahead
The World Bank Group will continue scaling up nature analytics and nature finance work for a clean, green, and blue planet. The Global Challenge Program on “Forests for Development, Climate, and Biodiversity” will enhance support for sustainable forest economies, focusing on critical ecosystems like the Amazon, Congo, and Asian forests. Emphasis will be placed on improving data quality and access through technologies and open data initiatives, such as the Livable Planet Observatory. Greater outreach activities are planned, including through hackathons, and the Landscape Knowledge Academy. Collaboration with multilateral development banks, the OECD, and other partners will boost financing for the implementation of the Kunming-Montreal Global Biodiversity Framework.
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