State of Finance for Nature 2026

The UNEP has released the State of Finance for Nature 2026 report, highlighting the gap in funding for ecological benefits. Read here to learn more.

The United Nations Environment Programme (UNEP) has released the State of Finance for Nature (SFN) 2026 report, delivering a stark warning: global finance remains overwhelmingly nature-negative.

While US$7.3 trillion annually flows into activities that degrade ecosystems, only US$220 billion is invested in nature-based solutions (NbS).

The report highlights that humanity is effectively running a massive ecological deficit, eroding the very natural capital upon which economies, livelihoods, and financial stability depend.

What is the State of Finance for Nature Report?

The State of Finance for Nature is a flagship UNEP assessment that:

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• Tracks global capital flows that either harm or restore nature
• Evaluates progress toward global environmental commitments under the Rio Conventions:
  • Convention on Biological Diversity (CBD)
  • UNFCCC
  • UNCCD
• Provides a financial roadmap to shift from a nature-eroding economy to a nature-positive economy through Nature-based Solutions (NbS)
• Nature-based Solutions are actions that protect, restore, and sustainably manage ecosystems while addressing challenges like climate change, food security, and disaster risk.

Key Findings of the State of Finance for Nature 2026 Report

1. A Massive Finance Gap

• To meet global biodiversity, climate, and land degradation targets, NbS investment must rise 2.5 times
• Required annual investment by 2030: US$571 billion
• Current level: US$220 billion

2. Dominance of Nature-Negative Finance

• Annual nature-negative finance: US$7.3 trillion
• Equivalent to ~7% of global GDP
• Creates a 30:1 imbalance between nature destruction and restoration

3. Environmentally Harmful Subsidies (EHS)

• Governments provide US$2.4 trillion annually in harmful subsidies
• Major components:
  • Fossil fuels: US$1.13 trillion
  • Agriculture, water, and fisheries
• These subsidies lock economies into unsustainable production and consumption patterns

4. Private Sector’s Negative Footprint

• Private capital flows into nature-negative sectors: US$4.9 trillion
• Concentrated in:
  • Utilities
  • Industrials
  • Energy
• Reflects mispricing of environmental externalities

5. Public Sector Dominates NbS Finance

• Of US$220 billion invested in NbS:
  • 90% (US$197 billion) comes from public finance
  • Mostly domestic government expenditure
• Indicates weak private sector participation

6. Slow Growth of Private NbS Investment

• Private NbS finance: US$23.4 billion
• Main channels:
  • Biodiversity offsets
  • Certified sustainable commodity supply chains
• Far below what is needed for systemic transition

7. Nature Risk = Financial Risk

• At least 50% of global GDP is moderately or highly dependent on nature
• Biodiversity loss directly threatens:
  • Supply chains
  • Insurance systems
  • Financial stability

What has been successful?

1. Debt-for-Nature Swaps (DNS)

• Debt restructuring in exchange for conservation commitments
• Eight agreements (2021-2024) in countries like:
  • Ecuador
  • Belize
  • Gabon
• Unlocked substantial long-term funding for ecosystems

2. Sustainable Bonds for Biodiversity

• Growth of bonds with nature-focused use of proceeds
• Example:
  • United Utilities (UK) issued a GBP 300 million bond
  • Funds used for peatland and riverbank restoration

3. Innovation in Real Economy Sectors

• Nature is replacing harmful industrial processes
• Examples:
  • Bacteria-infused self-healing concrete extends infrastructure life
  • Fungi-based leather reduces dependence on resource-intensive animal products

4. Rise of Nature-Related Disclosure

• Adoption of the Taskforce on Nature-related Financial Disclosures (TNFD)
• Over 730 organisations globally now track nature-related risks
• Improves transparency and risk pricing

Where the System Is Failing

1. Persistence of Harmful Subsidies

• Despite evidence, EHS remain largely unreformed
• Indian example:
  • Fertiliser and electricity subsidies for agriculture
  • Can exacerbate groundwater depletion and soil degradation without safeguards

2. Biodiversity Offset Weaknesses

• Offsets often fail to deliver genuine ecological equivalence
• India’s CAMPA:
  • One of the world’s largest offset mechanisms (≈ US$0.86 billion)
  • Faces issues of monoculture plantations and weak biodiversity outcomes

3. Inadequate Private Capital Mobilisation

• Private finance prefers traditional infrastructure over restoration
• Indian example:
  • Strong renewable energy investment
  • But limited private debt for ecosystem restoration and landscape-level NbS

4. Regulatory Uncertainty

• Dilution of environmental safeguards undermines long-term investment confidence
• India example:
  • Criticism of amendments to forest and environmental clearance rules

5. Underfunded International Cooperation (ODF)

• International public finance for NbS remains insufficient
• India’s challenge:
  • Achieving 30×30 biodiversity targets
  • Requires concessional finance and technology transfer
  • Current flows fall far short of needs

Key Recommendations of the Report

1. Reform Harmful Subsidies

• Redirect US$2.4 trillion in EHS toward:
  • Regenerative agriculture
  • Clean energy
  • Ecosystem restoration

2. Mandatory Nature Disclosure

• Enact laws requiring companies and financial institutions to:
  • Assess
  • Disclose
  • Manage nature-related risks and dependencies

3. Scale Blended Finance

• Use public finance to de-risk private capital
• Instruments:
  • Guarantees
  • First-loss capital
  • Co-financing structures

4. Integrate NbS into National Budgets

• Treat nature as core infrastructure
• Embed NbS into:
  • Fiscal planning
  • Green budgeting
  • Public investment frameworks

5. Ensure Equity and Justice

• Protect the rights of:
  • Indigenous Peoples
  • Local Communities
• Ensure they are co-creators and beneficiaries of nature finance

Conclusion

The State of Finance for Nature 2026 is a final warning that the global economy is operating deep in ecological deficit, with a 30:1 bias toward nature destruction. Incremental change is no longer sufficient.

A “Big Nature Turnaround”, repurposing trillions in harmful financial flows into a nature-positive transition economy, is essential. Embedding nature into every financial, fiscal, and development decision is not an environmental luxury but an economic necessity.

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• Green-Gray Infrastructure
• Land Gap Report 2025