Finance Solutions for Nature: Pathways to Returns and Outcomes (McKinsey & Company)

Summary

• The report consolidates available guidance into 37 financial solutions to mobilize capital for nature.p.4
• In 2022 alone, nearly $7 trillion flowed into nature-negative activities, including $1.7 trillion in harmful public subsidies and $5 trillion in private-sector impact, far outpacing the $200 billion invested in nature.p.6
• Private finance for nature surged eleven-fold to over $102 billion in the four years leading up to 2024.p.7
• Target 19 of the Kunming-Montreal framework calls for the mobilization of at least $200 billion per year for biodiversity by 2030.p.7
• Thematic bonds had annual issuance of ~$630 billion in 2024, of which nature-related issuance was ~$113 billion.p.15
• Impact funds had total assets under management of ~$1.6 trillion in 2024.p.15
• Ecuador's debt-for-nature swap converted $1.126 billion of debt and generated $323 million in funding over 18.5 years.p.25

Key insights

1. Sustainability-linked loans had annual issuance of ~$707 billion in 2023, while thematic loans reached ~$275 billion.p.15
2. Sustainability-linked bonds typically range from $100 million to $3 billion, while thematic bonds range from $10 million to $10 billion.p.16
3. Sustainability-linked loans typically range from $50 million to $5 billion, while thematic loans range from $5m to $500 million.p.18
4. 67 countries at risk of default hosted 22% of global biodiversity hotspots.p.24
5. The Boreal NAC, the world's first natural asset company, has $1.3 billion in ecosystem services under management.p.21
6. Payments for ecosystem services had an annual transaction volume of $36-42 billion in 2018.p.15
7. VEJA's PES scheme pays suppliers an 80% premium above market rates for deforestation-free rubber.p.27
8. The proposed Tropical Forest Forever Facility aims to provide $4 billion annually in performance-based payments to over 70 tropical forest countries.p.29