Demystifying biodiversity finance

The importance of the financial sector to biodiversity conservation and restoration is increasingly recognized in international policy and practice. Alongside efforts to divert finance from harmful activities (‘greening finance’), increased finance is required to support biodiversity outcomes (‘financing green’). Beyond traditional public and philanthropic grants, return-seeking financial mechanisms are evolving that aim to finance positive biodiversity outcomes alongside financial returns for investors. Incomplete understanding of this fast-moving landscape limits the potential for conservation experts and other key stakeholders to meaningfully engage in the design of biodiversity finance mechanisms and provide effective scrutiny. In this Review, we examine return-seeking biodiversity finance mechanisms that raise money for up-front investment in conservation or restoration (loans, bonds and equity) or generate revenues directly linked with biodiversity outcomes (credits). The contribution of these mechanisms to overall conservation goals remains hotly contested; here, we focus on the practical commercial, ecological and social risks that shape their viability. Scaling return-seeking biodiversity finance to deliver positive outcomes depends on improving investor returns while maintaining robust ecological and social oversight. Whether this is feasible is still unclear, and public investment and philanthropy will remain crucial to the biodiversity finance landscape, despite the promise of return-seeking mechanisms.