Biodiversity Finance is more important than ever before!

Indeed, financial institutions evaluate economic and financial risks associated with nature degradation as this has profound effects on our economies and eventually also on humanity’s own survival.

Some argue that above 50 % of the real economic in and output depends on nature directly, while the other half depends on it indirectly.

Question is, what are natural capital, ecosystems, and ecosystem services? How do we value nature? Does it have an intrinsic right to function on its own? How do we get inspired by nature? How can we use this inspiration to adjust our systems to become more nature based?

Key messages of this article:

1. Nature provides services to humanity.
2. Nature contains values independently of human benefits.
3. Nature is an inspiration for human systems.
4. Nature should be fully included into the financial system in order for humanity to have healthy (Eco) systems.
5. Biodiversity Finance should flow like water in a river.

Nature

To start with, nature refers to the natural world, with all living and non-living beings included. Furthermore, western science makes a distinction between biosphere with a division in five realms: terrestrial, atmospheric, sub-terranean, marine and saline waters, and freshwater. Additionally, a biome is a large area with specific climatic conditions and biotic life forms, while an ecosystem thrives within a biome. The more we zoom in, the smaller the size; from ecosystems, communities, populations, individuals, to even genetic diversity.

Ecosystem services

The thing is, we rely on nature, and sometimes nature relies on us. However, often, nature can also do without humans. Maybe even better most of the time. Nature on the other hand, provides us many things, based on its ecosystem functions. This can be provisioning, regulating, supporting, and cultural funtions. Practically, this refers to food, oxygen, and a stable climate towards health, wellbeing, recreation and spiritual functions. Unfortunately, we also use nature as a sink to dump our waste such as carbon dioxide, plastics, and other pollutants.

In summary, nature provides five key dimensions for human well-being:

1. Basic materials for good life
2. Freedom of choice
3. Health
4. Good societal relations
5. Security

Natural Capital

From an economic perspective, nature is a natural asset. Just as production capital (roads, buildings, factories), and human capital (health, knowledge, skills). Indeed, natural capital comprises renewable and non-renewable natural resources that benefits humanity and our economies (production & consumption).

Monitizing nature this way, can be functional in order to protect the renewable and non-renewable resources. For instance, the natural capital declaration (NCD) and protocol framework were created in 2012 by 40 CEOs of financial institutions. The NCD aims to create a standardized and internationally agreed framework for integrating natural capital thinking into financial products (i.e. loans, equity, insurance). Additionally, the group wants to integrate reporting, accounting and decision making processes that considers natural capital. The eventual goal is to calculate the direct and indirect impacts and dependencies financial institutions have on natural capital.

Commodification VS Intrinsic Value

Problematic with the natural capital approach can be the commodification of nature, meaning: the monetization and marketization of nature. Indeed, often, economic instruments might not be efficient enough to protect nature and its resources. Neither in combination with political decision making.

On the other hand, there is the concept of intrinsic value of nature. This refers to the value of nature of itself, independent of the value humans assign to it. An example of how this plays out, is the Rights of Nature movement. Nature is given the right to exist, independent of the service to humans.

The issue of economic vs intrinsic value is resolved if financial actors incorporate nature into their thinking and acting. Thereby, the whole system needs to change, and not merely a couple of products or services.

Biomimicry is a good example on how to base our systems on natural ones, rather than our monetary (Ego) thinking. Here, nature functions as an inspiration for products and services. Moreover, we can even mimic nature! For instance, an ecosystem of trees and the soil beneath functions with the roots, mycelenium, mushrooms, and many ancient species. Indeed, this is an ‘economy’ on its own. How? Well, I see it as different species co-evolving with each other. Trading water and nutrition, and even sharing (early) warning systems! The whole system is not degraded since it is to the benefit of many, while maintaining a healthy ecosystem.

So, let us create (Eco) systems where humans are part of nature again, instead of outside it (Ego-systems). Let us co-evolve with our environment!

For that to happen, finance needs to flow towards the right causes, just like water in a river. So let’s get to it!

Sources

Frankfurt School of Finance & Management. (2025). Certifite Expert in Biodiversity Finance. https://www.frankfurt-school.de/en/home

Natural Capital Coalition. (2025). On: https://www.naturalcapitalcoalition.org/