Businesses can either lead transformative change or risk extinction
What IPBES is really telling us about finance – and why closing the nature finance gap will not be enough
Reflections from the CBA’s Reimagining Nature Finance Fellow Justin Adams
Over the past few years the conversation around nature finance has gathered remarkable momentum. New funds have been launched, disclosure frameworks developed and we’re seeing a genuine shift in awareness across business and finance as investors are recognising that biodiversity loss presents real economic risk.
This progress matters. Yet the latest data on nature finance, alongside the science emerging from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), the UN-backed body assessing the state of global biodiversity, suggests we may still be asking the wrong question.
The deeper question may not simply be how we close the nature finance gap. It is whether we are willing to question the economic systems that continue to drive biodiversity loss in the first place, and whether we have the courage to imagine what might come next.
Earlier this week, speaking at a post-IPBES Business and Finance Summit gathering hosted by NatureAlpha at the Royal Society, I reflected on the evolution of scientific narrative from IPBES in the past few years and what it might mean for the future of nature finance.
We start in 2019 with the landmark IPBES Global Assessment. For many in the business community this was the first time biodiversity loss was framed in terms that resonated beyond conservation circles. Its conclusion was stark and critical: halting biodiversity loss would require transformative change across economic, social, political and technological systems.
At the time that phrase, “transformative change”, was widely cited but what would such transformation actually mean in practice?
To answer that question, IPBES undertook a major follow-up assessment on transformative change. Approved by governments at the end of 2024 at IPBES-11, this work represented more than three years of interdisciplinary research spanning economics, ecology, political science and the social sciences. Remarkably, its conclusions were endorsed by more than 150 governments.
The assessment identifies three underlying drivers of the biodiversity crisis:
- Our growing disconnection from nature,
- Deep and widening inequality, and
- The dominance of short-term decision making.
These are not simply environmental challenges. They point directly to the structure of our economic and political systems themselves.
Unless those underlying drivers are addressed, incremental improvements will fall short.
This brings us to the most recent IPBES report, the Business and Biodiversity Assessment approved at IPBES-12 earlier this year. The report was commissioned in recognition of the critical role that business and finance must play in implementing the Kunming-Montreal Global Biodiversity Framework. It sets out more than 100 concrete actions that companies can take to reduce biodiversity impacts and contribute to nature-positive outcomes.
This is an important step and reflects how far the conversation has moved in a relatively short period of time.
Yet the report itself also contains some striking messages. Its headline is clear:
“Businesses Can Either Lead Transformative Change or Risk Extinction.”
As Professor Stephen Polasky, one of the co-chairs of the assessment, puts it:
“The twisted reality is that it often seems more profitable to degrade biodiversity than to protect it.”
And among its recommendations is a direct call for systemic reform:
“Drive systemic change in financial systems to minimise harm, address drivers of loss, and align returns with positive outcomes for biodiversity and society.” (Action B2.1)
These are powerful statements. But they also reveal the tension at the heart of the current debate.
The progress we are seeing today is real. New tools, new disclosures and new financial commitments are important. Yet the deeper scientific analysis emerging from IPBES suggests that much more profound change will ultimately be required.
A good example is the way the challenge is often framed as a “nature finance gap”. According to the latest State of Finance for Nature report, around $7.3 trillion of financial flows each year continue to drive nature loss, while roughly $220 billion supports nature-positive activities.
Much of the debate therefore focuses on scaling up that $220 billion.
But the real question is why $7.3 trillion still flows in the opposite direction.
Seen in this light, the challenge is not just a finance gap. It is a systemic design flaw.
Our economies are sustained by far more than market transactions alone. Nature regulates water cycles, stabilises climate and sustains food systems. Communities steward landscapes. Public institutions safeguard shared resources. These non-market foundations are rarely captured in economic accounts, yet without them markets would simply not function.
If we take the science of transformative change seriously, the challenge ahead is therefore not only to scale today’s financial tools but to begin exploring what new economic architectures might look like.
Through my role as Reimagining Nature Finance Fellow with the Circular Bioeconomy Alliance, much of my recent work has focused on exactly this question. Last year we published a flagship report exploring how nature finance might be reimagined if the findings emerging from IPBES are taken seriously.
Encouragingly, early signals of change are beginning to emerge. Experiments in place-based finance, regenerative economic models and the growing momentum behind movements such as Rights of Nature all point toward ways in which economic systems may begin to recognise the value of living ecosystems more explicitly.
These initiatives remain small relative to the scale of the challenge. But they point to something important: the need to create more space to imagine, explore and test what genuinely transformative change might look like.
This is not about dismissing the progress that has been made. It is about recognising that the journey has only just begun.
The science emerging from IPBES is increasingly clear. Transformative change will require more than improving the system we have. It will require the courage to begin exploring what might come next.
Photo of Justin: Ines Stuart-Davidson for Royal Botanic Gardens, Kew
Read more about the CBA Sir Evelyn de Rothschild Fellowship for Reimagining Nature Finance and Inclusive Capitalism
