Insights

Panel sobre Soluciones Basadas en la Naturaleza en Fi Gathering Zurich
02/07/2024

Nature-based solutions (NBS): a key growth market for overcoming global challenges

· The NBS market is still in development despite increased investing and the fact that over half the world's GDP depends on nature and its potential, according to the European Investment Bank (EIB).

· NBS play an essential part in tackling global challenges such as climate change, biodiversity loss, and food security through ecosystem management, protection, and restoration.

· Through its innovative programs, Social Nest Foundation, the global platform for investors and entrepreneurs with social and environmental impact initiatives, calls attention to the main challenges faced by this type of business.

The recently developed concept of Nature-based Solutions (NBS) encompass any and all actions that rely on ecosystems and the services they provide to address the various challenges facing society today, such as climate change, food security and disaster risk. This key approach for tackling environmental challenges employs ecosystem management, protection and restoration.

These solutions seek not only to protect and rehabilitate biodiversity, but also to improve the resilience of the human communities living under threat from floods, droughts and other extreme weather events. For example, natural wetlands can act as wastewater treatment systems, forests can provide protection against natural disasters, and regenerative agricultural practices can improve soil fertility and food security. Not only do these approaches offer environmental benefits, they also generate economic opportunities and improve the quality of life for communities. Social Nest Foundation, the global platform for investors and entrepreneurs with social and environmental impact initiatives, addresses this issue in depth through its programs, thus calling attention to the main challenges and trends facing this type of business.

Challenges in Capital Mobilization

According to the United Nations Environment Program’s (UNEP) 2021 State of Finance for Nature report, global investment in NBS amounted to 113 billion euros, of which 27 billion come from Europe. However, there are three factors holding back investment: dependence on subsidies, lack of alignment with the preferences of commercial investors and the perception of high risk. In addition, NBS are often designed to prioritize impact outcomes over financial returns, thus hindering scalability, according to the European Investment Bank (EIB).

The NBS market is still in its early stages and its scalability is limited by several factors. Because they depend on public funding and subsidies, many projects are small and vulnerable. To make a significant impact, greater private sector investment must be secured. This requires creating financial models that strike a balance between environmental benefits and attractive economic returns for investors.

Organizations such Darwin Bioprospecting and Climate Farmers are leading the way with innovative and sustainable approaches. A participant in the Scale the Impact accelerator program promoted by Social Nest Foundation and Danone, Darwin Bioprospecting develops solutions that use microorganisms to improve industrial processes. Some of its products include a bioremediation process to remove sulfates from wastewater from the vegetable oil industry and a probiotic used in dairy products to improve mental health.

The German startup Climate Farmers seeks to mitigate climate change by working directly with farmers. Its multilevel and systemic approach involves developing technologies for carbon sequestration and the Measurement, Reporting and Verification (MRV) of carbon credits. They also support transitioning supply chains into regenerative agriculture practices in addition to providing financial solutions to help farmers adopt these practices.

The Role of Collaboration

Collaboration between various stakeholders is essential to the success and scalability of NBS. At the Fi Gathering Zurich, organized by Social Nest Foundation and Elea Foundation in April 2024, the topic of how nature is a crucial social and financial asset was examined. It was noted that over half of global GDP depends on nature and its services, though most of these benefits currently lack value in the financial market.

In this regard, Social Nest Foundation underscores how important collaboration is to building impactful and financially sustainable NBS models. Mobilizing private capital using philanthropy and public funding is key to overcoming barriers such as long time frames of financial return and the lack of technical expertise.

The platform is already preparing the second edition of The Gap In Between for next October, which aims to foster collaboration between all the stakeholders involved. “We are announcing the second edition of The Gap in Between. We need a multilevel, multi-stakeholder, multidimensional strategy for addressing these major global challenges. By both harnessing the personal skills for disruptive change and calling for collective action, we can catalyze the establishment of new norms, rules and practices,” noted Margarita Albors, founder and president of Social Nest Foundation.

Find out all the information and register for free to The Gap in Between on the official website of the event: thegapinbetween.com.