The global effort to halt and reverse biodiversity loss requires a major shift in finance. Currently, public funding dominates nature-based solutions (NbS) financing with an estimated annual allocation of US$165 billion – 82% of total NbS financing in 2022. However, this is far below the US$737 billion needed annually to meet climate and biodiversity targets by 2050. Private capital is largely absent from this space, with US$5 trillion flowing into nature-negative sectors—140 times the amount invested in NbS. Bridging this gap demands urgent action to redirect private-sector finance towards nature-positive investments and halt nature degradation.

This paper explores the transformative potential of sustainable finance and instruments used in reducing and reversing biodiversity loss, emphasising the critical role of financial institutions in driving naturepositive investments. It draws on case studies to assess the regulatory frameworks, risk management, and innovative financing mechanisms, that enables the financial sector to align economic growth with environmental sustainability. Hong Kong’s adoption of the International Financial Reporting Standards (IFRS) Foundation’s International Sustainability Standards Board (ISSB) Climate-related Disclosures S2 paves the way for the alignment of nature-related disclosures for Hong Kong listed companies.

The development of this publication was initiated by Hong Kong Green Finance Association (HKGFA) as a project of the Nature and Biodiversity Workstream under the Product Innovation and Solutions Working Group. It was produced as a result of the contributions of various leading international and local nature and biodiversity financing experts from the Workstream and Working Group.