The UK as a global centre for nature and adaptation finance

Realising the potential of nature and adaptation finance

Achieving net zero demands urgent action in scaling up high-integrity nature markets and protecting natural capital. Failure to incorporate nature into financial strategies risks undermining the global economy. Natural ecosystems underpin over half of the world’s GDP, and their degradation presents substantial financial risks, from climate-related disruptions to stricter environmental regulations. More critically, nature represents one of our most powerful tools in the fight against climate change.   

However, nature finance faces a significant funding gap. In the UK alone, an additional £44 to £97bn is needed to adequately address nature degradation. The financial services sector plays a critical role in bridging this gap, leveraging private capital and driving investment into natural ecosystems and nature-based solutions.  

At the same time, the impacts that climate change is having on nature, our communities and way of life are increasingly visible – from rising risks of wildfires to floods, storms and droughts affecting food security around the world. Investment in adaptation is becoming all the more important and urgent.

From mitigating climate change and enhancing natural carbon sinks, to protecting ecosystems and safeguarding biodiversity, investment in nature offers both immediate and long-term value. 

Chris Hayward,
Policy Chairman, City of London Corporation

In the UK, the Climate Change Committee estimates £50 to £100bn will need to be invested in adaptation over the next 10 years across both the public and private sector to address climate and physical risks. While the World Resources Institute (WRI) makes a case for the investment opportunity adaptation finance presents – with $1 invested in adaptation generating between $2-$10 return on investment, depending on the intervention.

The outcomes of key global summits, such as COP30 and the next United Nations Biodiversity Conference (COP17), must aim to catalyse private capital flows into nature and adaptation, setting a framework for sustainable investment.

Looking forward: opportunities in nature and adaptation finance

As the demand for sustainable investments grows, the financial services sector has a unique opportunity to lead the charge in nature and adaptation finance. Forward-thinking institutions that integrate nature and adaptation into their portfolios will not only mitigate risks but also unlock new revenue streams and enhance their ESG offerings. 

The City of London Corporation is actively supporting the growth of nature and adaptation finance by engaging with stakeholders across the financial services industry.  

In partnership with PwC and the Green Finance Institute (GFI), the City Corporation launched A Global Centre for Nature Finance in 2023. This report sets out a bold vision for positioning London as a global hub for innovative nature finance, aligned with the ambitions of the Global Biodiversity Framework. 

The City of London Corporation has also worked closely with the Prudential Regulation Authority (PRA) and Financial Conduct Authority’s Climate Financial Risk Forum’s (CFRF) Adaptation Working Group to support the production of Mobilising Adaptation Finance to Build Resilience, including supporting a series of workshops focused on implementation of these recommendations. 

The work initiated by the City of London Corporation underscores the importance of industry collaboration in shaping the future of nature finance Moving forward, the City of London Corporation looks to convene a coalition of ‘first-mover’ firms which are eager to be at the vanguard of investing in (and supporting investment into) nature and adaptation.

To find out more, please contact ​sustainablefinance@cityoflondon.gov.uk