In December 2023, Australia’s Nature Finance Council was established to increase private sector financial support to benefit nature. Karen McWilliams FCA, sustainability and business reform leader, at CA ANZ, is a member of the council and explains its purpose and goals, as well as the key challenges and opportunities of boosting investment in natural capital.

Why was the council established and what are its key goals?

Our purpose is to provide advice to the Australian Government, through the minister for the environment and water, on three key areas. The first is to advise on the best ways to increase the flow of finance into transparent and real benefits for nature. A significant proportion of current funding for nature restoration and repair is coming from the public sector, so we’re looking at how to drive more private sector engagement.

The second area is to advise on how to position Australia as a global leader in nature finance, and the third is to advise on how to commercialise credible emerging nature markets.

Council members have been appointed based on their individual expertise and there’s a diverse representation, with each member bringing different perspectives to the table. Although our fundamental goal is to increase private sector financial flow to benefit nature, if we achieve that and it has little impact on the environment, we will have probably missed the mark. We really want to see the benefits to nature.

What are some of the council’s key initiatives?

Australia has the Nature Repair Market that expects the first method on the logistics of preplanting native forest and woodland ecosystems to be finalised early this year. The organisation’s aim is to create incentives around actions to restore and protect the environment and we’ve been looking at how it can be most effective.

We were also involved in the Global Nature Positive Summit 2024, which was held in Sydney in October last year, with many council members providing input to help shape and facilitate sessions. We’ll be providing our initial advice to government, which will be released in the coming months.

What are the challenges and opportunities of increasing investment in natural capital?

We are certainly seeing an increased interest from entities in trying to understand the interconnection with nature but for many, it feels a bit nebulous.

If you’re looking at the transition risk side of climate, for example, a lot of the focus is on emissions measurement and emissions reduction, which is a fairly universal measurement. If you reduce a tonne of carbon dioxide equivalent in Australia, it’s the same as reducing it anywhere else in the world in terms of its impact. But nature is very different because it’s location-specific. In some locations, for example, water is a scarce resource but that’s not the case in others. That doesn’t mean it’s any less important, but it does mean that entities need to understand their local impact on nature.

There’s quite a lot of data out there about nature but understanding how you can use it for business decision-making remains a challenge.

When entities begin to understand their impact and dependencies on nature, they can find opportunities to address them and to perhaps be market leading. Doing it first can be more challenging but, equally, there’s a huge reputational and learning opportunity.

I also think that we need to focus more on the value that nature brings. For example, there’s some great research in Farming for the Future, which shows that farms with natural capital on them are more productive than farms without it.

What were the key learnings from the recent Global Nature Positive Summit?

The connection between fighting climate change and preventing nature loss was a theme at the summit, and there was a strong focus on incentivising positive biodiversity outcomes with carbon sequestration, including the connection between Australian carbon credit units and the emerging nature repair market.

Another key takeaway from the summit was the significant financing gaps in climate and nature conservation. The role of good quality data and better metrics to measure the social cost of nature loss was also discussed, and we need to put more effort into the framework and methodology.

Strong communities and partnerships were highlighted as important elements of successful nature conservation, and a recurring theme was the long-standing wisdom of Indigenous peoples regarding environmental stewardship. The integration of western science and Indigenous culture is crucial for closing the gap and achieving sustainable outcomes.

The overarching message of the summit was that it’s time for action. Even if the path isn’t clear, businesses need to get started.