• F4B

Catalyzing Nature Markets: a new programme of F4B

F4B has recently launched the Catalyzing Nature Markets (CNM) program to promote and accelerate the development of markets for nature based services.

Nature markets are markets for products, services and attributes which relate to nature’s integrity. So far, these markets (e.g. trading carbon offsets, ecosystem service payments, extraction quotas, etc.) have only captured a small fraction of potential revenue flows. They are constrained by structural obstacles including legitimacy of the traded products and claims (design, verification, tracking) and the eligibility of sellers (ownership of nature) and buyers (citizen agency), as well as the efficiency and trustworthiness of the trading platforms.

Nature markets are critical to addressing global crises like climate change and biodiversity collapse, which will be difficult to overcome without a market exchange that can efficiently match varied demand for nature’s services (e.g. clean water) with a clear and trustworthy source of supply (e.g. payment for ecosystem service markets).

Now is a good time to push.

Transactional complexity is no longer a problem – it has been cracked by existing e-commerce and supply chain management platforms. Sensing technologies allow precise measurement and verification of nature performance and attributes, enabling the value of natural systems to be turned into tradable assets and services. Voluntary and mandatory carbon and REDD+ markets are a top priority for the Climate Change COP26 in Glasgow in November 2021, with strong potential tie-ins to the biodiversity agenda. Finally, the twin crises of COVID 19 and climate change have sharpened the financial industry’s focus on natural risk (such as zoonotic diseases).

Over the next 18 months, CNM will accelerate these changes in several ways.

  • We will articulate an improved, compelling nature market narrative.

  • We will promote digital technologies that can help can measure, register, track, verify, and trade product and their attributes.

  • We will promote product standardization as well as protocols for verification, tracking and data access.

  • We will support innovative market designs which open up nature markets to entirely new classes of buyers and sellers.

  • We will invest in the governance and institutional integrity of emerging exchanges such as voluntary carbon markets.

Our success will be defined by

  1. creating new solutions, platforms, opportunities, and tools in service to high-momentum nature market initiatives,

  2. establishing a new community of practice which will take forward the cause of market creation at an accelerated pace and

  3. supporting the launch of the next generation of investment platforms and nature exchanges.