Development Banks Can Play Key Role in Protecting Nature

The destruction of the Amazon rainforest is one of the world’s most pressing ecological crises. It is also an economic crisis. The Amazon is home to 40 million people, most of whom rely on the forest for their livelihoods. It also supports the global economy, from generating rainfall essential to agriculture and water security, to providing medicinal resources, storing carbon and regulating the climate.

It’s not just the Amazon; over half of global GDP is moderately or highly dependent on nature. But we’ve grown the economy in ways that degrade the natural systems upon which it relies.

Halting and reversing nature degradation will require transforming the world’s financial flows. We need to eliminate funding that harms nature and significantly increase financing to protect, restore and sustainably manage it.

Multilateral development banks (MDBs), which exist to support countries’ development, have been working on the nature agenda for years now and have a key part to play in this transition. A new paper by WRI and NatureFinance offers a first assessment of how they’re supporting nature.

Specifically, the research looks at how MDBs are contributing to the targets of the Global Biodiversity Framework, including its goal to mobilize $200 billion for nature annually by 2030. We found that MDBs are increasingly owning their role in addressing nature loss. Yet progress on systematically integrating nature across their activities remains uneven, threatening progress toward $200 billion.

To fulfill their mandates and promote sustainable development, MDBs will need to make faster progress on mainstreaming nature across their operations — or risk undermining all they have achieved so far.

Why Multilateral Development Banks?

Global goals to conserve nature and reverse its decline are enshrined in the 2022 Global Biodiversity Framework. This sets out ambitious targets to protect and restore ecosystems and safeguard biodiversity by 2030.

In early 2025, the international community agreed to a resource mobilization strategy for achieving the framework’s goals. The decision specifically calls on MDBs to help shift their client countries toward more nature-positive economies.

MDBs already interact with nature in complex ways, both depending on it and impacting it. For example, a loan to expand an agricultural operation may depend on clean water filtered by forests or on pollination by bees. Take away the forests or the bees, and the project (and the principal on the loan) is in trouble. On the other hand, support for a new rail line or highway could bisect a habitat, stranding populations and disrupting migrations. Or, the project could be designed with wildlife crossings that minimize disruption.

MDBs can also make investments that strengthen ecosystems, economies and societies simultaneously — for example, in landscape restoration, wetland protection or urban greening — helping to drive the transformations envisioned by the Global Biodiversity Framework. These are not merely environmental add-ons; they are the infrastructure of sustainable development.

Even before the Global Biodiversity Framework was finalized, MDBs recognized the connection between nature and development. The World Bank Group, for example, has invested in nature for decades and is a global standard-setter for safeguarding against harmful impacts to nature in project financing.

The 2021 Joint Statement on Nature, People and Planet was an unprecedented acknowledgement by nine leading MDBs that addressing nature loss and climate change are inextricably linked to fulfilling their sustainable development mandates. It marked a collective broadening in MDBs’ approaches to nature — from primarily seeking to minimize potential environmental harm toward actively attempting to reverse the drivers of nature loss.

Now, MDBs must translate talk into action. They will have to revisit how they design projects and invest in new businesses and infrastructure. They must also, through interventions like policy-based finance and capacity support, contribute to well-functioning financial systems that allocate resources and manage risks in ways that account for nature.

Progress Toward Mainstreaming Nature at MDBs Remains Uneven

Our analysis evaluated the nine major MDBs that signed the 2021 Joint Statement. We looked at four elements to assess how well these banks are mainstreaming nature in their financing decisions and operations: discourse, collaboration, programs and projects, and financial allocations.

Discourse: MDBs are committing to nature action, but most have not set explicit nature finance targets.

MDBs are powerful contributors to economic discourse, both in countries where they operate and on the global stage. Their thought leadership, institutional commitments and publications shape how nature’s role in economic development is understood in both the public and private sectors. They also provide reams of data that are closely studied.

Discourse is also the first step toward driving real-world change. A bank needs to set a strategy or plan around nature to allocate resources effectively and efficiently.

Even though these nine MDBs all signed the Joint Statement on Nature, People and Planet, their high-level strategies and discourses on nature are a mixed bag.

Importantly, none have articulated specific strategies for supporting their client countries to achieve the Global Biodiversity Framework’s $200 billion financing target. Meanwhile, just three MDBs directly reference finance for nature within their climate finance targets. And only one, the Inter-American Development Bank, has set a nature-specific finance target.

Setting explicit financing targets and outlining credible strategies to achieve them is crucial. An important next step is for MDBs’ shareholders to ensure that the banks set nature finance targets that progressively align with the $200 billion goal.

Targets also require measurement and reporting. Financial institutions of all kinds are increasingly called upon to track and disclose their sustainability impacts and risks. These disclosures make domestic financial markets more resilient to nature loss and can potentially make the private sector more confident in assessing risks and opportunities in nature-related investments. Internationally recognized standards, such as the Taskforce on Nature-Related Financial Disclosures (TNFD), have been developed to meet this call.

However, few MDBs we analyzed use standardized nature-related disclosures at the portfolio level, and none currently follow TNFD guidance. This is the case even though, on average, one-third of MDBs’ financial commitments in 2019-2023 were in sectors with material nature-related dependencies and impacts, per TNFD. MDBs should disclose nature-related risks to ensure transparency and guide capital towards nature-positive outcomes.

Collaboration: Lack of staff capacity remains a major barrier, but common frameworks can help drive implementation.

By nature, MDBs do not work alone. Their projects are always in consultation with the governments of the client countries where they operate, and they actively seek private-sector partners whose added capital can expand the size, reach and sustainability of projects. Partnerships are therefore a key channel by which MDBs’ leadership on nature can lead to impact.

However, our research found that MDBs themselves still need greater staff capacity to understand and address nature-related risks and opportunities across their portfolios.

In the short term, MDBs should collaborate internally and externally to ease this challenge. MDBs are already using partnerships to overcome capacity constraints; for example, by establishing internal communities of practice and bolstering collaboration between their environmental and sectoral teams. MDBs also work with international organizations, think tanks and NGOs to gain technical expertise for designing nature-inclusive projects. For example, the African Development Bank (AfDB) and partners launched the Natural Capital for African Development Finance (NC4-ADF) initiative in 2021 to embed natural capital in its operations.

MDBs are also collaborating among themselves. In 2023, the MDB working group on nature agreed on common principles to track nature-positive investments. At the 2025 UN climate summit (COP30), the MDBs launched harmonized principles and methodologies, including a common taxonomy, to enhance transparency and ensure consistent reporting on how their financing impacts biodiversity and ecosystem services.

Nevertheless, collaboration is only part of the solution. Eventually, management will also need to significantly increase capacity.

Programs and Projects: MDBs need to address nature-related risks and opportunities more holistically across their operations.

While some MDBs we analyzed have made some strides on nature, their efforts are largely siloed or project-based. This will not be enough. Mainstreaming nature means that banks must integrate nature-positive principles across their operations and design programs that go beyond traditional or national boundaries.

Different MDBs will face different challenges in doing so. For example, some MDBs operate more heavily in sectors that can deeply impact nature, such as roads and railways or waste management. Their client countries may also have more or less interest in conserving nature. We found that an average of 30% of financial commitments per bank between 2019 and 2023 were in countries with low ecosystem protections. However, this varied from as little as 3% for the Inter-American Development Bank to 81% for the Asian Development Bank. MDBs will need to account for these risks and direct resources to manage them.

One way they can do so is by generating evidence on the value of nature. Several MDBs support natural capital approaches that track society’s dependence and impact on nature at the national or corporate level. For example, the African Development Bank’s NC4-ADF seeks to integrate natural capital in African infrastructure finance. However, these approaches remain siloed from MDBs’ core operations and therefore limited in their impact — for now. MDBs should systematically embed approaches that better reflect nature’s value into country dialogues and the diagnostic tools they use to evaluate economies and sectors. Once they’ve generated the evidence on the economic and development value of nature, they can share this evidence with national leaders.

While MDBs often operate at the country level, nature knows no national borders. Another nature-positive principle to adopt institutionally: transboundary approaches that better reflect how ecosystems function. Some MDBs have tested the waters; for example, the Asian Development Bank’s Regional Flyway Initiative seeks to invest $3 billion in biodiverse wetlands frequented by 600 bird species, including the endangered spoon-billed sandpiper, across ten countries along the East Asian-Australasian Flyway.

Financing: MDBs are designing innovative mechanisms to mobilize finance for nature.

As banks, financing is at the heart of MDBs’ operations and their potential to be nature positive. In 2022, MDBs and other multilateral institutions accounted for $5.7 billion (37%) of the total $15.4 billion in international biodiversity finance — a marked increase from 2021, but still short of what’s needed to meet targets set under the Global Biodiversity Framework. Available data since 2015 shows they will have to play a bigger role moving forward.

MDBs are typically involved with large, complex projects and initiatives, rather than smaller localized ones. Their flagship initiatives often combine different types of support (including technical assistance and financial instruments, such as loans, bonds or guarantees) to help partners address barriers to nature investments. These partners could include bilateral agencies, multilateral funds, domestic financial institutions and others.

The Inter-American Development Bank’s Amazonia Forever initiative, launched in 2023, is a good example. It coordinates ministries, domestic financial institutions and subnational entities in the Amazon region, using loans, blended finance and technical assistance to support specific interventions — for instance, setting up a fund to reduce pressure on forests or implementing projects that restore degraded land.

MDBs should continue to explore innovative financial mechanisms that can galvanize financing for nature, sharing learnings as they go.

In addition to this, investors need clear and predictable financial products; otherwise, they will remain reluctant to invest in unproven mechanisms that have no track record and cannot be easily exchanged on the markets. But standardization remains a persistent challenge to scaling nature investments due to the inherent complexity, variability and context-specific nature of ecosystem services. MDBs can help by structuring products that will make sense to investors and be tailored to support ecosystem services.

In 2008, the World Bank Group issued the first ever green bond — one that explicitly linked the proceeds to environmental projects. By 2025, green bonds had grown to a $6 trillion cumulative market aligned with green, social, sustainability and sustainability-linked principles. For example, IDB raised $100 million for conservation in Barbados by supporting innovative instruments like green/blue bonds. And in 2021, it developed a Green Bond Transparency Platform to harmonize reporting and boost investor confidence.

Natural Allies for 21st Century Development and Prosperity

MDBs were designed to address the global challenges of the 20th century. Now, in response to calls for reform, many are updating their mandates, missions and lending portfolios to protect what matters most to people’s livelihoods in this century: clean air, clean water and a healthy planet.

MDBs must rise to the challenge of increasing financing in line with global biodiversity and climate goals to support sustainable development and human well-being. This means a greater emphasis on clear strategic plans, building common frameworks, integrating into project and program implementation, and channeling finance.

By aligning financial flows with global nature goals, MDBs can become architects of long-term economic resilience: treating ecosystems as core infrastructure, supporting governments to reform economic incentives, and measuring success in part by delivering nature and biodiversity outcomes.