Gaps between demand and supply of biodiversity impact finance in the Global South

This contribution seeks to fill knowledge gaps on what kinds of biodiversity impact investment models already exist, what factors are constraining biodiversity impact finance in the Global South, and what could be done to bridge the gap. The review identifies complexity, high transaction costs, unfamiliarity with the product, and shortages of bankable projects as key challenges pertaining to the financial sector. On the investors’ side, concerns often revolve around the risk–return ratio, insufficient global biodiversity data, and the lack of an international framework defining biodiversity finance. On the investees’ side, there is anxiety over power imbalances from the past finding their way into these new products, which could be detrimental, especially in areas with informal land rights. To move forward, learning platforms and training opportunities on impact finance could be provided to stakeholders, and more resources are needed for de-risking investments through blended financing approaches.