Financial Institutions

Article 21, paragraph 4: "The Contracting Parties shall consider strengthening existing financial institutions to provide financial resources for the conservation and sustainable use of biological diversity."

The term “financial institutions”, referred to in Article 21, paragraph 4, of the Convention, has not been explicitly defined so far for purposes of implementing this provision. In the business world, a financial institution is an establishment that conducts financial and monetary transactions, such as deposits, loans, investments and currency exchange. The major categories of financial institutions include banks, asset management companies, insurance companies, brokerage firms and investment dealers. According to Canada’s Office of the Superintendent of Financial Institutions Act of 2 July 1987, the scope of financial institutions includes all federally chartered, licensed or registered banks, insurance companies, trust and loan companies, cooperative credit associations, fraternal benefit societies and private pension plans.

A development finance institution provides finance that promotes development and helps the private sector to invest, especially in the developing countries. Development finance institutions are mostly backed by Governments, especially by Governments with developed economies, including multilateral development banks, bilateral development banks, microfinance institutions, community development financial institution and revolving loan funds. A national development bank is a finance institution, created by a country's government, which provides financing for the purposes of economic development of the country. An international development financial institution is a financial institution that has been established (or chartered) by more than one country, such as multilateral development banks, Bretton Woods institutions, regional development banks, bilateral development banks and agencies, and other regional financial institutions.

According to the various documents prepared for the previous meetings of the Conference of the Parties, including draft global monitoring reports on state of financing for biodiversity, the following financial institutions have been of particular importance to financing for biodiversity and associated ecosystem services:
(a) Global Environment Facility - a systemically important financial institution, which would pose a serious risk to the Convention in the event of its collapse;
(b) Green Climate Fund - an increasingly important financial institution, which can finance the interface between climate change and biodiversity;
(c) Development financial institutions - a potentially important set of financial institutions, which can finance biodiversity and ecosystem services, both directly and indirectly;
(d) Market-based financial institutions – an ultimately important set of financial institutions, which remain to be tapped at a meaningful magnitude;
(e) Institutionalized funds - an optionally important set of multi-donor nature funds, single donor nature funds, and environment funds, that can be tailored to fit with specific requirements of various public and private donors.

  • United Nations
  • United Nations Environment Programme