From Science into Governance: The Promise of Earth Systems Law: A Case Study on Biodiversity Finance

Biodiversity loss demands governance approaches that acknowledge ecological complexity, diverse values, and rapidly evolving practices. While Earth Systems Law (ESL) has recently emerged as a promising paradigm in climate governance, its potential has not yet been systematically explored for biodiversity governance. This paper argues that ESL offers a more suitable legal and conceptual framework for the distinctive epistemic, governance and legitimacy challenges that biodiversity governance faces. Our case study here concerns biodiversity finance. Biodiversity finance is scaling rapidly in parallel with global disclosure mandates and nature-market expansions. Yet how  these developments are aligned with corresponding evolutions in scientific and legal architecture remains unclear. This introduces significant potential risks for actors and systems.

In climate finance, metrics, values, and causal pathways are comparatively stabilized through robust epistemic and scientific practices. In biodiversity finance, deeper scientific and normative contestations exist. Investments are shaped by conflicting priorities and justifications driven by divergent anthropocentric, biocentric, and ecocentric positions. Varied scientific approaches to measurement across taxa, scales, and ecosystems mean that financial practices remain contested and indicators often rely on normative assumptions and understandings of “good” conservation. Moreover, reflexive causal links between financial instruments and ecological outcomes are often uncertain, indirect, or speculative.

Together, these conditions generate significant ambiguity for providers and recipients of finance. They also create significant legal and policy challenges as reflected by emerging litigation concerning biodiversity-related greenwashing. Additionally, while the financial and socio-economic systemic risk implications of biodiversity loss are recognized, prudential regulatory mechanisms related to such risks remain in a nascent stage of development.

We argue that current prudential, civil and criminal monitoring and sanction regimes are not sufficiently attuned to the scientific and interpretative complexities of knowledge emerging in the biodiversity space. Building on socio-legal research and systems governance theory, we show how Earth Systems Law can provide clearer normative grounding in biodiversity finance while also better accommodating uncertainty, and strengthening accountability. The paper concludes with concrete implications for regulatory design, liability frameworks, and emerging ESG standards, focusing on areas likely to become critical over the next decade, including disclosure rules, verification duties, and claims assessment in biodiversity markets.