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Banking and Financial Services

About this sector

The finance industry constitutes the largest group of companies in the world. Banking is the largest financial services sector (24% of total assets in 2005), followed by securities (21%), insurance (18%), pensions (17%) and government related services (13%)168. The role of the sector in biodiversity loss and, indeed, in its conservation is increasingly being recognised. By providing financing to projects and companies, the sector has an indirect reliance and impact on biodiversity and ecosystem services.

Impacts

  • Indirect impacts through investment/ provision of financial services to company’s which mismanage biodiversity.
  • Potential for positive impact through incentivising development of biodiversity related products e.g. biodiversity offsets, offsets, REDD, payments for ecosystem services.

Opportunities/Risks

  • Development of new financial products e.g. carbon credits or biodiversity offsets.
  • Differentiation and branding e.g. HSBC’s Climate Partnership.
  • New investment opportunities e.g. biodiversity banking.

Case Studies


Handling of the Yamato River water quality improvement support time deposit “Yamato River Time Deposit”

Handling of the Yamato River water quality improvement support time deposit “Yamato River Time Deposit”

This project is based on the “Yamato River time deposit”, a product marketed by Yamato Shinkin Bank and designed to improve the water quality of the Yamato River, which flows through the basin of Nara. Additional interest is paid to deposits when prescribed improvements are seen in water quality, specifically the BOD (biological oxygen demand) levels.

Testing the first habitat banking project in Europe

Testing the first habitat banking project in Europe

New market mechanisms targeting biodiversity conservation are emerging worldwide, and among others, the biodiversity offset market size is expected to increase in the coming years. The French company CDC Biodiversité has seized this opportunity and is testing the first habitat banking project in Europe.

Utilizing financing mechanisms to protect Japanese satoyama biodiversity

Utilizing financing mechanisms to protect Japanese satoyama biodiversity

Aware of the role finance has to play in the field of biodiversity projects funding, Sompo Japan has developed a loan mechanism that fosters investments in ecological housing and finances a charity fund dedicated to Japanese specific landscape protection.

Yogyakarta Special Province Wildlife Reserve Restoration and Recovery

Yogyakarta Special Province Wildlife Reserve Restoration and Recovery

This project is designed to restore a natural reserve that has been ravaged by illegal logging and, over the long term to contribute to the local economy through the planting of trees. This has resulted in the planting of some 300,000 trees across nearly 350 hectares of highland area.


Tools and Mechanisms


Roundtable on Sustainable Palm Oil (RPSO)

Roundtable on Sustainable Palm Oil (RPSO)

http://www.rspo.org/

The RPSO is a multistakeholder initiative that has developed and is implementing global standards for sustainable palm oil. Additionally, a site and supply chain certification scheme has been developed and a biodiversity working group is in place. This is addressing issues concerning high conservation value, compensation schemes, (riparian) corridors & set-asides, biodiversity assessment methodologies, and green corridors/landscape issues.
Asian Development Bank

Asian Development Bank

http://www.adb.org/Topics/default.asp

ADB is an international development finance institution whose mission is to help its developing member countries reduce poverty and improve the quality of life of their people in the Asia and Pacific region.
Biodiversity and Ecosystem Service Work Stream

Biodiversity and Ecosystem Service Work Stream

http://www.unepfi.org/work_streams/biodiversity/in...

UNEP Finance Initiative (UNEP-FI) is a global partnership between UNEP and the financial sector. Over 180 institutions, including banks, insurers and fund managers, work with UNEP to understand the impacts of environmental and social considerations on financial performance. The objective of the ambitious UNEP FI Biodiversity and Ecosystem Service Work Stream is to assist the financial services sector in addressing the challenges arising from the loss of biodiversity and the degradation of ecosystem services. Currently the group consists over 20 members.

Climatescope

http://www5.iadb.org/mif/climatescope/2012/

Climatescope 2012 is a report and index that assesses the investment climate for climate-related investment in Latin America and the Caribbean. It profiles 26 countries in the region and evaluates their ability to attract capital for low-carbon energy sources while building a greener economy.

To assign each country an overall score, Climatescope examines four overarching and interrelated parameters. These parameters are supported by a series of 30 indicators based on data captured by Bloomberg New Energy Finance through first-hand research, consultation of publicly available sources, and discussions with experts. Together, these indicators and their corresponding parameters form a holistic picture of a particular country's climate for climate-related investment.

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Banking and Financial Services

Case studies
Tools and Mechanisms