The new Financial Sector Guide for the Convention on Biological Diversity aims to mobilise financial institutions to ensure a nature positive world, by fostering better understanding of nature’s importance for the financial sector, providing insight on the Convention on Biological Diversity (CBD) process. The guide is the first of its kind between the CBD and partner organizations, and the financial sector.
Nature is important for the financial sector as its loss is putting our economies at risk. Members of the financial sector can contribute to curbing nature loss and aligning their financial flows to nature positive outcomes by:
- advocating and calling for an ambitious and transformative post-2020 global biodiversity framework;
- collaborating and joining the initiatives in favor of biodiversity such as Principles for Responsible Investment (PRI), the UN Environment Programme’s Finance Initiative (UNEP FI), Business for Nature and Finance for Biodiversity Pledge, a call to action and collective commitment for collaboration, engagement with companies;
- adapting their investment strategies and engage with companies;
- assessing their risks, impacts and dependencies;
- setting targets in line with global goals and the post-2020 global biodiversity framework; and
- reporting publicly on positive and negative contributions to biodiversity by using the Taskforce on Nature-related Financial Disclosures or similar approaches.
Raising awareness on nature’s importance for the financial sector is becoming increasingly crucial. Continued biodiversity loss puts global economies at risk, and the financial sector, significantly exposed to nature, has a critical role to play to transform the current financial system, with a view to aligning financial flows for a nature positive world.
The guide is particularly timely as the world presently negotiates the post-2020 global biodiversity framework, due for adoption later this year in Kunming, China.
The guide, which is geared towards all financial institutions, stakeholders and partners, is the result of a collaboration between the CBD and four partners representing businesses and the private financial sector: Business for Nature, Finance for Biodiversity Pledge, PRI and the UNEP FI.
How the the financial sector can act:
Together with UNEP FI and the PRI, the Finance for Biodiversity Pledge and its initiator the Finance@Biodiversity Community wanted to help financial institutions to understand what initiatives are out there, and who is doing what. With the overview of initiatives, they aim to enable synergies and accelerate collaboration on key topics. The definitions of the topics included can be found in the guidance document of the Finance for Biodiversity Pledge.
Initiatives are in place to support the financial institutions and enable strategies in favour of biodiversity.
Public and private financial institutions can take many actions to support the conservation and restoration of biodiversity:
- Mainstream biodiversity into all decision-making and strategies, including in biodiversity finance strategies. This includes assessing portfolio and sector impacts and dependencies on nature to understand exposure and setting targets to manage risks identified.
- Engage with sectors, companies or business models responsible for biodiversity loss to transition them towards nature positive outcomes, by addressing the drivers of biodiversity loss.
- Increase opportunities for positive outcomes on the ground, including for restoration.
- Require disclosure on biodiversity risks, impacts, dependencies and opportunities.
- Engage with policymakers on reforming biodiversity incentives and eliminating and redirecting harmful incentives and subsidies for biodiversity, ensuring that they are either positive or neutral for biodiversity.
Several tools and metrics are available or currently under development for assessing impacts and dependencies by financial institutions. The finance members of the EU Business@Biodiversity Platform and Finance for Biodiversity Pledge signatories published the Guide on biodiversity measurement approaches for financial institutions.
Setting and disclosing targets based on the best available science increases significant positive and reduces significant negative impacts on biodiversity, and would be informed by the post-2020 Global Biodiversity Framework as adopted by the CBD COP15, as well as by other regional initiatives and policies (e.g. the EU Biodiversity Strategy). Setting and publicly disclosing targets is important, not only on biodiversity, but also on its drivers of loss. Whenever available, the Science-Based Targets Network on biodiversity allows financial institutions to set science-based targets.
Existing reporting framework provide guidance and examples on how financial institutions can report on positive and negative contributions to biodiversity. Examples of reporting standards and other guidance are:
- Taskforce on Nature-related Financial Disclosures (TNFD);
- Ecogain Biodiversity Index;
- Certified B Corporations;
- Sustainable Investment Report;
- Impact Report;
- Green Water Bonds; and
- Forestry and conservation investments.
The Taskforce on Nature-related Financial Disclosures aims to distill leading practice and promote a common approach on nature-related reporting across finance and business.