Biodiversity Briefing

The latest developments for investing and biodiversity

The Task Force on Nature-related Financial Disclosures’ (TNFD) has announced the chairs of its Informal Working Group, which will kick off the new initiative’s work until an official task force is formed next year. Antoine Sire, Director of Company Engagement at BNP Paribas, Rhian-Mari Thomas, Chief Executive of the UK’s Green Finance Institute, and Mariuz Calvet Roquero, Director of Sustainability and Responsible Investment at Banorte will co-chair the group, leading monthly meetings and ensuring the goals of the current work plan are delivered. Launched this summer, the TNFD seeks to mirror the success of the Taskforce on Climate-related Financial Disclosures. Its working group currently comprises 34 financial institutions, including Storebrand, NatWest and Citi, alongside the governments of UK, France, Peru and Switzerland, and multinational companies, including BP and KPMG. Set up UNEP FI, the UN Development Programme, Global Canopy and WWF, the TNFD will develop an international reporting standard for biodiversity and natural capital risk.

HSBC Global Asset Management, Axa Group and Allianz France were among the 26 financial institutions, representing over $3trn in assets, that signed the Finance for Biodiversity Pledge last month. The firms committed to ramp up their efforts on biodiversity by measuring and setting targets, as well as publicly reporting on their biodiversity impacts by 2024. The five-point pledge was initiated by Dutch bank ASN Bank and France's state-backed bank Caisse des Dépôts.

According to the latest Global Biodiversity Outlook from UN Environment, none of the 20 biodiversity targets the world set for itself a decade ago will be fully met by the 2020 deadline, although six have been partially achieved. Nicky Chambers, Programme and Impact Director for Global Canopy, a non-profit promoting a deforestation-free economy, wrote in RI: “To avoid risks spiralling out of control, immediate action is needed. Finance sector leadership is the key to unlocking progress at scale. The size of the prize is vast: by 2030, nature-positive solutions could create $10trn in business opportunities and 395 million new jobs, according to the World Economic Forum.”

The Principles for Responsible Investment has warned that “to date, investors have primarily focused on biodiversity loss due to acute events, including those linked to illegal activity,” in a discussion paper. “Less attention has been paid to how legal business activities are fundamentally reliant on biodiversity to produce goods and services, and their contribution to its decline,” it said. Following interviews with 11 investors, Investor Action on Biodiversity recommends ways to better integrate biodiversity by joining initiatives, allocating capital, engaging with companies and sourcing meaningful data.

Following its successful launch last year, the Partnership for Biodiversity Accounting Financials (PBAF) published its first report, as a step towards a harmonised biodiversity accounting metric for the financial sector. Paving the way towards a harmonised biodiversity accounting approach for the financial sector offers financial institutions guidance on how they can begin to account for their biodiversity impacts. The ASN Bank-led initiative is backed by Actiam, FMO, Robeco, and Triodos Bank; its format mirrors the carbon accounting initiative, PCAF, that ASN Bank set up in 2015 and which has seen global success.

AXA Investment Management, BNP Paribas Asset Management, Mirova, and Sycomore have awarded a tender to Paris-based environmental advisory firm I Care & Consult and data provider Iceberg Data Lab to develop a biodiversity assessment methodology and tool for asset manager quartet last month. The work will see the pair expand their existing Corporate Biodiversity Footprint metrics to cover more companies and sectors. Once a quantitative biodiversity impact assessment methodology has been finalised, the tool will be developed further to be used for portfolio-level analysis. 

At last month’s UN Summit on Biodiversity, 76 national leaders committed to reversing biodiversity loss by 2030 through the Leaders Pledge for Nature; however, prior to the summit, a coalition of civil society groups, including indigenous peoples, criticised the summit for not platforming their voices. Despite the forum being attended by nearly 150 countries and 72 heads of state and governments seeking to build political momentum towards the post-2020 global biodiversity framework to be adopted at COP15, the CBD Alliance argued the summit wrongly “provides a prominent role to some of the world’s biggest corporations and financial actors who are among those most responsible for biodiversity destruction.” 

One in five countries globally are at risk of ecosystem collapse as biodiversity declines, Swiss Re has warned in a study using the reinsurer’s newly-launched Swiss Re Institute Biodiversity and Ecosystem Services Index. The index aggregates data across water security and quality, food provision, habitat intactness, pollination and soil fertility. The Swiss Re Institute report that accompanies the launch of the index, "Biodiversity and Ecosystem Services: A business case for re/insurance", highlights several real-life cases of how biodiversity and ecosystems impact economies. 

Actiam, Aegon, NN IP and Robeco led an investor statement by the Dutch arm of the International Union for the Conservation of Nature and the Association of Investors for Sustainable Development, calling for greater sustainability in the mining sector. Specifically, it calls for improvements in water management with the underlying goal of preserving biodiversity. The statement, sent by 16 international institutional investors with over €900bn in assets under management, urged other parties in the financial sector to join the initiative and enter into discussions with mining companies to reduce their impact on water and biodiversity.

RSK Group has developed a new service, RSK Wilding, that will assist the environmental and technical service firm’s clients to offset their carbon emissions and meet the requirements for ‘biodiversity net gain’ through rewilding. Rewilding refers to a range of ways to restore and protect environments, from leaving natural spaces untouched to planting trees. The service aims to help reverse decades of environmental degradation, biodiversity loss and the impacts of climate change. 

The European Commission has published a proposal this week on how the EU will protect and restore biodiversity and natural capital in line with its Green Deal. The planned 8th Environment Action Programme explores the ways that the EU can accelerate the transition to a climate-neutral, resource-efficient and regenerative economy. To track progress, the EAP suggests setting up a new monitoring framework.

The Paulson Institute, The Nature Conservancy and the Cornell Atkinson Center for Sustainability launched a major report in September making the economic case for valuing nature. Financing Nature: Closing the Global Biodiversity Financing Gap calculates that there is an additional $598-824bn in investment needed each year for the next decade to manage the biodiversity crisis. It recommends nine financial and policy mechanisms, including tackling harmful subsidies and using innovative financial mechanisms. 

AXA Investment Managers has invested $5m in a US platform from Forest Carbon Works, which seeks to reduce the cost of generating carbon offsets for landowners. The firm pays landowners for conservation outcomes – some up to $50,000 a year – and claims the new investment “will channel an estimated $1.4bn in market demand”. AXA made the investment through its AXA Impact Fund: Climate and Biodiversity