Healthy and sustainable biodiversity is a fundamental benchmark of a healthy and sustainable world, and should be reflected and supported in wider ESG programmes. However, while much has been discussed and achieved in recent years in terms of biodiversity, there is still a significant way to go.
Given the urgency, we believe the UK government needs to develop a ‘nature positive’ roadmap for the UK economy and set an overarching delivery framework that businesses and investors can support and build on together.
The UK has already made good commitments in this space. The chancellor’s announcements at COP26 on net zero transition plans were very welcome. This, in part, responded to a joint position paper Aviva and WWF published in 2021 setting out our call for mandatory private sector net zero transition plans.
See also: – Give biodiversity same attention and urgency as climate
While the UK government deserves credit for this commitment and other leadership demonstrated on green finance and climate policy to date, further steps are needed to drive the transition at the pace and scale required to tackle climate and nature emergencies.
Biodiversity has historically fallen down the political, corporate and environmental agenda. Back in 2013, when I was studying the impact on investment portfolios from a global loss of pollinators, it was seen as very left field.
Now, however, it has come in from the cold. Sell-side ESG broker notes now cover biodiversity as a core topic.
NGOs such as ShareAction are actively highlighting it to retail investors. Dedicated funds have been launched and financing mechanisms – such as The World Bank issuing the world’s first Wildlife Conservation Bond – are emerging.
Nonetheless, all scenarios outlined by the Intergovernmental Panel on Climate Change limiting climate change to 1.5oC rely on land-use change mitigation – such as afforestation and land restoration. As such, it will be impossible to achieve net zero goals without tackling nature loss.
In addition, recent work by the Network for Greening the Financial System makes clear the link between biodiversity loss and financial stability. Despite this, nature-based factors are not fully accounted for in policy and private sector decision making, nor in overarching regulatory and supervisory architecture.
As the UK government and the private sector takes greater action in pursuit of the net zero transition, we believe it must do so in a way that properly considers nature.
Such a roadmap should define the economic transition required to deliver on nature goals set out in the Environment Act – the G7 Nature Compact and in the Convention on Biological Diversity (CBD) agreement – including the policies that would facilitate that economic transition.
This would include identifying key drivers (for example financial, economic, sectoral) for nature loss and investment opportunities for conservation and restoration, identifying clear links to Government department level, corporate and financial sector transition planning.
The influential Dasgupta Review, an independent review on the Economics of Biodiversity by Professor Sir Partha Dasgupta, commissioned by HM Treasury, concluded with a simple truth; that our economies are embedded within nature.
The report argued that public and private financial flows are critical to supporting a “more sustainable engagement with nature”. It called for better disclosure of nature-related financial risks and tying asset managers’ fiduciary duty to biodiversity impact. However, it fell short in suggesting how policy makers and investors should price-in the externalities of nature.
Looking ahead, the Taskforce for Nature Related Disclosure (TNFD) will likely play a critical role in providing a framework for the implementation of corporate analysis and disclosure of impacts and dependencies on nature. It will align financial flows with the biodiversity goals as outlined by the CBD.
It will not be easy – the CDP had 15 years of data before the Task Force on Climate-Related Financial Disclosures was created. But if the TNFD can find a way for companies to deal with complex nature-related financial disclosures, pressure can build to embed them into international accounting standards – a compelling goal that is within reach.
There is, now, a profound amount of activity taking place with regards to biodiversity, and all stakeholders have a role to play in accelerating this focus. A ‘nature positive’ roadmap for the UK economy, headlined by the Government, would be a fitting stage for such a serious endeavour.
