A committee of biodiversity finance experts brought together by ShareAction and UK Sustainable Investment and Finance Association (UKSIF) have called for policymakers to consider nature loss as urgent as climate change ahead of CBD-COP15.
At a roundtable titled Tacking Biodiversity Loss at the Houses of Parliament on 17 May, Anthony Brown MP opened the discussion describing the “twin crisis of climate change and biodiversity loss” saying there is a lot of work to be done to align the financial sector to meet the challenges of tackling them both, but highlighted “biodiversity has not been given the same attention as net zero has… it is far more complex to align the financial incentives”.
James Alexander (pictured), CEO at UKSIF and ESG Clarity Committee member, agreed saying financial services, and in particular investors, cannot just focus on climate change as a key issue.
“We have to talk about nature and biodiversity too and the other things that come under the ‘E’ of ESG.
“We are in a nature crisis, and climate is overshadowing how significant this is. We need to think about what financial services can do. We want to put the message across to move financial flows to nature-based solutions in the same way as we have done very effectively with climate solutions. We need to take similar action.”
He also noted the UK government’s ambitions to be a net-zero financial centre adding that this cannot be achieved without a nature-positive approach.
Taking responsibility
CEO at ShareAction Catherine Howarth said the organisation has been tracking 75 of the world’s largest asset managers’ approach to biodiversity. A few years ago, it asked questions around biodiversity integration, such as was it factored into risk management and investment decision making?
“The picture was extraordinary grim,” she said.
“Two years ago, not one group had a dedicated biodiversity policy, half of them had a passing mention but nothing that amounted to a rigorous approach, and some had nothing to say at all.”
She added as the underlying challenges of nature and biodiversity loss continues to accelerate, she is pleased to see some progress this year.
“Today we are in a different place, we have seen a transformation in the past couple of years. The thinking is becoming much more about the dependencies on the natural world, the investment community is really engaging and thinking about [its] impact and taking responsibility for having a lighter footprint in all that it does.”
However, she pointed out the approach to biodiversity by asset managers is not anywhere near as advanced as the approach to climate and said getting to biodiversity at a later stage is “not credible”.
“We have this huge amount of assets under management looking after people’s retirements and savings. We need to provide a good income in retirement, but not in a world that has been ravaged along the way,” she added.
Transformative framework
Almost all the panellists, which included Sonya Likhtman, engagement and stewardship manager at Federated Hermes; Emily Mckenzie, technical director of the Taskforce on Nature-related Financial Disclosures; Alison Midgley, senior sustainable finance and policy analyst at WWF UK; and Lord Benyon, parliamentary under-secretary of state at the department for environment, food and rural affairs, said they were hoping for a “transformative biodiversity framework” to be a key outcome of CBD-COP15, which has been postponed until 29 August – 9 September 2022.
Likhtman commented: “The Paris Agreement sent a strong signal to financial institutions about directing flows to low carbon solutions – that is what we need for biodiversity loss. We want a requirement in the Global Biodiversity Framework to have public and private flows aligned [in this way].”
ShareAction’s Howarth added: “There is a need to put in place finance services policy structures at the sector level [encouraging organisations] to be really bold so they too become champions of more ambitious policy.”
