The vital importance of nature and biodiversity in achieving climate aims means that regulatory frameworks worldwide are evolving swiftly to integrate the theme into investment practices.
Brace yourselves, then, for September 2023, a milestone month that will spotlight nature and biodiversity considerations, driving investor awareness and action.
Fidelity has noted ‘nature positive‘ could be the new ‘net zero’. We’re all aware that ecosystems and species face unparalleled threats, with wildlife populations experiencing a staggering average decline of 68% since 1970. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services warns that millions of species are teetering on the brink of extinction.
But why is this important? Because it adds up to a loss of ecosystem services and economic resilience that could potentially cost the global economy $10trn annually by 2050, according to the World Economic Forum.
A report from BMO highlights that biodiversity is the cornerstone around which most sustainability objectives sit, and an area to which corporates and investors alike will pay increased attention in order to meet sustainability and economic goals. Nature and the integrity of ecosystems are intrinsically linked to climate change, the circular economy, pollution prevention, and social goals – and the regulatory landscape has fast evolved to address this.
TNFD
As such, regulatory frameworks worldwide are evolving swiftly to integrate nature biodiversity into investment practices. On 18 September 2023, the launch of the Taskforce for Nature-related Disclosures (TNFD) has the potential to revolutionise the landscape, launching just before COP28, which is also anticipated to features nature as a key focus area.
Following in the footsteps of the Task Force on Climate-related Financial Disclosures, the TNFD provides investors with a comprehensive framework to assess and disclose nature-related risks and opportunities.
See also: – TNFD mandating discussions are underway
But this launch follows a significant acceleration in developments concerning the topic, representing the culmination point of several years. The Biodiversity Conference of Parties (COP15) in December 2022 played a significant role in elevating biodiversity to the global regulatory agenda.
Mark Gough, chief executive of the Capitals Coalition, said in a statement that the Global Biodiversity Framework, to protect 30% of the world’s land and oceans, would provide “new impetus and direction” in 2023, pushing business and financial institutions to assess and disclose their risks, impacts and dependencies on nature.
Investor interest
Heightened investor consciousness is evident, with reports from institutional investment houses Morgan Stanley, Lazard and Goldman Sachs revealing that both institutional and individual investors are seeing biodiversity topping their list of agenda items.
Investor interest in biodiversity has been steadily gaining momentum, driven by several key factors. First, recognition of the need to address biodiversity is closely tied to achieving net-zero decarbonisation goals.
Second, investors are becoming aware that the degradation of ecosystems and loss of biodiversity can have far-reaching consequences with disruptions to supply chains, increased business risks, and reputational damage just some of the potential negative impacts.
Data
September 2023 looms large as a pivotal month for investors worldwide, with pressure to disclose and manage risks in a still-evolving area continues. Thankfully, rapid advances in technology continue to evolve to ensure that the tools to support investors on their journey to understand both risk and opportunity are ready.
Enter the realm of spatial data—a game-changer in understanding biodiversity patterns and assessing the impact of human activities. Satellite imagery, geospatial mapping, and remote sensing technologies combined with traditional corporate and financial data reveal invaluable insights into the spatial distribution of nature biodiversity – location-based insights which are demanded by the next generation of regulation and disclosure.
Investors armed with this data gain the power to evaluate risks with a transparency not yet seen before in the market, enabling investors to measure, monitor, and manage biodiversity-related risks and opportunities with greater transparency and precision than previously possible. With detailed information on habitats, land use, species diversity, and ecosystem services at their fingertips, investors can make informed decisions in an era of new disclosures, risk mitigation and materiality assessments.
As the world grapples with the urgent need to address climate change, the spotlight on nature and biodiversity is intensifying. September 2023 stands as a milestone month in propelling investor awareness and action in this critical area.
