The finance sector should urgently set biodiversity targets

New research published today shines a spotlight on the urgent need for financial sector action on biodiversity.

Beyond ‘Business as Usual’: Biodiversity Targets and Finance was published by the United Nations Environment Programme (UNEP) and the Natural Capital Finance Alliance (NCFA) and developed by the UN Environment Programme World Conservation Monitoring Centre.

The report highlights the need for banks, investors and insurers to set firm targets to reduce biodiversity loss such as ‘net positive impact’ across their activities, starting with nine critical sectors.

Mining, Agriculture and Oil & Gas are among these high priority sectors, along with Brewers and Apparel, Accessories and Luxury Goods.

The report draws on the science and analyses of the online ENCORE tool – Exploring Natural Capital Opportunities, Risks and Exposure – developed jointly by the NCFA and UNEP-WCMC.

Biodiversity is fundamental to economic health

US$44 trillion of economic value generation, more than half the world’s GDP, is moderately or highly dependent on nature, yet in less than three generations, human-caused global change has accelerated sharply, altering almost 75% of our planet’s surface. The continued degradation of these vital ecosystem services represents an annual loss of at least US$479 billion per year.

Corli Pretorius, Deputy Director, UNEP-WCMC, says: “The COVID-19 pandemic is a stark reminder of our exposure to and the risks created by the loss of nature. We urgently need all sectors of the economy to create better outcomes for people and nature. This report shows that banks, investors and insurers have a crucial part to play too. By making nature part of its decisions, and setting ambitious targets for biodiversity, the financial sector can reduce its risks and help to build a more resilient economy.”

Policy frameworks, such as the Post-2020 Global Biodiversity Framework, due to be agreed under the Convention on Biological Diversity in 2021, and the European Union’s 2030 Biodiversity Strategy, are placing biodiversity at the heart of a post-pandemic economic recovery. But these policy goals will be impossible to achieve unless financial institutions consider biodiversity, and urgently set targets to halt, or better reverse, current rates of ecosystem degradation and species loss.

While many financial institutions have set climate targets in recent years, few have begun to address the critical issue of biodiversity loss. This may be set to change. The European Commission, for example, is currently reviewing the reporting obligations of businesses under the Non-Financial Reporting Directive, with a view to potentially mandating new disclosures on biodiversity.

A step by step to target-setting

Today’s report explores how financial institutions can contribute to halting biodiversity loss. It sets out the nine priority sectors with large financial flows and major potential dependencies or impacts on biodiversity. This enables financial institutions to gain an understanding of where the highest risks lie within their current activities to inform their target setting.

A step-by-step guide outlines approaches to target-setting on biodiversity based on an initial analysis of the nine priority sectors, with example targets including “no net loss” or “net gain” of biodiversity. These can be implemented through measures such as investing in ecosystem restoration, biodiversity conservation, and the sustainable use of natural resources.

This approach enables financial institutions to reduce risk exposure and create a more resilient global economy.

This report will be followed later this year by a ground-breaking biodiversity module in ENCORE, currently under development in consultation with 27 financial institutions. The module will enable banks, insurers and investors to assess whether their portfolios are in alignment with global biodiversity goals.

Read the full report here.

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