Why finance matters in the biodiversity crisis
When it comes to biodiversity, finance matters for a number of reasons.
Last week we wrote an article about net zero and to reach that target, we must drastically reduce emissions and stimulate nature to absorb more by restoring biodiversity – through afforestation and reforestation.
To reverse the sharp decline, we have and continue to see in biodiversity by 2030, we need to address a funding gap of US$825 billion per year (this figure comes from ‘Financing Nature: Closing the Global Biodiversity Financing Gap’ by The Nature Conservancy).
Government and philanthropy alone cannot bridge that gap. Finance must therefore play its part.
Parties to the Convention on Biological Diversity are seeking to establish a Global Biodiversity Framework (GBF) which will set out a vision for worldwide action to preserve and protect nature.
The UN’s Principles for Responsible Investment identified several of the GBF targets which are of relevance to investors:
Target 15 expects all businesses to: a) assess and report on their dependencies and impacts on biodiversity, b) reduce negative impacts by at least half, and c) increase positive impacts. The Task Force on Nature-related Financial Disclosures (TNFD) will facilitate the implementation of this target. In Australia, the Responsible Investment Association of Australia is running a local programme around TNFD.
Target 14 brings financial institutions under the banner of the GBF with its goal of integrating biodiversity into all sectors of the economy.
They also note that Target 7 which about the reduction of pollution with specific mention of pesticides and plastic waste and Target 10 which focuses on agriculture, aquaculture and forestry to be sustainably managed are both highly relevant to investees.
In October at the first of a two-part Convention on Biological Diversity COP meeting, a financial sector guide to biodiversity to the Convention on Biodiversity was also launched.
Expect to see more action on finance for nature as we move towards a second meeting of the parties in April 2022.
This article is by Claire Hanratty, Impact and Evaluation Advisor at GoodWolf. Claire is a member of the Responsible Investment Association of Australasia, sitting on their Working Group on Nature. It is part of a series on COP26.