A group of major global financial institutions have called on finance ministers to commit to significant biodiversity commitments. This is to ensure that the ‘alignment of public and private financial flows with an ambitious Global Biodiversity Framework’ is a firm position taken by their governments in the negotiations at COP15.
- Financial institutions are calling for the integration of nature-related risks and opportunities into decision-making at national level.
- The gap between humanity’s demands on nature and nature’s ability to supply is widening and threatens continued provision of the critical ecosystem services that underpin key economic sectors.
- Failure to address biodiversity loss will risk $$44 trillion in global value add (equivalent to half global GDP) in sectors dependent on nature.
It is widely understood that nature loss and climate change are interrelated and
neither crisis can be successfully resolved unless both are tackled together. But action on the ground so far has been limited.
June 2022 saw the release of Bending The Curve of Nature Loss, a report from the Coalition of Finance Ministers for Climate Action, demonstrating the urgent need for governments and regulators to address nature-related financial risks.
What is clear is that the economic transformation required to protect biodiversity and safeguard the natural systems that our economies and financial systems depend upon to function cannot be left to the voluntary actions of relatively few private actors.
Carole Laible, CEO of Domini Impact Investments, when announcing the call, said: ” On behalf of Finance for Biodiversity Pledge members, we are encouraging Finance Ministers to create the enabling policy environment needed to address the urgent biodiversity crisis, which can help unlock public and private capital at scale.”
What is COP15?
The second part of the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity (CBD), known as COP15, will be held between 9 and 17 December 2022 in Montreal, Canada.
At this meeting, the finalisation and adoption of a post-2020 Global Biodiversity Framework is expected. This framework is needed to halt and reverse nature loss worldwide and will replace the current biodiversity targets, the Aichi targets, which ended in 2020.
What do financial institutions want finance ministers to do?
The finance ministers are also being asked to implement the alignment of public and private financial flows with the goals and targets of the Global Biodiversity Framework.
The financial institutions encourage the ministers of finance to take concrete steps, such as setting disclosure regulations, requiring transformation pathways, integrating nature into regulatory frameworks, supporting central banks and financial supervisors, and creating economic incentives for businesses and the finance sector to incorporate nature into their decision making.
Who is calling for action?
Members of the Finance for Biodiversity Foundation include 103 financial institutions – representing 19 countries and over €14 trillion in assets – now signatories to the Finance for Biodiversity Pledge. This calls on global leaders to reverse nature loss and commit to protecting and restoring biodiversity through their finance activities and investments.
The foundation runs several working groups to stimulate collaborative action on biodiversity between financial institutions and has been an observer of the UN Convention of Biological Diversity (CBD) since 2021.
The co-leading financial institutions in the Public Policy Advocacy working group have been advocating for an ambitious GBF via participation in the Open-Ended Working Group meetings of the CBD in 2021 and 2022.
Jan-Erik Saugestad, CEO Storebrand Asset Management said: “All of nature’s alarm systems are flashing warnings of an imminent catastrophe: a permanent loss of the biodiversity and ecosystem services that support human life and our economies. The economic transformation needed to decisively change our course cannot be left to the voluntary actions of few private actors alone.
In the end, whether financial institutions see the need for action on biodiversity or not, little is likely to change without significant commitment for action from governments. Investors are always clear that they like to see clarity and a firm direction of channel before investing in major changes to their operational approaches.