Biodiversity for Investors, Where to Start

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    Stockholm (NordSIP) – It has been a few months since the Kunming-Montreal Global Biodiversity Framework (GBF) was officially adopted by 196 countries at the 15th Conference of the Parties to the Convention on Biological Diversity (COP15). Translating the broad goals and vague formulations of the GBF into concrete actions relevant to different market participants, however, takes time and dedicated effort.

    For the investment community, a welcome instalment in this direction is a new report co-authored by the United Nations Environment Programme Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI), and the Finance for Biodiversity (FfB) Foundation, launched on 21 April, Stepping up on biodiversity: What the Kunming-Montreal Global Biodiversity Framework means for responsible investors. The authors of the report seek to provide guidance and advice specifically for investors looking to align their activities with the goals of the GBF.

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    “We hope this report will help investors jumpstart their action to understand, manage, and act upon nature-related risks and opportunities with the urgency required for us to halt and reverse biodiversity loss by 2030,” write the leaders of the three organisations, David Atkin, CEO of PRI, Anita de Horde, Executive Director of FfB, and Eric Usher, Head of UNEP FI in the foreword. A jumpstart may indeed be required, given that signatory countries are rapidly moving to develop national plans to ensure they can meet the short timeframe of the GBF’s overall objectives.

    The authors recommend three broad actions that investors can take to address risks and opportunities associated with the biodiversity crisis, to build resilience and long‐term value for themselves and their underlying portfolios, and to prepare for anticipated policy and market developments as governments look to implement the GBF:

    • Integrate biodiversity into investment decision-making, recognising the importance of biodiversity within policy, strategy, governance, risk management, operations, and targets, and encourage action among clients, peers and policymakers; to catalyse alignment with the GBF.
    • Invest in innovative financial solutions to help mobilise the USD 200 billion per year needed to meet the GBF’s objective and scale up new investment opportunities. These solutions include blended finance; impact funds; payments for ecosystem services; green bonds; and biodiversity credits.
    • Disclose nature-related dependencies, impacts, risks and opportunities, engaging with voluntary initiatives such as the Taskforce on Nature-related Financial Disclosures (TNFD) and anticipating likely regulatory developments to improve investment decision-making.

    Investors looking for further guidance on aligning their portfolios with the goals of the GBF can also find a helpful summary of other available resources at the end of the report. Organisations such as ENCORE, IBAT, WWF Risk Filter Suite, and UNEP-WCMC Nature Risk Profile have already developed tools for screening and assessing investor portfolios for biodiversity risks. By getting involved in relevant initiatives, such as the Finance for Biodiversity Foundation, the TNFD, and Science-based Targets Network, they can also benefit from the knowledge sharing that is invaluable at this implementation stage.

    “Responsible investors have the opportunity to take immediate and ambitious action to align their operations and portfolios with the GBF and prepare for anticipated policy developments,” assert the authors of the report.

    Image courtesy of Anderele via Pixabay
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