The compelling reason why the financial sector must invest in boosting Earth’s biodiversity 

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum./

Author: Ribhu Ranjan Barua‪, Project Lead, Biodiversity Finance Initiative, World Economic Forum

• The Earth is in the midst of a biodiversity crisis and this fall in biodiversity threatens not only the environment, but also the global economy.
• With the world’s economies so intrinsically linked to the health of the environment, there are huge opportunities for financial investment to support projects designed to restore Earth’s biodiversity.
• As we celebrate the International Day for Biological Diversity on 22, five global leaders share their views on how to consider the impact and dependencies on nature and biodiversity when it comes to investment decision-making.

The world is experiencing a catastrophic fall in biodiversity. Not only is this an environmental disaster, it can also lead to financial ruin; $44 trillion of economic value is moderately or highly dependent on nature and its related services.

All is not lost, however. With the world’s economies so intrinsically linked to the health of the environment, there are huge opportunities for financial investment from both the public and private sectors to support projects designed to restore Earth’s biodiversity.

Nature

What is the World Economic Forum doing about nature?

Biodiversity loss and climate change are occurring at unprecedented rates, threatening humanity’s very survival. Nature is in crisis, but there is hope. Investing in nature can not only increase our resilience to socioeconomic and environmental shocks, but it can help societies thrive.

There is strong recognition within the Forum that the future must be net-zero and nature-positive. The Nature Action Agenda initiative, within the Centre for Nature and Climate, is an inclusive, multistakeholder movement catalysing economic action to halt biodiversity loss by 2030.

The Nature Action Agenda is enabling business and policy action by:

Building a knowledge base to make a compelling economic and business case for safeguarding nature, showcasing solutions and bolstering research through the publication of the New Nature Economy Reports and impactful communications.

Catalysing leadership for nature-positive transitions through multi-stakeholder communities such as Champions for Nature that takes a leading role in shaping the net-zero, nature-positive agenda on the global stage.

Scaling up solutions in priority socio-economic systems through BiodiverCities by 2030, turning cities into engines of nature-positive development; Financing for Nature, unlocking financial resources through innovative mechanisms such as high-integrity Biodiversity Credits Market; and Sector Transitions to Nature Positive, accelerating sector-specific priority actions to reduce impacts and unlock opportunities.

Supporting an enabling environment by ensuring implementation of the Kunming-Montreal Global Biodiversity Framework and mobilizing business voices calling for ambitious policy actions in collaboration with Business for Nature.

Nature-based and derived solutions provide a host of compelling investment opportunities that could supercharge a positive growth trajectory for the environment and the economy going forward. The ratification of the Global Biodiversity Framework at COP15 in Montreal in December 2022 and the release of the Taskforce on Nature-Related Financial Disclosures (TNFD) beta versions provide a solid starting point and a much-needed fillip for meaningful action.

Progress on multiple biodiversity impact assessment tools and environmental, social and governance (ESG) reporting standards enable better consideration of nature and biodiversity by financial institutions.

Both public and private capital must work in collaborative and innovative ways to finance biodiversity and nature-positive business models. Here, five global leaders from the private and public sectors, including academia, are filmed sharing their views on how to consider the impact and dependencies on nature and biodiversity when it comes to investment decision-making.

‘The future is sustainable or there is no future’

Andre Hoffman, Chairman, Massellaz

We have to accept the fact that the impact of business on the planet will only be positive if we start worrying about other people than shareholders. The future is sustainable or there is no future.

The future is based on us continuing to use the resources at our disposal so that we can continue to grow collectively.

Our current use of nature is: extract, develop, consume and give back in the form of pollution. That’s not the way to go forward

If we do not succeed in the next ten years in finding the right solution, which will deal with the climate crisis and the loss of nature, our humanity and our survival is at risk.

‘A new accounting system’

Bernardus J. Marttin, Member of the Managing Board, Rabobank

We are going to have to invent a system where we are going to take the long cost of every decision into the immediate decision.

In effect, we need a new accounting system that will give us the results of our impact on natural capital, social capital and on human capital.

If we at the time of the decision-making we are able to integrate these three different capitals and their interdependencies, we should be able to create value, which is not only a financial value, but also a general contribution to society.

‘We have to act’

Leslie Johnston, CEO, Laudes Foundation

We’re not just talking about climate. We’re not just talking about inequality. We’re talking about a biodiversity crisis. We’re talking about a nature crisis. We’re talking about a food crisis as a geopolitical situation changes around us.

So, we have to act and we have to do it with a systems lens.

The biggest misconception about philanthropy in the sustainability space is that either it’s a silver bullet or it’s going to solve the issues on its own

And that’s where I think there is a big role for foundations to step up, come on board and work with us to try to address this crisis before it gets to the point of no return.

‘Diversify your portfolio of ideas’

Ronald Wuijster, CEO, APG Asset Management

If you look at biodiversity, you can approach it from very different perspectives. You can approach it from a DNA level, from a species level, from a landscapes level, from a country level, from even a continent level.

You already see signals, degradations of the number of species, land degradation, water problems, water purity problems

So, there are so many perspectives that you need to integrate, that with the investment knowledge we have, I think you should always try to diversify your portfolio of ideas.

‘More active intervention’

Professor Joseph E. Stiglitz, School of International and Public Affairs, Columbia University

Many of the issues of biodiversity are intimately related to those of climate change. Much of the loss of biodiversity is associated with deforestation and that, of course, has a very large impact on greenhouse gas emissions.

If we did more to protect our forests, to encourage sustainable farming, I think we’d actually do a great deal for protecting biodiversity. It would be at least a very good start.

We are now just beginning the exercise of figuring out the appropriate ways for pricing biodiversity

You need government investment, you need regulation. You need more active intervention and partnership between government, private sector, civil society and a whole ecology of institutional arrangements.