The final report published on 2 February 2021 finds that the global financial system is critical to supporting a more sustainable engagement with nature. It calls for a financial system that channels financial investments towards economic activities that enhance our stock of natural assets and encourage sustainable consumption and production activities.
Peter Blom, chief executive officer of Triodos Bank N.V: “We greatly welcome this review and its unequivocal call for the finance sector to take a proactive approach to understanding and changing the impacts of investment decisions on nature and the vital ecosystems services that underpin all life on our planet. The decisions that the financial sector continue to make do not reflect todays reality, let alone the future we face. For too long we have taken from our natural assets, threatened biodiversity and destabilised environments and communities. If we do not act on the recommendations of the Dasgupta Review, we risk bankrupting our greatest asset.”
Triodos Bank aims for decisions around its loans and investments to not only consider reducing harm to biodiversity, but also regeneration. Its minimum standards currently exclude companies involved in deforestation, environmental pollution or pesticide production, for example. Much of what the bank finances, such organic food and farming, aims to stimulate biodiversity.
The Dasgupta Review says that financial actors must manage and mitigate the risks and uncertainty that result from unsustainable engagement with nature. Businesses and financial institutions are encouraged do this by accounting for dependencies and impacts on nature in their activities; and through the measurement and disclosure, not only of climate-related financial risks but nature-related financial risks too.
It calls for a set of global standards underpinned by credible, decision-grade data, which businesses and financial institutions can use to fully integrate nature-related considerations into their decision-making, and assess and disclose their use of, and impact on, nature.
Peter Blom says: “In order to measure and report on the financial sector’s impact on biodiversity, a common methodology is needed. That is why we have supported the work of the Partnership Biodiversity Accounting Financials (PBAF). This early collaboration between several Dutch financial institutions aims to find common ground that will help formulate business strategies that have a positive impact on biodiversity.”
The Partnership Biodiversity Accounting Financials (PBAF) aim to investigate how a bank or investor can contribute to the protection and sustainable use of biodiversity and how the impact of these investments can be calculated or measured. Financial institutions could use this knowledge to formulate investment policies that take biodiversity into account. The impact is calculated or measured for a number of cases of concrete investments in, for example, reforestation, forestry and landscape restoration. The goal of this work is to create a generally accepted and supported common foundation and methodology.
In 2020, Triodos Bank also became a signatory of the Finance for Biodiversity Pledge that calls upon world leaders to reverse nature loss this decade and commit to collaborating, engaging, assessing their own biodiversity impact, setting targets and reporting on biodiversity matters by 2024 at the latest. The signatories recognise the need to protect biodiversity and to reverse nature loss in this decade. The initiators of the pledge strongly encourage other financial institutions from all continents that are not yet involved with the pledge to also sign up to it.
Meanwhile in the UK, Triodos Bank has been pioneering work with partners to develop new investment approaches to involve private sector in environmental projects, helping to tackle climate change and restore nature. Connecting economic outcomes to investment in environmental restoration in this way could deliver benefits, in terms of carbon storage, air quality, flood management and human health, as well as enhancing biodiversity and wildlife habitats. You can read more about this work here.
The UN Biodiversity Conference (CBD COP 15) in May this year will provide a critical opportunity to advance this agenda.