On September 1st 2021, the Green Finance & Development Center at FISF Fudan University Shanghai, the Centre for Sustainable Finance at SOAS University of London and IIGF at Central University of Finance and Economics in Beijing co-organized a high-level panel on biodiversity finance as part of the 4th annual conference of the Global Research Alliance for Sustainable Finance and Investment (GRASFI). During the panel, globally leading experts from the financial sector and from the natural science were discussing biodiversity finance as the new frontier of green finance with a view on biodiversity risk, reporting standards, data.
The panelists included:
- Odile Conchou, Secretariat of the Convention of Biological Diversity, a UN Environment Programme.
- Marianne Haahr, Executive Director of the Green Digital Finance Alliance.
- Alice Hughes, Associate professor based at Chinese Academy of Sciences in Yunnan Province, Southern China.
- Robert-Alxandre Poujade, ESG analyst at BNP Paribas Asset Management.
- Simon Zadek, Chair of Finance for Biodiversity(F4B) Initiative and Co-chair of the Informal Technical Expert Group (ITEG) of Taskforce on Nature-related Financial Disclosures (TNFD).
- Tenke Zoltani, Senior Impact Advisor to Zoscales Partners and Founder of the ESG and impact advisory firm Better Finance.
The panel was moderated by
- Dr. Christoph Nedopil Wang, Associate Professor in Economics and Director of the Green Finance and Development Center at Fudan University.
- Ulrich Volz, Professor in Economics at SOAS University of London and Founding Director of the SOAS Centre for Sustainable Finance.
You can watch the whole panel here. Here is a summary of some of the main points.
- Biodiversity loss is accelerating and putting nature and economies at risk. Global finance needs to recognize biodiversity as a key topic, in addition to risks from climate change.
- Integrating biodiversity into financial decision-making might currently seem more complex compared to climate change. This should not stop but motivate the financial sector to accelerate an integration of finance and biodiversity science to prevent further biodiversity loss.
- Financial sector players and biodiversity researchers need to cooperate to improve biodiversity finance outcomes, even if this process might not come easy.
- The terminology “nature positive” is not yet clear for the financial sector, with the financial sector being in need of a more structured formula to identify whether their investments would be improving nature’s condition.
- Instead of asking if there should be a need to monitor biodiversity, we should question how we can improve monitoring process. There is a need to use creative methods to attract investors to help them understand the benefits of green investments.
- Technological solution could potentially help to alleviate challenges in monitoring nature loss. Paired with more regulations the data could drive financial decision-making towards specific biodiversity targets .
Summary of the Biodiversity Finance Panel
Just before the IUCN (International Union for Conservation of Nature) World Conservation Congress in Marseille from September 3rd to 11th 2021 and the CDB COP-15 (Convention on Biological Diversity) in Kunming from October 11th to October 24th 2021, the panel on September 1, 2021 focused on issues of biodiversity finance, as a main pillar of addressing the loss of biodiversity.
All panelists agreed that that it is a critical time to discuss how to address biodiversity concerns with finance. Dr. Christoph Nedopil opened the panel discussion with the two main perspectives that the panel will be exploring:
- What is the impact of financial decision makers on the financial decisions on biodiversity and therefore, what is the responsibility of financial makers to protect biodiversity?
- What is the risk of biodiversity loss and the opportunities for biodiversity protection or financial decision makers?
Ulrich Volz asked the first question of the panel: “Critics in biodiversity finance say that it is all about monitoring nature but what is your response to this?”
Simon Zadek and Alice Hughes highlighted that instead of asking whether we should be monitoring nature, we should ask how we should monitor nature in the most effective way. Simon further highlighted that there is a need to find proper governance. He concluded that when addressing climate or nature issues we must know “how we build governance model [and] ensure they align with their governance-purposes”.
Tenke Zoltani highlighted that we need to ensure innovative revenue streams that would remain appealing to the investors to protect nature. For example, if we use flagship animals, such as Rhinos, and create a Rhino bond where financial values could be allocated towards the conservation of the Rhino species, this form of creative marketing would allow investors to understand connections between these green bonds with biodiversity conservation.
Ulrich Volz’s second question was “if you want finance to take this course on board, we need to have the right incentives. So, do we have the right incentives for nature positive finance in the large scale? Or do we need to make sure or create that through other governance mechanisms ?”
Robert Poujade highlighted in his response that through a financial institutions’ perspective, nature positive has not been truly defined yet. He sees that there is not yet an instrument or sufficient data to define nature positive. The only two tools that are currently being addressed remains to be nature negative and nature neutral. Therefore, in order to truly suggest a nature positive impact, he suggests to create a framework that could be able to use empirical results to evaluate nature positive-impacts. If the concept of nature positive is not defined properly, green-washing would be a great concern.
Marianne Haahr further highlighted that technology would be able to facilitate the process in defining nature positive impact. If there is a way to set a neutral target and create a geo-location, with open-sources, technology would be able to create a solution where nature positive investments could be tracked.
Alice Hughes highlighted that the major concern in technology or any form of solution in defining nature positive is that specific terms, such as “forest” may be controversial. The process of addressing biodiversity concerns between business and science may be extremely complex. Simon Zadek concluded the discussion with a final opinion about the two disciplines, underlining that “scientific biodiversity community favors complexity and finance favors simplicity”. Therefore, in order to truly define and find the best of two worlds, there needs to be a “highly intellectual complex system” that would enable the two disciplines to truly work together.
The next part of the panel invited questions from the audience. The first question was “What is your view of coordinating stakeholder on their development of technology required to operate business activates of biodiversity loss. How can government and other stakeholders speed up [research and development in biodiversity with] link and data technology? In addition, what tools are available for scientist to use and what data providers are able to use to help us speed up our research?”
Marianne Haahrexplained that much data on biodiversity has already been made available. However, the use of these data and the data localization policies remain to be an issue. There is some regulatory friction that needs to be resolved.
In addition to that concern, Simon Zadek added that “data transformation is already happening and it is expected that in the next five years”. The data gap that we are suffering from today, would slowly become less of an issue in future. Thus, the challenge would be “how to ensure that the data isn’t just going to be appearing on Bloomberg Terminal, but become accessible for all the different actors who are responding to biodiversity challenge”.
Alice Hughes and Robert Poujade both concluded that data transformation is happening and that it’s all about how we use these huge amounts of data in the future. Robert Poujade ended that blending financial and scientific data together could potentially give us new strategies and partnerships that would help us think of new methods to improve biodiversity challenges.
The closing point commonly made by the panelists was the urgent need to recognize the dependence of our economy on nature. In order to improve biodiversity conditions, we must find the best way to ensure that we are making financially sustainable decisions. Furthermore, we should see that having great amount of data would be beneficial for the biodiversity- finance integration in the future. With more biodiversity and data accessibility, biodiversity concerns will be able to be addressed globally. As Tenke Zoltani has mentioned, “if data becomes accessible, so will the investors”.