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October 10, 2023

Climate and nature impacts should be considered jointly, says new study

Rewinding on the Belgium-Netherlands border. The signatories of the Finance for Biodiversity Foundation have all pledged to reverse nature loss in their lending and investments activities. (Photo: Ksenia Kuleshova/Bloomberg)
Rewinding on the Belgium-Netherlands border. The signatories of the Finance for Biodiversity Foundation have all pledged to reverse nature loss in their lending and investments activities. (Photo: Ksenia Kuleshova/Bloomberg)

Supporting economic development without considering climate change and biodiversity loss makes financial institutions highly vulnerable to both, says research from the Finance for Biodiversity Foundation

The Finance for Biodiversity Foundation has warned in a new paper that championing economic development while ignoring the link between climate change and biodiversity loss will increase the risks for financial institutions.

All signatories of the foundation – the majority of them Europe-based asset managers – have signed a pledge to reverse nature loss in their lending and investments activities. The foundation counts 140 signatories across 23 countries, representing €19.7tn in assets under management, and says it is set to expand further by the end of the year.

Anita de Horde, executive director at the foundation, tells Sustainable Views: “We have a few large and ambitious private banks that signed the Finance for Biodiversity Pledge, like LGT Private Banking, Rabobank and UniCredit. But for most financial institutions, biodiversity is a new topic so it will take a while before all large banks can publicly commit to nature actions.” 

The paper – which is the authors say is written by financial institutions for financial institutions – aims to provide insurers, banks, asset owners and asset managers with the tools to better comprehend the trade-offs and synergies between climate action and nature action.

The research is based on four pillars: that climate change is one of the direct drivers of nature loss; that biodiversity conservation is necessary for climate action; that biodiversity solutions can, however, also impact climate negatively; and that climate action can also affect nature negatively.

It then identifies some investment and lending solutions that are considered essential to tackle the climate and biodiversity crises jointly. These include agricultural solutions, nature-based solutions, alternative energy sources, and the circular economy.

The report concludes with five key recommendations for financial institutions to promote both climate and nature in their financing solutions:

  • Finance synergy-generating solutions by supporting R&D, start-ups and innovation;
  • Prioritise sectors with a positive impact on both biodiversity and climate;
  • Engage with companies on the joint topics by leveraging existing frameworks such as the Science Based Targets initiative and Climate Action 100+;
  • Set up sector policies and targets;
  • Fully integrate biodiversity topics into climate targets, policy and reporting.

You can read the paper here.

A service from the Financial Times