ESG in ‘23: Protecting biodiversity

Biodiversity is in crisis, presenting one of the world’s biggest dangers, according to the World Economic Forum’s Global Risks Report 2022. Yet despite half of the world’s total GDP moderately or highly dependent on nature and its services, there is still insufficient understanding, or indeed acknowledgement, that everything in our world is interconnected and interdependent. 

Making peace with nature

This week marks the start of the UN biodiversity conference, COP15, in Montreal, where the UN’s environment chief has warned that “as far as biodiversity is concerned, we are at war with nature.” Inger Andersen goes on to say “we need to make peace with nature. Because nature is what sustains everything on Earth … the science is unequivocal”, advising that the resulting text of any agreement must address “the five horsemen of the biodiversity apocalypse: land-use change; overexploitation; pollution; the climate crisis; and the spread of invasive species.”

Over the course of the two week summit 196 governments need to agree on how to go about protecting and living in balance with ‘nature’ – animals, plants and ecosystems. As a key component for limiting global heating to the targeted 1.5C, the final outcome needs to include working out which environmental goals to prioritise, how environmental risk should be reported, and regulation around these activities. It is critical that whatever agreement is reached, its impact is akin to what the Paris Agreement did for climate change, complete with an actionable global framework. Andersen adds there should also be a proper accountability mechanism – similarly to how contributions that countries submit through the climate process are determined – if the world is to deliver on the commitments made.

“Nature needs to be thought of as an asset – and we invest in assets,” said Tony Goldner, executive director of the Taskforce on Nature-Related Financial Disclosures.
Committing to action

According to the U.N. Environment Programme, $384 billion will be needed each year for biodiversity-focused projects by 2025. And while an increasing number of companies say they consider biodiversity in their investments, a majority have yet to translate commitments on biodiversity to action, according to new data released just this week by CDP. According to the not-for-profit that runs the world’s environmental disclosure system for companies, nearly three-quarters (70 percent) of companies do not assess the impact of their value chain on biodiversity. 

Recent losses of biodiversity and associated ecosystem services already cost an estimated US$4-20 trillion per year and are likely to increase exponentially. It is vital for investors to understand the biodiversity-related risks and opportunities of their portfolios and redirect capital toward sustainable activities.

Through active ownership and engagement, companies can be encouraged to develop stronger governance, embrace good practices on nature-related financial disclosures, and promote circularity and more sustainable food and water systems.

To find out how SI Engage will help aid this dialogue, talk to us today!


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