The UN Biodiversity Conference in Montreal, also known as COP15, could do for biodiversity what the 2015 Paris Agreement did for climate with its decision: Put the issue firmly on the agenda for businesses, policymakers and investors, writes U.S. asset manager Fidelity.
After about two weeks of negotiations, participants at the United Nations World Summit on Nature in Montreal, Canada, agreed on a final declaration. The 200 or so countries involved set u.a. on the goal of putting at least 30% of the world's land and marine areas under protection by 2030. They also want to spend more money on biodiversity conservation. The UN Biodiversity Conference could do for biodiversity what the 2015 Paris Agreement did for climate, points out Jenn-Hui Tan, global head of stewardship and sustainable investing at Fidelity.
The concept of "nature positive Is on everyone's lips, the idea that the true economic value of nature should be taken into account and that we should go beyond mere damage limitation. One of the goals in Montreal was to agree on standards that promote nature-friendly capital allocation. The ambitious goal: reverse biodiversity loss by 2030 and restore natural ecosystems by 2050.
Even more difficult than the fight against climate change
Although the conferees have now agreed on this goal, it is not an easy undertaking: Biodiversity, which refers to the variety and abundance of life on Earth, is an even tougher nut to crack than climate change, Jenn-Hui Tan of Fidelity notes. For example, available assessment tools are less developed than in other areas of sustainability. There, investors who want to compare the climate impact of projects or portfolios can, for example, use the now widely used metric "CO2 equivalent." use.
There is no comparable method for biodiversity. While emissions to the atmosphere contribute to climate change regardless of where they occur, the impacts of human interactions with nature vary greatly from place to place. What is devastating in one place may have minimal impact elsewhere. Each ecosystem has its own combination of soils, minerals, water, climatic conditions and other factors that make it difficult to develop universally applicable metrics.
Comparable data must be available
"Still, a global disclosure standard is possible and would be a big improvement,", said the Fidelity expert ahead of the conference. Currently, one company may report the number of hectares of land it protects, while another in the same industry may report how many tree species it plants. "Figuring out which company is doing more for nature is a difficult task", says Jenn-Hui Tan.
Requiring similar companies to disclose comparable information would be an important step in unlocking the financial resources needed to combat the threat to biodiversity. The same applies to the international alignment of standards and, where possible, the integration of new regulations into existing climate standards. After all, we are talking about one and the same planet.
The example of France
French law now requires financial institutions to disclose their risks and impacts related to biodiversity as well as those related to climate. At the international level, the Taskforce for Nature-related Financial Disclosures (TNFD), modeled on the former Taskforce for Climate-related Financial Disclosures (TCFD), is scheduled for completion in 2023. TCFD reporting is already mandatory for some activities in the UK and Switzerland, and is set to be introduced in other countries. The same is likely to happen in time with the TNFD.
According to the World Economic Forum, about half of the world's GDP is dependent on nature to a low or high degree. "Either we change our way of life to preserve natural capital, or we consume it and have to change our way of life anyway.
Giving investors tools such as the right data to act on biodiversity is an important step, Fidelity's Sustainable Investing chief advises. Montreal has laid the foundation for this work, the "backbreaking work" starts now.