Align project: How is finance sector working on integrating biodiversity into natural capital

In the framework of Align project (Aligning accounting approaches for nature,). at the beginning of June took place an open webinar on “Integrating biodiversity into natural capital”, where representatives from ASN Bank, BNP Paribas Asset Management and ING Group participated sharing their experience on how they are addressing risks related to natural capital in financial decisions.

During the online seminar, Fiona Place, Associate Director of the Capitals Coalitionexplained to the audience that Align shares the common ambition which is that the value of nature has to be embedded within economic thinking. Currently the way that businesses measure and report their impact and dependencies on natura capital is limited, and there is a growing demand for changes in corporate reporting towards a multidimensional view covering natural, social, human & non-reporting. In parallel there is pressure from other stakeholders such us international policy drivers (CBD, EU Green Deal, EU Biodiversity Strategy), finance (EU Action Plan on Sustainable Finance, TNFD, IFC), sustainability reporting organizations (GRI, CDP), and consumers demanding increased transparency.

The Align project has been established with the aim of reaching alignment on existing measurement approaches to improve clarity and build consensus on how both business and financial institutions can measure and report their performance, and to develop a generally accepted way for businesses and financial institutions to understand their relationship with nature to lead to more informed decisions and positive impacts on biodiversity. And the project will build from and link to existing initiatives and networks within the business and finance communities and will bring together technical developers of corporate measurement approaches, guided by businesses and finance needs and learned from applying these in practice. It also seeks to complement policies developed within the European Commission and be opened to influencing and to be influenced by the these. The work will not be addressing a specific piece of legislation at this moment.

Marine de Bazelarie, Group Advisor on Natural Capital of HSBC, shared the preliminary work that her company is developing linked to HSBC’s recognition of natural capital. 

“The work done in the last years on carbon schemes has led us to better understand the natural capital depletion issues, which has translated into the decision of assessing their business strategy to incorporate these aspects. The new sustainability strategy was launched in October 2020, and it includes the objectives of aligning their finance emissions to achieve net zero by 2050 or sooner and be net zero in their operations and supply chain by 2030 or sooner. There is no way to achieve both objectives without considering nature. This also means to collaborate with external parties to better understand how to embed nature into our activities from the risk’s perspective and from the opportunity point of view.”

Marine de Bazelarie, Group Advisor on Natural Capital of HSBC

“As a global bank with billions flowing, we have a huge opportunity and a responsibility to make an impact for the better through our financing decisions. We are working with a systemic approach connecting the different pieces that are already in play and strengthening them and developing new ones. Since 2018, biodiversity is included in our environmental and social risks policy framework, in which we disclose our activities and the value of ecosystems, and we have increased due diligence in high impact sectors. In our banking domain we are also looking for opportunities such us sustainability linked loans which includes criteria for biodiversity: a KPI on increased traceability of soft commodities, which is a first step to minimizing risks for deforestation, for example.

Global Sustainability Advisor of ING Group

Rodermon also explained that they have also begun to set targets for climate alignment taking into consideration that climate change is one of the main drivers of biodiversity loss or decline. They also have some thematic biodiversity targets, for instance, responsible soy and palm oil and  are disclosing biodiversity-related aspects. This year ING Group has published a report that jointly integrates climate and biodiversity because both aspects are very interlinked, but more and more they are asking themselves more questions as they are developing their understanding of biodiversity.  Some of these questions are: where the risks related to biodiversity are in ING portfolio? To what extent is their portfolio dependent on biodiversity? Where should they focus their efforts? They are aware that they “really need data and insights and look at biodiversity measurement approaches to get more answers.”

“There are many reasons why we should focus on biodiversity. For ASN Bank is due to our urgent and the motivation coming from reports by central banks showing what are the financial risks for our sector, and of course another reason to start working in this topic is the planetary boundaries, which show that we are already in the high-risk zone for genetic diversity. This topic is gaining attention among the public, but for long time climate has been the core focus, so it’s good that now the focus is also on biodiversity and looking to trade-offs and dependencies between these two.

Roel Nozeman, Senior Advisor Biodiversity of ASN Bank

Nozeman assured that SDGs are another key motivation to work on biodiversity as if “we want to achieve the Sustainable Development Goals, we need to keep the natural resources base in good condition.” He recalled that, many reports launched in the last years have also contributed to put biodiversity higher and higher in the agenda, such as the Global Risks Report by  World Economic Forum, the report from the Dutch Central Bank Indebted to Nature is a quite important step as it looks at the dependency of the Dutch financial sector investments from natural capital. You can read on the document that one third of the investments are highly or very highly dependent on biodiversity, and more recently the ‘The Dasgupta Review on the Economics of Biodiversity is a crucial step and helps feed the knowledge of governments so Ministers of Finance won’t ignore this issue anymore.”  

Watch the video below for further information about the practices developed by panelists to mainstream natural capital management accounting practices and biodiversity measurement in their respective organizations, and the interesting open discussions held by Align coordinators (Joshua Berger, Head of Biodiversity Footprint Department of CDC Biodiversité, Wijnand Broer, partner of CREM, Johan Lammerant, Lead Expert, Natural Capital & Biodiversity of Arcadis, and Yann Verstraeten, Senior Consultant of ICF), speakers, and participants.

Align is funded by the European Union and led by WCMC EuropeCapitals CoalitionArcadisICF and UNEP-WCMC, and is being supported by a series of contractors: CDC Biodiversité, CREM, Ecoacsa, eftec, Global Balance and Pré.

 

To find out more about the different opportunities for engagement and the project’s objectives, download the information flyer.

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