26 April, 2023 / Research
How to align investments with the Global Biodiversity Framework
By Laura Miller
UNEP FI, PRI and FfB provide guidance and advice
Investors should back innovative financial solutions to address biodiversity risks and help mobilise the required $200bn per year by 2030 to enact positive change, according to a report from the United Nations Environment Programme Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI) and the Finance for Biodiversity (FfB) Foundation.
The report, Stepping up on biodiversity: What the Kunming-Montreal Global Biodiversity Framework means for responsible investors, provides guidance and advice specifically for investors looking to align their activities with the goals of the Global Biodiversity Framework (GBF), and supports investors in managing risks associated with the biodiversity crisis and preparing for anticipated policy developments.
In December 2022, at the 15th Conference of the Parties to the Convention on Biological Diversity (COP15), 196 countries adopted the GBF, which provides a framework to achieve its overarching aim to halt and reverse nature loss by 2030.
In addition to investing in innovative financial solutions, the technical report recommends integrating biodiversity into investment decision-making and assessing and disclosing nature-related dependencies, impacts, risks and opportunities in line with the GBF targets.
The long-term vision of the GBF is that, “[by] 2050, biodiversity is valued, conserved, restored and widely used, maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people”.
It is underpinned by four goals with direct relevance to the private sector.
These include halting and reversing biodiversity loss, including both ecosystem degradation and species extinction, as the ‘apex goal’ of the GBF. “Reducing harmful financial flows will have the greatest overall contribution to achieving the GBF’s objectives,” the report stated.
Financial institutions should also, the report added, embed nature into their decision-making processes, internalising environmental externalities and seeking opportunities to invest in the maintenance of land and seascapes that they and their investee companies source from.
Ensuring proper stakeholder engagement is applied throughout the life of financed activities and across supply chains, is another part of the goals, and that free, prior and informed consent principles are applied when Indigenous Peoples are affected.
Financial institutions could also promote the role of Indigenous Peoples and local communities in nature-related enterprises and as project proponents, as less than 1% of nature finance currently reaches them.
Finally, the report wants adequate financial resources made available to implement the GBF, particularly for developing countries, and that the $700bn per year finance gap for biodiversity is progressively closed, and all financial flows—public and private—are aligned to deliver the objectives of the GBF.
Investors who align their activities with the goals of the GBF will be able to better manage physical and transition risks related to nature, and to seize opportunities linked to the shift towards nature-positive economies, according to the report.
Bridging science and markets, UNEP FI has been the gateway for financial institutions, policymakers and leading researchers to take practical, science-based action on international frameworks such as the GBF.
Prior to COP15, UNEP FI and PRI issued a statement signed by 150 financial institutions, including banks, investors and insurers, representing more than $24trn in assets under management, calling for the adoption of an ambitious framework.
UNEP FI also works with banks, insurers and investors to accelerate nature action in the financial industry through initiatives such as pilots for the Taskforce on Nature-related Financial Disclosures, and the Principles for Responsible Banking Biodiversity Community, a group of signatories learning to support biodiversity protection and restoration.
A part of the Mark Allen Group.