A framework to help asset managers and asset owners set targets for nature has been launched by the Finance for Biodiversity Foundation (FfB).
The document sets out a guide for how investors can achieve ‘initiation targets’ to analyse their exposure to nature-related impacts, risks, and dependencies.
Financial institutions should set these by the end of 2024 with the aim of completing them no later than 2026, FfB said in guidance developed in collaboration with UN Environment Programme Finance Initiative (UNEP FI) and Science Based Targets Network (SBTN).
Although SBTN has published target guidance for corporations on nature, it has not done so for financial institutions. The new framework follows UNEP FI launching nature target-setting guidance for banks last week.
The 153 signatories of the FfB pledge, which includes some of the biggest names in finance, have committed to disclosing targets to reduce negative impacts on biodiversity by 2024 at the latest.
Charlotte Apps, co-chair of the FfB target-setting working group and ESG analyst at investor Fidelity International, said the framework should help institutions build on their climate capacity “to really start to integrate nature into our capital allocation decisions”.
The release sets out how finance can align its activities with the key goals from the final agreement at COP15 last December – an event overseen by the Convention on Biological Diversity (CBD) – she said during a launch webinar.
FfB also requested feedback on draft guidance for setting sectoral, engagement and portfolio-level targets for asset managers and owners, to be achieved by 2030.
The proposals only covered asset classes of listed equity and corporate bonds. Next year, more guidance will be published addressing:
- 10 priority sectors to inform engagement targets
- Aggregating sectoral and engagement targets into portfolio coverage targets
- Target-setting for sovereign issuers
- Positive impact targets
- Other asset classes
Targets should continually evolve with regular increases of ambition starting with a reassessment after three years, and subsequent reviews at least every five years, FfB said.
David Cooper, acting executive secretary of the secretariat of the CBD, praised the framework for providing “pragmatic guidance that enables financial institutions to set targets for action, and to initiate the transitions that will be needed towards a more nature positive future”.
“We have only six years to 2030″ to meet some of the biodiversity goals in the COP15 agreement so “the time to act, or to begin acting, is now”, Cooper said.
By Thomas Cox – t.cox@carbon-pulse.com
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