The Finance for Biodiversity Foundation (FfB) has released a set of recommendations for policymakers to align financial flows with the Kunming-Montreal Global Biodiversity Framework (GBF).
The guidelines, developed by its Public Policy Advocacy working group, encompassed a wide range of topics, including demanding nature-related assessments for companies and financial institutions, and boosting the engagement of central banks and supervisors.
“[FfB] asks governments to take a holistic, economy-wide approach by setting clear boundaries and promoting innovation in the most impactful sectors on nature, like the food sector, chemicals, and mining, through policy tools such as regulation, tax reform, and subsidies,” the paper said.
“Such governmental guidance enables the private sector to divest from harmful activities and redirect investments towards innovative solutions within specific sectors that can support the restoration, conservation, and sustainable use of nature.”
FOUR STEPS
As countries must submit National Biodiversity Strategies and Action Plans (NBSAPs) and National Biodiversity Finance Plans (NBFPs) ahead of the next UN biodiversity summit, FfB claimed that the role of the private sector in tackling biodiversity loss should be clearly framed in these plans.
To do so, the paper presented four suggestions to governments and regulators aligned with several GBF targets:
- Require companies and financial institutions to assess, monitor, and disclose their nature-related risks, impacts, dependencies, and opportunities (target 15).
- Mandate nature transition plans, based on sectoral transformation pathways, and foster collaborative commitments (goal D and target 14).
- Integrate nature in central banks policies (goal D and target 14).
- Create economic incentives for businesses and financial institutions to maximise the mobilisation of private finance (target 18 and target 19).
According to the FfB, the implementation of target 15, which ensures disclosure of nature-related impacts, dependencies, and risks by all large and transnational companies and financial institutions, needs to be complemented by policy measures and transformative action across many sectors of the economy.
Governments should promote nature-related disclosures by directing firms and financial institutions towards existing frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations, the document said, and by encouraging access to measurement tools and facilitating open-source and location-specific data on nature.
“Disclosure requirements, introduced by governments, should ideally be standardised and internationally aligned, to the extent that this can be achieved without delaying the swift adoption of disclosure requirements,” the paper said.
The need to standardise and align biodiversity frameworks has been highlighted by several organisations during the last few months, including non-profit CDP, which last week called on G20 countries to enhance efforts in developing globally recognised standards for nature-related disclosures.
FfB also called on governments to shape sectoral regulations to penalise harmful conduct, including prohibiting specific business activities where there are no other feasible regulatory measures that can prevent negative impacts.
Notably, the guidelines advised policymakers to ban dangerous practices such as deep sea mining unless evidenced that it can be conducted and adequately regulated in a way that minimises harmful outcomes.
“Clear policies and red lines on sector-specific harmful activities on nature from governments can help financial institutions to screen their finance activities and investments,” the paper said.
“We hope these recommendations will support the much-needed shift from ambition to implementation, and look forward to continuing the dialogue with key stakeholders in the run-up to COP16,” stated Sonya Likhtman, co-chair of the Public Policy Advocacy working group.
To date, 170 financial institutions – representing 26 countries and with over €22 trillion in assets – have signed the FfB Pledge, committing to protecting and restoring biodiversity through their finance activities and investments.
By Giada Ferraglioni – giada@carbon-pulse.con
*** Click here to sign up to our twice-weekly biodiversity newsletter ***
