Competitive advantages arising from being early movers in biodiversity finance are among the main drivers for businesses considering investments in nature, accounting firm KPMG has said.
Speaking during a webinar on Thursday, head of nature and biodiversity at KPMG Sarah Nelson said that there are three main reasons behind corporate interest in nature: compliance, risk management, and opportunities.
“What we see is that companies are starting to put in place investment strategies to try to mitigate risks arising from biodiversity loss,” she said.
“At the same time, companies are really starting to see the opportunities in this space, both in the short and the long term, and they want to get that early mover advantage.”
With biodiversity starting to climb the investor’s agenda, companies are increasingly integrating nature into their strategies.
For instance, Nelson mentioned examples of corporate strategies from different sectors harnessing sustainable practices to enhance their production.
“Agribusiness companies can use nature-positive solutions, such as regenerative agriculture techniques, to safeguard crops and make them more resilient to shocks,” she said.
“Furthermore, if a company has to deal with its wastewater as part of their manufacturing process, the creation of constricted wetlands not only helps clean up the water but also provides valuable habitat for local species.”
PROBLEMS IN HEAVEN
However, while awareness related to nature positive is emerging, climate-related actions and strategies still catalyse the bulk of the corporate budget.
According to Nelson, as the biodiversity market is still nascent, the best way to scale conservation efforts among companies is to invest in climate actions with biodiversity co-benefits, such as nature-based solutions.
“Companies could look for projects where there are both nature and climate benefits and try to maximise that funding as much as possible,” she said.
Last month, Marios Michaelides, one of the early members of the Biodiversity Credits Incubator (BCI) initiative by the Sustainable Finance Coalition, told Carbon Pulse that, at the moment, companies are more interested in carbon credits with biodiversity co-benefits than in creating a standalone nature market.
Emma Toovey, chief ecology officer at Environment Bank, said during the webinar that the biodiversity credit market struggles even in a country such as the UK, where the biodiversity net gain legislation mandates companies to offset their impact on nature.
And while there’s a lot of focus on corporate disclosures, with frameworks such as the Corporate Sustainability Reporting Directive (CSRD), the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations, and the Global Reporting Initiative (GRI) drawing increasing attention, many companies are still reluctant to take action.
“There is confusion and inertia,” she said. “In the UK we have a lot of high-integrity projects ready to go, with biodiversity credits ready to buy off the shelf. But, let’s be honest, the market is just not quite there yet.”
By Giada Ferraglioni – giada@carbon-pulse.com
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