An Italian network has launched a national initiative to steer companies and financial institutions in integrating biodiversity into decision making, with 90 organisations already enlisted.

The initiative, dubbed Biodiversity Working Group and led by the Forum for Sustainable Finance (ItaSIF), consultancy Etifor, and the Lombardy regional government, aims to enhance corporate understanding of nature-related risks and provide firms with the tools to address them.

Signatories of the Biodiversity Working Group include asset manager Etica Sgr, solar asset operator NextEnergy Group, law firm Advant Nctm, and food company Alce Nero, Alessandro Leonardi, CEO of Etifor, told Carbon Pulse, adding that other members will be disclosed over the next few months.

“We aim to create a group of companies and financial institutions that are eager to contribute to a nature-positive future, in line with the targets of the Kunming-Montreal Global Biodiversity Framework (GBF) and the EU’s Nature Restoration Law,” said Leonardi.

“Within the Italian context, companies too often go it alone. With this programme, we intend to connect and align them with the best practices and standards at the international level.”

The initiative also intends to establish partnerships between the private and public sectors to advance conservation and restoration efforts, said Leonardi.

“Businesses seeking to engage in conservation and restoration activities across the country must interact with public authorities, as in most cases these bodies manage the sites of high value for nature, such as parks and other biodiversity-rich areas.”

RECOMMENDATIONS

As part of the initiative, ItaSIF launched its first guide to help financial institutions address nature-related risks and prioritise biodiversity in their operations.

“It is essential to redirect financial flows away from sectors and projects with negative environmental impacts towards those that positively contribute to its protection and restoration,” said the report.

“It’s crucial to incorporate biodiversity analyses and assessments covering both risks and impacts into governance frameworks, internal decision-making processes, and the offering of products and services.”

Additional recommendations include encouraging investee, financed, or insured companies to collect and publish data on biodiversity-related risks and impacts, as well as join global initiatives such as the Finance for Biodiversity pledge and responsible investor groups like Nature Action 100, looking to ramp up corporate engagement on biodiversity loss.

Financial institutions should also publish annual sustainability reports that incorporate the European Sustainability Reporting Standards (ESRS) framework, which determines disclosure requirements for companies subject to the EU’s Corporate Sustainability Reporting Directive (CSRD).

“MASSIVE INTEREST IN CREDITS”

ItaSIF outlined a number of tools that financial actors could deploy to better integrate biodiversity considerations into their processes and products, including green bonds and sustainability-linked bonds to finance ecosystem conservation or restoration projects, ad-hoc insurance coverage to mitigate risks, and biodiversity credits.

While pointing out that credits could enable organisations to demonstrate measurable improvements in biodiversity, the report encouraged them to take action in order to prevent negative impacts on nature.

This includes addressing the risk of biodiversity leakage, whereby activities harmful to biodiversity are moved from highly regulated to lightly or non regulated areas, and ensuring that effective monitoring frameworks are in place, said the report.

“There’s a massive interest in biodiversity credits among companies, though these challenges must be addressed to ensure the market builds on robust foundations,” said Leonardi.

“As well, companies and financial institutions looking to venture into the biodiversity credit market must keep in mind that the priority should be avoiding and minimising impacts on nature, as set out by the mitigation hierarchy.”

Leonardi said Etifor has started collecting nation-wide data on how Italian companies are progressing towards the achievement of target 15 of the GBF, which urges businesses to regularly monitor, assess, and disclose their risks, dependencies, and impacts.

Results will be presented at the COP16 UN biodiversity summit, due to be held in Cali, Colombia from Oct. 21 to Nov. 1.

By Sergio Colombo – sergio@carbon-pulse.com

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