29.08.2022 | Insight
Protecting biodiversity is an issue of increasing interest for companies and financiers. More actors are needed to pilot biodiversity-financing projects, demonstrate successful projects, and monitor and report on results.
By Katariina Vartiainen, Senior Manager, Environment and Sustainability, Nefco
Biological diversity is declining globally faster than ever before in human history. The rate of species extinctions and ecosystem degradation is accelerating, with grave impacts for people and businesses around the world who rely on the services and benefits provided by nature.
Nearly 1 million species are at risk of extinction from human activities, and 75% of the land surface has been significantly altered by human actions (IPBES, Global Assessment Report 2019). According to the World Economic Forum’s recent Global Risks Report 2022, biodiversity loss is currently considered the third most severe global risk after climate action failure and extreme weather.
The financial sector has a crucial role to play
The biodiversity decline is projected to worsen with business-as-usual scenarios. Financial institutions have a crucial role to play in preventing biodiversity loss and conserving and restoring nature through their activities. Protecting biodiversity helps maintain ecosystem services that businesses in different sectors depend on. Strengthening regulation, such as the EU Taxonomy including biodiversity requirements, pushes the financial sector to focus on biodiversity management practices.
Protecting biodiversity is an issue of increasing interest for many companies. While it is still a few years behind climate change in terms of policymaking and public awareness, the topic is beginning to progress more rapidly. Current drafts for the Global Biodiversity Framework, a framework that will become the Paris Agreement for nature, and the EU Supply Chain Due Diligence Acts both include reporting obligations for businesses to assess their impacts and dependencies on nature.
Despite this, the financial sector’s approach to biodiversity loss is in its infancy. Part of the reason is that biodiversity loss is difficult to grasp and hard to measure because there are many different issues and drivers. The challenges and solutions are not as clear as for, for example, climate change. Biodiversity loss is multidimensional and spatially dependent, which makes developing metrics and indicators for assessments and solutions challenging.
The general expertise in biodiversity is also quite weak in the financial industry. More actors are therefore needed to pilot biodiversity-financing projects, demonstrate successful projects, and monitor and report on results.
How does Nefco protect biodiversity?
As a pioneer in green financing, Nefco only finances projects that generate positive environmental and/or climate-related impacts. Nefco has long analysed the impacts of its financing. We focus not only on recognising the benefits but also on ensuring that possible environmental risks, such as biodiversity impacts, are sufficiently considered and appropriately mitigated. We apply the mitigation hierarchy, which aims to avoid, minimise and restore impacts on biodiversity in project design and during operations.
This year, we renewed our Environmental and Sustainability Policy. In the new Policy, we want to clearly communicate our stand on unsustainable sectors and, for the first time, to provide a list of excluded activities that Nefco will not finance. For instance, land use change bears the largest global impact on biodiversity loss and Nefco therefore put in place certain limitations on, for example, the forestry and animal husbandry sectors. We want to protect primary and old-growth forests and high conservation value areas and therefore refuse to finance any commercial activities in these areas. We also will not finance any new greenfield livestock husbandry farms.
But, is this enough for a green bank such as Nefco? To reverse nature loss this decade, financial institutions need to accelerate their biodiversity management and start drafting ‘nature-positive’ impact strategies.
Testing and developing biodiversity solutions
Nefco acknowledges the need for increasing biodiversity finance and is in the process of starting a first-of-its-kind and pioneering Biodiversity Pilot Programme. The purpose of the programme is to test and develop suitable biodiversity solutions to achieve additional positive impact on the natural capital. The programme, which is planned to be launched in the autumn of 2022, is open to existing Nefco client companies in the Nordic countries.
Nefco’s Biodiversity Pilot Programme will contribute to knowledge transfer and learning and deliver positive biodiversity impacts and conservation outcomes beyond simple risk management, which is the status quo in the market. The aim is to create a demonstration effect and inspire even more companies and project owners to think in terms of nature-based solutions.
The Biodiversity Pilot Programme is facilitated by experienced and seasoned specialists from AFRY, an international engineering, design and advisory service company, and steered by Nefco.
By the end of this tailor-made programme, the participating companies will have gained experience in biodiversity protection, developed a biodiversity management plan and introduced concrete steps to tackle biodiversity loss relevant to each organisation’s size and needs. Activities that strengthen nature will improve risk management and enable better access to finance, among other things, and the companies will be at the forefront in greening the future.
How to get involved in the Nefco Biodiversity Pilot Programme
Who can participate: The programme is open to existing Nefco client companies within the Nordic countries. The companies will be selected during autumn 2022.
What: Nefco Biodiversity Pilot Programme offers capacity building, technical support and consulting services. Several workshops, peer learning, facilitated sessions with seasoned specialists and well-planned biodiversity actions suitable for the organisation’s size and needs are included in the programme. The participating companies will gain experience in biodiversity protection, develop a biodiversity management plan and introduce concrete steps to tackle biodiversity loss.
Duration: Nefco Biodiversity Pilot Programme starts in October 2022 and will last approximately 1.5–2 years.
How: Selected companies are expected to dedicate time and be committed to taking their biodiversity management to the next level. Some operating expenditure depending on the selected, tailored activities may be required. Cooperation with Nefco throughout the programme and reporting the results is also expected from the participating companies.
For more information: Open Q & A sessions for interested clients will be organised on 31 August 2022 in both the morning at 9.00-11.00 EEST and afternoon at 13.30-14.30 EEST and on 6 September 14.00-15.30 EEST. Please contact Katariina Vartiainen (katariina.vartiainen@nefco.int) for more information and to schedule a call.
Visit programme page: www.nefco.int/biodiversity