What will the UK Government's 'nature positive' response to Dasgupta mean for finance?

The UK government recently committed to a 'nature positive' response to Prof. Sir Partha Dasgupta's review of the Economics of Biodiversity. At Ethical Finance 2021 last week, Prof. Dasgupta called for a 'World Bank of Biodiversity', arguing that despite the complexity of nature and biodiversity, there are ways of reducing the issues to fairly simple economic principles. The biosphere should be treated as a global public good, argued Prof. Dasgupta at the annual Ethical Finance Summit, explaining that treating it as such would justify paying penalties for its desctruction.

In the UK Government's response to Prof. Dasgupta's review, it committed toi a number of actions ahead of the crucial COP26 climate summit in November. These include:

  • Committing up to £3 million additional support to the development of the Taskforce on Nature-related Financial Disclosures framework – a market-led initiative which will support business in assessing emerging nature-related risks and opportunities
  • Working with the Office for National Statistics to improve the way nature is incorporated into our national accounts
  • Further improving Government guidance for embedding environmental considerations into policy-making processes
  • Incorporating biodiversity into the UK Government Green Financing Framework
  • Joining the OECD Paris Collaborative on green budgeting, an initiative to encourage governments to incorporate climate and environmental considerations into their financial and fiscal decisions

These are all no doubt positive developments - necessary steps on the way to creating global frameworks that protect biodiversity and the biosphere. However, given the scale of the challenges we face, are they enough? The Living Planet Report 2020 reports stark statistics regarding biodiversity, including:

  • An average 68% decrease in population sizes of mammals, birds, amphibians, reptiles and fish between 1970 and 2016
  • A 94% decline for the tropical subregions of the Americas over the same period
  • 75% of the Earth’s ice-free land surface has already been significantly altered, most of the oceans are polluted
  • More than 85% of the area of wetlands has been lost
  • Until 1970, humanity’s Ecological Footprint was smaller than the Earth’s rate of regeneration. To feed and fuel our 21st century lifestyles, we are overusing the Earth’s biocapacity by at least 56%
  • Per person, our global stock of natural capital has declined by nearly 40% since the early 1990s, while produced capital has doubled and human capital has increased by 13%

Put simply, nature is in crisis, and as this crisis depens, it will affect our economies more and more. As the Dasgupta review pointed out nature suffers from a 'Tragedy of the Commons' effect - while the benefits for its destruction are privatised, the costs are public - a classic 'Principal-Agent problem', in the economists' parlance. To address this, we desparately need global cooperation between governments, finance, business and civil society on protecting biodiversity, and we need it now. THe steps the UK Government has committed to are a crucial step on the road to protecting nature with a 'World Bank for Biodiversity', but without committments to go further - to not just report and disclose impacts, but actively work to prevent them - there is a risk that this could be too little, too late.

The finance sector needs an urgent, credible plan to make TNFD reporting mandatory, as reporting in line with TCFD is likely to become soon. While TCFD's progress from idea to (in some territories) law has been admirably fast relative to the usual pace of public policy, it has still been too slow relative to the climate crisis. To respond to the crisis of nature and biodiversity that we are seeing, TNFD must be even faster.

At COP26, we will be exploring these issues as part of our Finance for Nature programme in our Path to COP26 campaign, with a dedicated focus on nature discussions in the unique setting of Loch Lomond. Click to learn more.


Ethical Finance 2021 | Day 2 | Sustainability | Round-Up

Day 2 of Ethical Finance 2021 was a jam-packed day of fascinating exchanges, unpicking the complex challenges of delivering Net Zero and the macro-economic factors underpinning them. Our sessions and speakers all pointed towards the need to shift global focus to issues of sustainability, prevent further nature loss and make a business case of biodiversity preservation. Together, they have layed the ground for our focus on Day 3 of our Ethical Finance Summit: How to move beyond climate to achieve long-term, sustainable solutions in finance and beyond ahead of COP26.

We started off with Kirsty Britz Director of Sustainable Banking at NatWest Group, highlighting how the #EthicalFinance2021 is an opportunity for NatWest Group and others to learn collaboratively. Next, Inger Andersen, Executive Director at United Nations Environment Programme Finance Initiative (UNEP FI), outlined her four-step action plans for financiers (watch now). Dr Werner Hoyer, President of European Investment Bank (EIB), then outlined the daunting set of challenges we face globally from the COVID-19 pandemic to the climate crisis, emphasising that this is our last chance to make real change. Bill Winters, CEO of Standard Chartered Bank launched a new Carbon Dated report looking at the impact of MNCs’ #netzero intentions on suppliers in Asia, Africa and Middle East - read it now at sc.com/carbon-dated.

We then moved on to our 'Global Trends in Sustainability' Panel with Dame Susan Rice from FSCB, Tan Sri Dato’Zeti Aziz, former Governor of Bank Negara Malaysia and Katie Murray, Group Chief Financial Officer at NatWest Group, who unpicked some of the challenges around sustainability finance globally. Our last session of the morning saw Dr. Sarah Ivory from University of Edinburgh Business School in conversation with Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, spotlight the International Platform for Climate Finance (IPCF), and its work building consensus ahead of COP26.

To kick off our Net Zero session, Kaisie Rayner FRSA Rayner, Climate Change Lead at Royal London interviewed Manuel Pulgar-Vidal Global Energy and Climate Practice Lead at WWF and former COP President, who advised Alok Sharma to "be the DJ", mixing all the avenues for climate action together to create the right sound! Our approaches to 'Delivering Net Zero in Banking and Investment' Panel discussion was lead by David Pitt-Watson, Visiting Fellow at Cambridge Judge Business School. He challenged Deirdre Michie OBE, CEO at OGUK, Masja Zandbergen-Albers , Head of Sustainability Integration at Robeco, Kaitlin Crouch-Hess, Sustainability Manager at ING and Joanne Manda, Regional Advisor, Climate Change and Innovative Finance at UNDP Indonesia on greenwashing, practical tools for Net Zero, the role of the fossil fuel sector, transparency, and the responsibilities of the financial sector. Our Initiative Spotlight profiled the Institutional Investors Group on Climate Change (IIGCC). Clare Foster, Head of Clean Energy and Green Recovery Lead at Shepherd and Wedderburn was joined by Daisy Streatfeild, Investor Practices Programme Director at the Institutional Investors Group on Climate Change (IIGCC) and Dewi Dylander, Deputy Executive Director at PKA, who outlined how the framework grew from a small group of investors interested in the Paris Agreement, to a vital tool in assessing investment portfolio alignment to science-based targets.

Our Nature session opened with Greg Ritchie in conversation with Prof. Partha Dasgupta, author of the review into the Economics of Biodiversity, who called for a 'World Bank for Biodiversity' (read more in Bloomberg or watch now). Our last session panel saw Andrew Mitchell from Global Canopy bring together Antoine Sire from BNP Paribas,  Charlotte Kaiser from NatureVest, Madeleine Ronquest from First Rand and Reza Marvasti from ISS ESG, for a lively panel exploring the routes to practical action on biodiversity from a range of viewpoints. The day closed with and initiative spotlight lead by Natalie Jackson, which highlighted the work of TFND, which launches tomorrow, drawing on the expertise of Elizabeth Mrema from UN Biodiversity and Mikkel Larsen from DBS Bank.

Tomorrow, we will be looking ‘Beyond Climate’ which will be opened by The Scottish Government First Minister herself Nicola Sturgeon at 09.20 BST.

Remember to sign in using our EfX Global login: https://www.efx.global/ethical-finance-2021-sign-in/

You can find more ore information about all of sessions and speakers at ethicalfinancesummit.com