Governments need to fix financial plumbing to stop biodiversity loss, says not-for-profit « Carbon Pulse

Now is the Time for Regulation to Hold the Financial Sector Accountable for Nature Loss

A Switzerland-based NGO, NatureFinance, has released an extended version of a report that highlights the need for regulation to address nature loss in the financial sector. The report provides insights into how nature can be accounted for across the financial system, including reworking food commodity markets, tackling nature crime, and increasing economic rewards for “nature’s stewards”.

Biodiversity and Carbon Credits: Catalyzing Action and Valuing Nature

The report emphasizes the importance of biodiversity and carbon credits as tools to reward Indigenous Peoples and Local Communities for nature conservation. However, it also acknowledges that the current market scale and lack of regulation limit their impact. Hiba Larsson, principal investment officer at NatureFinance, states that biodiversity credits can stimulate the finance sector, but their role may be comparatively small in achieving the Global Biodiversity Framework target of $200 billion.

Biodiversity credits and other nature-related markets can help governments value and put a price on nature, which is the ultimate goal. Larsson emphasizes that nature is currently not accounted for or visible in the financial system. The report suggests that governments need to mandate disclosure requirements and leverage their influence to ensure proper accounting and valuation of nature.

Regulation and Transition Plans: Ensuring Orderly Change

Larsson argues that regulation alone is not enough. It must be accompanied by transition plans to facilitate an orderly shift to new financial and corporate paradigms. This approach will help avoid unintended consequences and ensure a smooth transition.

International Alignment: Addressing Biodiversity Loss Beyond Borders

The report highlights the need for international alignment on addressing biodiversity loss. While biodiversity is often seen as a local problem, national regulations addressing international drivers of biodiversity loss can disrupt globalized supply chains. Larsson cites the example of the EU Commission’s anti-deforestation law, which, without proper transition plans, could negatively impact producer communities and lead to dumping production.

Larsson also mentions the emergence of a coalition of nature-rich countries, led by Brazil and other tropical nations, which is likely to have a strong voice in upcoming climate negotiations. This coalition aims to address unilateral adoption of regulations such as the EU’s deforestation regulation.

Rebuilding the Financial Plumbing: Beyond Regulation

In addition to regulation, the report emphasizes the need to address other aspects of rebuilding the financial plumbing. It highlights the importance of fast-moving capital, such as venture capitalists, entering the biodiversity space. However, Larsson argues that there is a need for other funding streams and partnerships to reset existing financial paradigms.

NatureFinance itself is taking positions in companies and has obtained upfront capital through a pre-seed to Series A fund. The organization aims to support the right initiatives and create tools for financial institutions to measure the state of nature accurately.

Overall, the report calls for a comprehensive approach involving regulation, transition plans, international alignment, and innovative financial solutions to address nature loss and achieve sustainable development goals.

SDGs, Targets, and Indicators Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 14: Life Below Water – The article discusses the need for regulation and financial incentives to address biodiversity loss and protect nature.
• SDG 15: Life on Land – The article emphasizes the importance of valuing and putting a price on nature, as well as the need for international alignment to address biodiversity loss.
• SDG 17: Partnerships for the Goals – The article mentions the need for funding streams, partnerships, and financial innovations to support nature conservation initiatives.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 14.5: By 2020, conserve at least 10 percent of coastal and marine areas, consistent with national and international law and based on the best available scientific information.
• Target 15.9: By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies, and accounts.
• Target 17.17: Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator 14.5.1: Coverage of protected areas in relation to marine areas.
• Indicator 15.9.1: Progress towards national targets established in accordance with Aichi Biodiversity Target 2 of the Strategic Plan for Biodiversity 2011-2020.
• Indicator 17.17.1: Amount of United Nations Development Programme (UNDP) and Global Environment Facility (GEF) funding for biodiversity.

SDGs, Targets, and Indicators Table

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Source: carbon-pulse.com

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