Where we stand on biodiversity loss and footprinting

Importance of Biodiversity and Assessment of Biodiversity Footprint

Robert-Alexandre Poujade, Biodiversity Lead, discusses the significance of biodiversity, the biodiversity roadmap, and the steps taken to assess the biodiversity footprint of portfolios.

Why does biodiversity matter?

Biodiversity is essential as healthy ecosystems support various aspects of society. They produce oxygen, help mitigate climate change, and contribute to at least 55% of the global economy. However, approximately 25% of all species are at risk of extinction by 2050, including around one million species of plants and animals.

The main threats to biodiversity include land/sea use change, pollution, overexploitation, invasive species, and climate change.

Impact on Sustainable Development Goals (SDGs)

Biodiversity loss poses a threat to achieving the UN Sustainable Development Goals related to poverty, hunger, health, water, cities, climate, oceans, and land, according to IPBES 2019. Therefore, it is crucial to reverse the destruction of ecosystems and biodiversity loss.

Efforts to Protect Nature

At COP15, approximately 200 countries agreed on the Kunming-Montreal Global Biodiversity Framework. The framework aims to protect 30% of nature by 2030. Protecting nature has been found to make financial sense, with a University of Cambridge report showing that the financial benefits outweigh the costs by a ratio of 5 to 1.

Governments have also committed to phasing out subsidies that harm nature and have set a target of spending USD 200 billion per year on conservation. Private finance, blended finance, and impact funds can also contribute to funding conservation efforts.

Impact on Investors

Biodiversity loss poses a systemic risk to investors. Even the loss of a single bee can negatively impact investor assets, as bees play a crucial role in pollinating one-third of the world’s food supply. For example, honeybees in the US alone provide pollination services valued at roughly USD 15 billion to USD 20 billion per year.

Investors need to understand the risks associated with biodiversity loss. Companies should disclose environmental information to help investors assess their impact on biodiversity. However, data from CDP has shown that most companies are not translating their commitment to biodiversity into action.

The Global Biodiversity Framework calls on governments to encourage companies and financial institutions to disclose their risks, dependencies, and impacts related to biodiversity. Regulatory action can help investors understand biodiversity-related risks and opportunities in their portfolios.

Role of Asset Managers

There is an annual USD 700 billion gap in financing the protection of natural systems. This gap can be reduced by cutting subsidies that harm biodiversity and raising more funds through carbon markets, biodiversity credits, and green financial products. BNP Paribas Asset Management supports the alignment of financial flows with global biodiversity goals and consistent corporate disclosure.

BNP Paribas Asset Management has developed a biodiversity roadmap called “Sustainable by Nature” based on six pillars: integrating environmental, social, and governance considerations; stewardship; responsible business conduct; taking a forward-looking perspective; investment solutions for sustainability; and corporate social responsibility.

Stewardship can be used to support efforts to reduce biodiversity loss. Environmental investment strategies can address climate change and biodiversity loss by bridging the funding gap to restore, protect, and preserve Earth’s resources.

Assessment of Biodiversity Footprint

BNP Paribas Asset Management has analyzed its global assets under management to understand its exposure to water and deforestation risks and its dependence on ecosystem services. The company has also conducted research on a “biodiversity footprint” to measure how its investments impact biodiversity.

The biodiversity footprint assessment helps investors quantify their potential impact on biodiversity by combining modeled and reported data of invested companies and their supply chains. This assessment complements the analysis performed by ESG analysts and helps identify targets for engagement by stewardship and portfolio management teams.

Challenges remain, such as capturing biodiversity in soil and marine ecosystems, addressing extinction risk and species richness, and modeling pressures like invasive species and resource overconsumption. There is also a lack of data linking specific impacts to individual companies.

Despite these challenges, BNP Paribas Asset Management believes it is important to take action and work towards preserving biodiversity.

Conclusion

Biodiversity is crucial for the well-being of society and the achievement of sustainable development goals. Protecting nature and reducing biodiversity loss require efforts from governments, companies, financial institutions, and investors. BNP Paribas Asset Management is committed to integrating sustainability considerations into its investment decisions and engaging with companies to reduce biodiversity loss.

SDGs, Targets, and Indicators

1. SDG 15: Life on Land

   • Target 15.5: Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity, and protect and prevent the extinction of threatened species.
   • Indicator: The article mentions that about 25% of all species are at risk of extinction by 2050, highlighting the need to reverse biodiversity loss.

2. SDG 13: Climate Action

   • Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning.
   • Indicator: The article mentions that healthy functioning ecosystems help mitigate climate change, emphasizing the importance of biodiversity in achieving climate goals.

3. SDG 14: Life Below Water

   • Target 14.2: Sustainably manage and protect marine and coastal ecosystems to avoid significant adverse impacts.
   • Indicator: The article mentions that biodiversity loss threatens the achievement of UN Sustainable Development Goals related to oceans, highlighting the need to protect marine ecosystems.

4. SDG 6: Clean Water and Sanitation

   • Target 6.6: Protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers, aquifers, and lakes.
   • Indicator: The article mentions that biodiversity loss threatens the achievement of UN Sustainable Development Goals related to water, emphasizing the importance of protecting water-related ecosystems.

5. SDG 11: Sustainable Cities and Communities

   • Target 11.7: By 2030, provide universal access to safe, inclusive, and accessible, green, and public spaces, particularly for women and children, older persons, and persons with disabilities.
   • Indicator: The article mentions that biodiversity loss threatens the achievement of UN Sustainable Development Goals related to cities, highlighting the need to reverse the destruction of ecosystems.

6. SDG 1: No Poverty

   • Target 1.4: Ensure that all men and women, in particular, the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services.
   • Indicator: The article mentions that biodiversity loss threatens the achievement of UN Sustainable Development Goals related to poverty, emphasizing the need to protect biodiversity for the well-being of vulnerable populations.

7. SDG 2: Zero Hunger

   • Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production.
   • Indicator: The article mentions that biodiversity loss threatens the achievement of UN Sustainable Development Goals related to hunger, highlighting the importance of pollinators like bees for food production.

Table: SDGs, Targets, and Indicators

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Source: viewpoint.bnpparibas-am.com

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