Our focus on the dangers of climate change have been warranted, but it’s left us blinkered to other major challenges, such as biodiversity loss.
Of course these high level problems are interrelated and overlapping, but reducing carbon emissions to slow climate change is just one problem amid a broad swathe of damage being done to our planet’s natural environments.
According to the World Economic Forum’s 2020 Global Risks Report humanity has already wiped out 83% of wild mammals, half of all plants, and severely altered three-quarters of ice-free land and two-thirds of marine environments.
One million species are at risk of extinction in the coming decades – a rate tens to hundreds of times higher than the average over the past 10 million years.
The good news is that change is happening, and fast!
The finance sector has answered the call, and while it took the climate movement 15 years to engage Wall St, it’s taken a more like 15 months to get biodiversity and ‘nature-related’ investments onto the agenda.
This was all helped along by the UN’s biodiversity conference at the end of 2022 that managed to reach rare agreement among world leaders. As well as progress on a global framework for measuring business impacts on nature, the Taskforce for Nature Related Financial Disclosures (TNFD).
And… new companies are blooming:
Australian startup Wilderlands is making it easier than ever for people to invest in conservation, Cecil has built a platform that makes it easy for everyone to invest in conservation, and Tiverton is offering institutional grade investment opportunities to protect (and regenerate) huge swathes of land.
Finance Moves Fast When It Wants To
The model of integrating climate change issues into investment decision-making helped immensely in clearing the way for biodiversity, and nature-related issues, to find their place in investment committee meetings.
Nonetheless, the pace of adoption has been incredible. From one perspective it can be viewed as a simple risk assessment. As the WEF says, $44 trillion worth of GDP is dependent on nature. Which means any breakdown in natural cycles could have dramatic economic impacts.
Climate change has shown just how blind our accounting and financial analysis systems have been to the natural world. With lessons learned, biodiversity issues are being integrated and investment opportunities recognised.
There is a model that can be followed. Investors want companies to report their activities and their outputs in line with a universal set of indicators. With adequate monitoring and independent verification. This equates to another layer of data with which an investor can judge an opportunity.
The most obvious challenge is that biodiversity issues are broad, dispersed and not easily quantified. While carbon emissions, that contribute to climate change, can be aggregated by tonnes of CO2e, biodiversity impacts are far harder to measure.
TNFD – A Global Model for Assessing Biodiversity Risk
The Taskforce on Nature-related Financial Disclosures is an emerging framework for companies to report their impact on nature.
The model is based on the TCFD (Taskforce on Climate-Related Financial Disclosures) and adds to the growing set of tools that investors and corporations now have available to understand how their impacting the environment, and potential risks they face.
Central banks have led the way with stress tests that identify how various scenarios could impact particular economies. Such high level attention makes it difficult for institutional investors to ignore, and this then trickles down to investment managers and companies.
In theory anyway. Investors rely on company disclosures, and with consistent carbon reporting still being a rarity, it will be some time until the far more complex metrics that quantify biodiversity impacts are widely reported.
To get there, we need consistency and conformity we need a systems level approach, and that’s where government policy comes in.
UN Biodiversity Conference Reaches Agreement
The UN’s Biodiversity Conference, held at the end of 2022 in Montreal, received far more publicity than ever before. It was COP 15 for the Convention on Biological Diversity (CBD), and it had pundits scrambling to understand where this particular convention fitted next to the well known climate COP meetings.
Whether the exposure influenced the outcome is unclear, but it resulted in the adoption of the Kunming-Montreal Global Biodiversity Framework (GBF).
The meeting was able to gather agreement among state leaders to set a goal of protecting 30% of the world’s land and ocean areas by 2030. Known as “30 by 30,” the new goal is a major shift in how the UN is thinking about biodiversity and broader conservation.
The theme continued with a commitment by wealthy countries to pay $30 billion a year, by 2030, to poorer nations through a biodiversity fund. The fund would be managed by the Global Environment Facility.
But, to ensure that this COP leads to tangible action, and not just more blah, blah, blah, we need boots on the ground making change today, and that’s where entrepreneurs and impact investors come in.
Companies Driving Action on Biodiversity
Wilderlands makes it easy for everybody to invest in conservation.
The Wilderlands platform facilitates the purchase of ‘biological diversity units’, that represent a promise to protect parcel of land with high biodiversity value. Packages can be bought for as little as $30 for 10sqm, with each section uniquely geo-tagged, so individuals can see the specific path of land they’re funding.
The units represent a promise to both conserve and regenerate the land, aiming to contribute to the Federal Government’s commitment to protect 30% of nature by 2030. This is in line with the targets of the United Nations Convention on Biological Diversity.
“We are giving people the ability to protect vulnerable Australian land for biodiversity and engaging leading conservation organisations to help you preserve it forever; that’s what we’re making possible when people purchase these units,” says Paul Dettmann, Wilderlands co-founder.
Cecil is helping steer capital towards Nature-Based-Solutions (NBS) projects with a dedicated platform to centralise key data and reduce friction.
It helps investors access information in a standardised format, all in the one place. As well as giving them oversight of their portfolio.
They launched in June 2021 and have already onboarded over 1,500 NBS projects. This represents 1 million hectares of land across Australia, the United Kingdom and Germany.
“Nature-based solutions that conserve natural ecosystems can play a critical role in meeting global climate commitments. That includes net zero commitments and other incentives for decarbonisation.” says co-founder Alex Logan.
Tiverton Forever Fund
The Tiverton Forever Fund is a conservation vehicle that buys, protects and regenerates high-value pieces of land with added biodiversity value through providing a ‘corridor’ to other areas. It’s a partnership between Tiverton and Sentient Impact.
The partnership has already acquired an asset for the fund. Sunnyside is a property near Albany in WA, and for this first asset it’s what they won’t be doing to it that contributes to its impact. The land will be reserved for biodiversity management, with hopes it will be linked to nature reserves to operate as a ‘regional corridor’.
“We’re taking all the learnings from our many years of looking at biodiverse assets, as well as farming assets, and bringing it all together, to make it easier, or less risky, for investors to come into the Forever fund.” says founder Nigel Sharp.