How can finance address the loss of nature and biodiversity?

Michelle Horsfield, a former environmental scientist and executive director of ESG advisory for the SMBC Group, and Keith Bottomley, deputy policy chair for the City of London corporation, explain the key actions you can take to incorporate biodiversity into your decision-making and investment strategies.

6 key takeaways from this video

  • Nature loss and the loss of biodiversity is a serious threat and, as with climate change, the finance sector must get up to speed on it.
  • To address biodiversity loss, annual investments in nature-based solutions must almost triple by 2030.
  • One way to increase such investment is through biodiversity funds, which provide a mechanism to raise capital for biodiversity recovery and mitigation programmes while offering investors a return.
  • Biodiversity fund assets topped US$1bn in 2023, and this is expected to continue growing as finance is channelled toward more nature and biodiversity-positive activity.
  • To start integrating biodiversity into your investment strategies, build it into your risk management processes and assess your portfolios for biodiversity risks. Tools such as ENCORE can help you do this.
  • You will also need to start the conversation with stakeholders – ask what firms can share with you about how they think about nature. This is a journey that investors and companies will need to walk together.

3 practical actions you can take today

While governments are undertaking to set policies on the issue of nature and biodiversity loss, there are three key actions financial professionals can take now:

  1. Build capacity internally on biodiversity
    Raise awareness and learn about what was agreed at the Global Biodiversity Forum. Identify whether your firm should track biodiversity loss or whether nature loss is more relevant to your organisation. Then, find out how to measure these aspects and share insights and learnings with your peers.
  2. Identify opportunities and risks
    Pinpoint the nature-related risks and opportunities within your organisations and portfolio.
  3. Disclose
    Publish where the nature-related dependencies, impacts and risks are in your portfolios, in line with the Taskforce on Nature-related Financial Disclosures’ recommendations.