New ideas generally need a long period of incubation before they are brought into the mainstream.  The notion that financial activity strongly affected climate and was, in turn, affected by it took a long time to make its way into the boardrooms of corporations and financial institutions.  Today, few would dispute that the way in which the global financial system works is central to meeting the climate challenge.  Global climate summits such as COP 26 in Glasgow are less and less about science and more and more about finance – both how to finance climate action and how to align finance to the needs of climate stabilization.

In this context, it is striking how much more quickly biodiversity finance has moved up the political agenda, despite the complexity of the issues at the interface between nature and the operations of the financial sector.  How can this be explained, and how should we address it?  First, there can no longer be any legitimate doubt that the loss of biodiversity and ecosystem services is a threat to the planet on a par with climate change.  Recent reports from IPBES and others leave no reasonable doubt that the situation is dire and growing rapidly worse.

Second, the link between the climate and biodiversity threats is increasingly clear.  Climate change is one of the key drivers of biodiversity loss, and the breakdown of natural systems exacerbates climate change.  By the same token, action to slow and reverse the destruction of nature will contribute significantly to climate change.  And grappling with climate change would be a significant contribution to bringing use of nature and ecosystems back within sustainable limits.

So, great, we simply add biodiversity finance to the list of what financial decision-makers need to address in making investment decisions?  Not so fast! If climate and biodiversity are threats of similar importance, aligning finance with Net Zero is much easier than aligning it with Nature Positive.

Several hurdles need to be jumped for biodiversity to be addressed smoothly in the world of finance, starting with the embarrassing reality that most financial actors simply don’t know how to do it.  Problems start at the most basic level – we don’t have accepted measures or methodologies to assess biodiversity risk; nor agreed definitions that would guide efforts to develop them. There are no protocols governing the necessary data, and therefore a lack of clarity on what corporations and financial actors should be disclosing in terms of their impact on nature.

While we talk about a Nature Positive standard joining up with a Net Zero carbon target, it is not clear how such a standard can best be articulated much less rendered obligatory.  And biodiversity investment – more so even than climate investment – is beset with the entire panoply of problems relating both to perceived risk and to rates of return.  The richest biodiversity is found most often in countries deemed to be unstable and, while nature-based investments can yield a satisfactory return, too many do so over a time period that exceeds investors’ patience.

Even the thriving Green Bond market – in which annual issuance is now more than 30 times higher than it was a decade ago – still shuns nature-based projects to a large extent, preferring tried-and-true solutions in the field of renewable energy, clean technology, or public transport.

There are two ways of addressing this dilemma.  The first, common today, is to say that we should systematically address the obstacles to biodiversity finance at scale, and gradually remove approaches to finance and corporate activity that undermine nature.  We must, of course, do this, and to accelerate the process wherever we can.  At the same time, the current pace cannot make a serious dent in – much less reverse – present destructive trends.

The alternative is to decide that the present predicament is simply unacceptable and set out the challenge in terms that reflect the gravity of the situation.  In 2016, Coca Cola announced that it would become a water-neutral company by 2030.  When asked how they intended to achieve this ambitious target, the Vice President for Environment and Water Resources answered that he had no idea.  That was precisely the point; setting a goal that was required by the planet but difficult to reach was intended to trigger a wave of innovation and imagination that would discover and implement solutions that were unimaginable at the time.

We need a similar burst of imagination and innovation now with respect to biodiversity finance, with the aim that all financial activity shall, by 2030 at the latest, be at a minimum neutral in terms of its impact on nature and, better still, positive, contributing to the restoration of damaged landscapes and ecosystem services.  What are some of the steps that might be taken?

There are many, but here are three, each entirely feasible:

  • Rapidly develop the Nature Positive standard as a workable guideline for all financial activity and insist that compliance with it be a necessary condition for access to credit or investment;
  • Align all public finance – including the trillions invested through sovereign wealth funds, multilateral and public development banks – to the requirements of nature and ecosystem restoration; and
  • Realign the portfolios of the multilateral and public development banks so that they devote a significant proportion of their funds to derisking nature-friendly private investment.

We need rapidly to reach the point where destroying nature in the course of financial activity becomes pariah behaviour, similar to public expectations today in respect of slave-free and child-free labour.  We need this because we need to restore a wounded planet to health, so it is no longer a question of if, but of how and when.