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Axe 2 - Towards biodiversity-positive production and consumption
Biodiversity-friendly financial flows
By 2030, 150 public and private entities take biodiversity risks and opportunities into account in their strategies and their financial flows are oriented towards biodiversity-friendly projects
Biodiversity loss presents a physical, reputational and transitional risk for financial institutions. However, although this is recognized for climate change, these risks are still largely unaddressed for biodiversity by the finance sector. There are two ways financial institutions can enhance their contribution to biodiversity:
"Financing the green" : integrating biodiversity-supportive projects and initiatives in their investment portfolios. Financing green and biodiversity-friendly activities is essential to support biodiversity and represents an asset for building more resilient economy after the COVID-19 crisis. The finance sector plays a specific role by encouraging both public and private investments into a certain direction as they look to reduce risks for their investments. Many environmental as well as socio-economic studies highlight the risk to the finance sector if they do not take more pro-active action on greening their portfolio and the sector thus has a real interest to take an active part in changing its direction.
"Greening the finance" : ensuring that the finance itself is green and biodiversity-friendly is also a significant way to support biodiversity, if not more effective. It enables indeed to mainstream biodiversity in finance, as it is currently done for climate in several central and supranational banks.
Integrating biodiversity in the finance sector will help integrating biodiversity concerns in all sectors and promoting biodiversity-positive activities. The finance sector has a crucial role to play in the transformative change our society needs.
What is to be achieved?
- Conservation, restoration and sustainable use of biodiversity and its components
- Reducing direct and indirect detrimental impacts on biodiversity of the finance sector
- Integration of biodiversity concerns in the finance sector
- Increased financing of biodiversity-friendly projects and activities
- Mainstreaming of biodiversity-friendly finance and financing tools
Criteria to be reflected by the voluntary engagements:
- Reduce ecological damage caused by investments: Remove and/or phase out harmful investments, exclude projects when they are detrimental to biodiversity, ...
- Redirect financial resources causing damage to biodiversity to investments that support biodiversity
- Develop and promote alternative financial tools in support of biodiversity (e.g. granting reduced mortgage/loans to encourage companies’ transition; investment products directed towards green investments, ...)
- Fund ecological and biodiversity-friendly initiatives and projects
- Ensure and show traceability and transparency of investments
- Align portfolios with international/European/national biodiversity objectives
- Link biodiversity and climate change funding (every climate investment has to include biodiversity-related challenges)
- Incorporate biodiversity-related issues into the projects/measures that the entity designs/implements (e.g. taking biodiversity into account during the construction/renovation of its buildings with regard to the ground as well as the materials used, ...)
- Link the marketing of certain products to ESG standards (environmental, social and governance criteria)/sustainability/biodiversity
- Request partners and customers to have a transparent financial strategy that supports biodiversity
Model Projects "Biodiversity-friendly financial flows"
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