The race to put a real price on Nature

Newsletter # 6

Credit: Future Earth Media Lab (image by Stockholm animation studio Brikk)

As Europe stumbles into the second wave of the pandemic, I’m back in the Gers. France’s daily case numbers are averaging around 20,000, and the latest fix is a 9pm-6am curfew for big French cities. President Macron appeared on TV to announce this, along with advice to open windows, keep gatherings to 6 people and some lame boasting about France being world class in numbers of tests performed. He declared, theatrically but without real conviction, that France had become a “nation of citizens in solidarity.”

Before the pandemic took all the limelight, this year was always going to be a big one for biodiversity. In today’s newsletter, I bring you the highlights from a battery of recent headlines and look at how finance is getting into the game. But first, could I ask you a favour?

Over the past few weeks I’ve been taking stock of the podcast, and I’ve decided that episodes 10 and 11 - coming this month - will wrap our first season. I’m incredibly grateful to everyone who has been showing up to listen, and if you have a few minutes spare I would love to hear your feedback.

As an independent producer and a newbie to podcasting your views are tremendously important to help me shape Season Two (set to arrive just after Christmas!). I’ve got some exciting thoughts on where we can go next, but I want to hear from all of you first. If you can, please head over to our short survey to have your say on the content you want, and the people you’d like to hear from.

Thank you!

Green and sustainable finance highlights

2020 was to have been a Super Year for Biodiversity, and in the last month we’ve seen a catch up on that lost promise with a raft of new reports and initiatives coming on stream. The UN assessment body for biodiversity science (an IPCC-type body) - the International Platform for Biodiversity and Ecosystem Services (IPBES) even got a Nobel Peace Prize nomination from Germany.

2020 may turn out to be the year that the world, and finance, got serious about Nature.

The foundation of our civilization is a stable climate and a rich diversity of life. Everything is based on this.

That’s scientist Johan Rockstrom, in the opening talk at Countdown Zero, an online TED event which happened last week. I'd highly recommend setting aside 8 minutes to watch the full presentation if you're wondering what tipping points are, and why they matter.

Investors are only just starting to come to grips with biodiversity loss, how to measure it, how to put a value on it, how to understand what it all means for the financial sector. The World Economic Forum rated biodiversity loss among the top five global risks this year, and 2020 was also the year where zoonotic diseases entered common parlance, and heart-breaking images of out-of-control fires in Australia, in Russia, in the Amazon and in the U.S. flooded our consciousness.

👉Insurance firm Swiss Re put out a report this month showing that one-fifth of the world’s countries are at risk of their ecosystems collapsing because of the destruction of wildlife and their habitats.

More than half of global GDP depends on high-functioning biodiversity, according to the report, but the risk of tipping points is growing.

Countries including Australia, Israel and South Africa rank near the top of Swiss Re’s index of risk to biodiversity and ecosystem services, with India, Spain and Belgium also highlighted.

The report provides a Biodiversity and Ecosystems Services (BES) Index, which is a tool that financial institutions can use to review how they allocate and price investments that are highly dependent on nature.

The price of financing or re/insurance should take BES fragility or intactness into account. Highly BES dependent operations in fragile areas may not have a sustainable future and this knowledge should help decision makers allocate resources accordingly. The price the financial services industry charges for providing capital – be it via investments or re/insurance – should reflect BES risk going forward.

👉 But a new Biodiversity financial disclosure initiative is now underway

Efforts to get a disclosure standards body similar to the Task Force on Climate-Related Disclosure (TCFD) have passed a milestone with the creation of an informal working group of the Task Force for Nature-Related Financial Disclosure (TNFD).

The group - with more than 60 members drawn from financial institutions, companies and governments - will set the scope and work plan for the Task Force which launches next year. While the pace of this work lags the urgency of the problem, it is nevertheless an important step towards quantifying and disclosing the costs of biodiversity loss and habitat destruction. (nb. It took 24 years from the creation of the IPCC in 1988 to get the IPBES launched in 2012.)

Another initiative to watch: the development of Science-based targets for Nature, a project under the umbrella of the Global Commons Alliance.

From the podcast

In case you missed the last two episodes, here’s a summary:

Episode # 8 looks at Climate-Aligned Finance with Paul Bodnar from the Rocky Mountain Institute. Inspired by the shipping sector, this emerging approach relies on sector-wide, self-governing climate agreements among financial institutions - sort of like mini Paris Agreements. Paul takes us from the last, fraught hours of the Paris negotiations - where he represented the Obama administration - to the groundbreaking Poseidon Principles and tells us why we proudly claim the term ‘activist’. 

In Episode # 9, we look at the recent Rio Tinto fiasco. Brynn O’Brien of the activist NGO ACCR explains what we’ve learnt from the tragic destruction of the ancient Aboriginal rock shelters in Western Australia and how investor activism played a decisive role.

A heartfelt thanks to listeners Down Under who’ve given me great feedback on the Rio Tinto piece. For those who haven’t had a chance to listen to this episode, I really encourage you to catch the powerful opening quote (courtesy of the Australian Broadcasting Corporation) from Aboriginal leader Burchell Hayes describing his reaction to the news of the site’s destruction.

From the Gers, France,

Denise