Welcome to The Zeroist, a finance newsletter for the net zero revolution.
You may have noticed this newsletter has a new name, a new visual identity, and a new url. Why the re-brand?
When the first edition went out in May 2020, it was still a work-in-progress extension of the podcast, New Climate Capitalism.
A lot has happened in the past 16 months. Net zero is almost a household term, and we are at the start of its disruptive potential.
The previous newsletter name - climate narratives: annotated - took too long to type, to say and to share as a url.
So, a new name, a new look, and a new cycle of international summits starting next month with COP26.
You’ll still get updates on the 15th of the month, with a tighter focus on insights you can use as we pick up the pace on this historic journey towards net zero emissions.
Highlights from Green and Sustainable Finance
Just announced: The Task Force on Nature-Related Financial Disclosures (TNFD) now has an Executive Director (former Deloitte consulting partner Tony Goldner) and a Secretariat. The announcement comes several months after its formal launch in June.
The finance track at the IUCN World Conservation Congress in Marseille
Last week the International Union for the Conservation of Nature (IUCN) held their once every four years World Conservation Congress in Marseille. Part of that event is a four-day Forum, whose agenda is way broader than species conservation and the environment.
This year’s event - billed as the first major environmental conference since the pandemic - had a strong track on economics and finance.
In the past, IUCN Congresses have played a role setting the agenda for policy frameworks such as the Convention for Biological Diversity (CBD), but also for being a kind of test balloon forum for big societal issues such as participation, inclusion and governance.
The Marseille event put the difficult topic of biodiversity finance front and centre: discussions were ‘early stage’ and more about understanding challenges than rushing to solutions. If you are looking for a comprehensive download on this space, these sessions are a great place to start.
Here are some of the key takeaways:
👉 The finance sector is making efforts to start aligning with the post-2020 framework but the way ahead is challenging because metrics are lacking.
👉 Addressing biodiversity related financial risk is more difficult than climate because there is no universal metric to translate into the usual financial metric.
👉 The more a financial system is dependent on ecosystems, the more it is at risk to financial risks.
Silent Spring for the Financial System
That last point is based on a recent study by the Banque de France, the French central bank.
Romain Svartzman, Research Economist at the BDF presented the findings of a new paper he co-authored called ‘A “Silent Spring” for the Financial System? Exploring Biodiversity-Related Financial Risks in France’.
Before we look at the conclusions, here’s the big why from that paper.
The risks posed by biodiversity loss to ecological and socioeconomic
systems could be at least as high as those imposed by climate change, in addition to
interacting with them.
The study looked at the French financial system and found that the more a financial system is dependent on ecosystems, the more it faces financial risks. 42% of securities in France come from issuers that are highly or very highly dependent on at least one ecosystem service.
👉 Addressing biodiversity-related financial risk is more difficult than climate risk, as central bankers are now quite used to climate risk.
👉 Main challenge is lack of a universal metric.
Svartzman cautioned that we face deep uncertainty on where the risk will hit, and which player, and noted that we have a long way to go to estimate biodiversity risk.
Public development banks as seed funders in biodiversity finance
Public development banks were also active in the biodiversity and finance discussions, mostly explaining their role as seed funders of initiatives that can scale by attracting investors from the private sector, or, in other words, blended finance.
Gilles Kleitz, Director of Biodiversity, Water and Agriculture of the Agence Française de Développement, talked about how public development banks are starting to try and align with the post-2020 Global Biodiversity Framework, the new deal for nature that will be agreed at the CBD COP15 at Kunming, China next April.
A first step towards that alignment is their effort to craft a common position among themselves, which can be seen in the declaration from last year’s inaugural “Finance in Common” summit.
Here’s a sample from that declaration:
Nature-based solutions, sustainable resources and land use as well as better consideration of nature-related risks will be used to promote a biodiversity-positive economy as well as climate neutrality.
The same work happened in climate change 6 years ago - in and around COP21 - non-state actors shaping commitments and pledges, building coalitions, launching campaigns.
These early moments where dialogue feels authentic, exploratory and fresh are a great time to tune in. The Marseille dialogues had that early stage quality. Experts were acting humble and learning from eachother. It was impressive.
Oh, ICYMI, President Macron was in Marseille to open the Congress (alongside Harrison Ford), and amidst the flurry of announcements, he promised a One Ocean Summit either end 2021 or early 2022. If international summitry is the music of electoral victory, play on …
From and beyond the podcast
Coming soon, the next podcast episode will be a discussion about Degrowth and Green Growth, featuring Julia Steinberger from the University of Lausanne, and Malcolm Fairbrother from Umea University and the University of Graz.
Thank you for reading, for subscribing, and for caring. I do this work in my own time, and with my own money, so if you appreciate what you read here, please do share with others to help grow the community.