Integrating Biodiversity into Investment Decisions

29 May 2008 | Bonn, Germany

UNEP Finance Initiative and Fauna & Flora International (FFI) co-hosted a side event at the 9th Conference of the Parties (COP) to the Convention on Biological Diversity (CBD). The event addressed the issue of integrating biodiversity and ecosystem services (BES) into financial decision-making and convened a panel of experts from the BES and finance sectors, bringing a rich blend of perspectives to the discussion. Biodiversity and ecosystem services (such as water supply, soil quality and erosion control) are being lost and degraded at an alarming rate. The CBD global 2010 target to ‘significantly reduce the rate of biodiversity loss’ will not be met, indeed the global trend is an increasing rate of loss. But what does this mean for business? In a capitalist market where decisions are driven by the bottom line, should business care about biodiversity? Following an introduction from Sylvie Lemmet, Director, Division of Trade, Industry and Economics (DTIE), UNEP, Dr. Leon Braat, of Alterra, Wageningen University, presented the findings of ‘The Cost of Policy Inaction’, one of five reports that fed into a first assessment of the European Union-commissioned study on ‘The Economics of Ecosystems & Biodiversity’. Just as the Stern Report did for climate change, this initiative is intended to demonstrate the immense importance of BES by estimating their financial value. The initial findings are compelling. Unless current trends change, the annual loss of welfare from the cumulative loss of terrestrial ecosystem services will be $14 trillion by 2050. This is equivalent to 7% of projected global GDP for 2050, and does not include the value of coastal or marine BES. The sheer scale of estimated loss draws sharp relief on the relevance to the private sector. Richard Burrett, former Head of Sustainable Development at ABN AMRO and Chair of UNEP FI’s work stream on biodiversity and ecosystem services, noted that BES risks and opportunities are still largely unmonitored within the finance sector, and highlighted examples of where companies are already feeling the impact of BES degradation. One case is bee colony collapse disorder in the USA, where crops such as almonds have suffered significantly from the loss of pollination ‘services’. The finance sector, through investment and project finance decisions, leverages great influence over corporate sector practice. To this end, FFI, UNEP FI and the Brazilian business school FGV, have established the ‘Natural Value Initiative’ (NVI), which is developing a toolkit to assist finance institutions to incorporate BES issues into their decision-making. Annelisa Grigg, FFI’s Director of Environmental Markets, introduced the NVI. The NVI toolkit will initially be used to benchmark around 30 companies within the food, beverage and tobacco sectors, based on their performance in managing BES risks and opportunities. Six finance sector institutions, with investments in these companies, have agreed to pilot the toolkit and the results will be used to generate a simple tool designed to mainstream BES into finance sector decision-making. To round-up the event, which was ably chaired by Paul Clements-Hunt of UNEP FI, Craig Hanson presented the World Resources Institute’s recently launched Corporate Ecosystem Services Review (ESR), designed to help companies identify the ecosystem services that are most material to their business. The challenge of tackling the loss of biodiversity and ecosystem services is great, but the cost of inaction is greater. For more information about the Natural Value Initiative and the business case of managing BES risks and opportunities, visit . Copies of the ESR are available for download at . A webcast of this event is also available at Agenda (PDF: 115 KB)