Protecting biodiversity - what can the financial sector do?
According to the World Economic Forum (Global Risk Report 2023), the loss of biodiversity is one of the four greatest risks facing the world's population over the next 10 years, alongside a lack of climate protection and climate change adaptation as well as severe weather disasters. Biodiversity refers to the diversity of life, whether animal or plant. In order to preserve this, it is necessary to protect and maintain the various habitats.
The need for action on the part of the financial sector was presented and discussed in a webinar on 7 November 2023. The event took place as part of the webinar series "Green Money for Green Investments", which was organised by ÖGUT on behalf of the Ministry of Climate Protection and in cooperation with the Ecolabel team at VKI. The event was hosted by Katharina Muner-Sammer (ÖGUT).
After a welcome from Josef Behofsics (BMK), Jakob Mayr (WWF) gave an introduction to the topic of biodiversity. He pointed out that countless vital services that we need every day are thanks to biodiversity. He also spoke about the current biodiversity crisis we are facing. This is expressed by an extreme decline in species of 69 per cent since 1970 (WWF 2022: Living Planet Report). The drivers of this crisis are habitat destruction, the climate crisis, overexploitation of species, environmental pollution and invasive species and diseases.
In her presentation, Anete Liepina from investRFP discussed the various biodiversity risks for the real and financial economy - including physical risks (loss of natural capital), liability risks (e.g. legal proceedings, penalties) and transition risks (e.g. procurement standards). The loss of ecosystem services causes losses of between USD 4 trillion and USD 20 trillion per year (PIR 2023: Does biodiversity risk affect asset prices?). At the same time, the protection of biodiversity also offers business opportunities. Liepina refers here to the guidelines and recommendations of the World Economic Forum for various sectors (Business for Nature 2023: Sector Actions Towards a Nature -Positive Future).
Global framework agreement for the protection of biodiversity
The protection of biodiversity is now increasingly being integrated into legal frameworks for the financial and real economy at EU level, e.g. in the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy and the EU Supply Chain Directive (CSDDD). At international level, the UN Biodiversity Conference ended in December 2022 with a new "Global Framework Convention on Biodiversity".
Rose with bee© Ecolabel
In his presentation, Christoph Chrysalis from the Federal Environment Agency addressed the topic of biodiversity in the context of the EU taxonomy. The EU taxonomy is a standardised classification system for defining ecologically sustainable economic activities. The protection of biodiversity is one of the six environmental objectives within the taxonomy. Chrysalis pointed out that despite being a high priority, important topics such as agriculture and forestry, food production, etc. were not included in the taxonomy. Specifically, there are only two "taxonomy-compliant" activities that contribute directly to the protection of biodiversity: habitat restoration and tourism businesses. Otherwise, biodiversity risks are covered indirectly within the EU taxonomy (Do No Significant Harm/DNSH).
Examples from practice
This was followed by two practical examples from the financial sector that are dedicated to the protection of biodiversity. Stefanie Schock and Dominik Varga from EAM presented the biodiversity guidline of Erste Asset Management. In addition to the commitment to the protection of biodiversity, the topic is integrated into the investment process and promoted through active ownership (engagement). Günther Herndlhofer from VBV - Vorsorgekasse AG, reported on the "Finance for Biodiversity Pledge", which the pension fund was the first Austrian financial company to sign. This platform offers an exchange of knowledge within its participants and joint engagement activities and working groups.
The event summarised the urgency of the topic of "protecting biodiversity" and the close link to the topic of climate change. At the same time, there are already guidelines and initiatives in this area that can help companies to get to grips with the topic.
The individual presentations from the webinar can be downloaded here: https://www.oegut.at/de/events/2023/11/uz-webinar-schutz-biodiversitaet-was-kann-finanzbranche-tun.php
Katharina Muner-Sammer, ÖGUT