At this point, the finance industry arguably has a pretty good handle on the implications of climate change.
That’s not to say it’s moving aggressively to fight it, but only that bankers and investors have a solid understanding of the sources of emissions in their portfolios, what their clients need to do to decarbonize and what government policies or financing support could accelerate that process.
However, when it comes to biodiversity — climate’s broader sister topic — bankers appear to be less certain. In private conversations, financiers from some of the biggest banks in Europe and the US (as well as a major Canadian lender) told Bloomberg Green they’re at a loss about what to do with biodiversity.
It’s not that they’re ignorant of the threat to human life and economic output posed by mass extinctions or breakdowns of natural systems. It’s just that they don’t understand how to measure its impact on their operations—or how to make money from it.
No one knows what to do, said a senior banker at a major US lender, who asked not to be identified for expressing opinions that may differ from those of their employer. As such, the bank’s work on nature has stalled, the banker said.
While quantifying climate-related risks and aligning portfolios accordingly has been a multi-year effort for everyone from standard setters to finance executives, biodiversity was adopted into sustainability teams’ remit on a much more accelerated timeline.
The launch of the Taskforce on Nature-Related Financial Disclosures in 2021, which asks companies to report their biodiversity footprint, was a key moment in elevating the nature agenda.
A year later, world leaders agreed to protect and restore 30% of the Earth’s land and oceans by 2030. The goal rallied investors around a new catchphrase called “nature positive,” which refers to the idea of stopping and eventually reversing biodiversity loss. It’s the new…