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Harnessing financial markets to benefit biodiversity

25/10/2007

The United Nations Environment Programme Financial Initiative (UNEP FI) yesterday released Bloom or Bust, a report that presents ways the finance sector can address its impacts on biodiversity and ecosystem services to benefit both its own investments and the natural environment.

Commissioned by the Biodiversity & Ecosystem Services workstream of UNEP FI, the report was written by experts from Fauna & Flora International and finance sector experts Sustainable Finance Limited. It sets out a convincing business case for considering biodiversity as a mix of opportunities and risks for the finance sector. The authors provide concrete examples from financial institutions leading in biodiversity policy commitments including Goldman Sachs, JP Morgan, ANZ and Citigroup.

The last few years have seen a rapid change in perception of risk within the finance sector. The ability to manage biodiversity and ecosystem risks is increasingly being recognised as a way of securing continued access to resources, license to operate and access to finance, with the inclusion of a specific requirement on biodiversity conservation in the Equator Principles (financial industry benchmarks for managing social and environmental risk).

The potential for new biodiversity-related financial products is also growing, particularly in the carbon and water markets. For example, the World Bank estimates US$43 billion could flow into developing countries if forest conservation, often referred to as ‘avoided destruction’, becomes part of any post- Kyoto agreement on global emissions reductions.

“Significant investment opportunities linked to ecosystem services are already emerging. Institutions that track these issues and respond to them quickly will gain first-mover advantage. The carbon market is seen as a huge opportunity, but this is only the tip of the iceberg.”, commented co-author Annelisa Grigg, Director of Corporate of Affairs at Fauna & Flora International.

The report goes on to make practical recommendations for financial institutions. For instance, it encourages them to use their leverage to influence the biodiversity policy of the companies they invest in. It also calls for a coordinated approach for the finance sector that will set industry standards in biodiversity and ecosystem services risk management.

Download the CEO briefing of the report.
For more information, contact: Rebecca Foges, Fauna and Flora International, on +44 (0)1223 579491 or Rebecca.foges@fauna-flora.org