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Tackling Nature Loss: Now or Never

Storebrand has been invited to join a new taskforce tackling biodiversity risk as investors increasingly recognise environmental threats beyond climate change

Published 11.12.2020 by Emine Isciel

The threat to the biodiversity of our planet has never been greater. Recent news that Brazilian deforestation is at a 12-year high follows the WWF's Living Planet report* earlier this year which revealed that mammal, bird, amphibian, reptile and fish populations declined by over two-thirds (68%) on average between 1970 and 2016. As well as the devastating effect on species and the environments they inhabit, the financial costs of biodiversity loss for businesses and the wider economy mean that investors are starting to take notice.

Dependency on nature can vary significantly between sectors. Although the direct risk to industries such as forestry and agriculture is evident, the indirect threat to many others is less obvious but often considerable. Nature Risk Rising, a recent study* by the World Economic Forum, highlights how the gross value added (GVA) by 22 global industries has medium or high dependency on nature, either directly or "hidden" within their supply chains:


To tackle the problem, an Internal Working Group was launched in July to form a Task Force on Nature-related Financial Disclosures (TNFD). It aims to create a reporting framework that will assist the finance and corporate sectors to manage biodiversity risks and identify new opportunities. As the UN Secretary-General, António Guterres, outlines: "TFND will help financial institutions to shift finance from destructive activities and toward nature-based solutions.”

The idea for TNFD was first muted in Davos at the 2019 World Economic Forum and has since taken shape through a four-way partnership between Global Canopy, the UN Development Programme, the UN Environment Programme Finance Initiative and the WWF. Represented by Jan Erik Saugestad and I, Storebrand is a member of the Internal Working Group which now comprises 73 companies, governments, regulators and think tanks working to develop TNFD's reporting, metrics, and data needs.

A similar framework already exists through the Task Force on Climate-related Financial Disclosure (TCFD), which was established in 2015 to raise financial awareness of climate change. The forerunner to TNFD focuses on measurable CO₂ emissions and excludes threats such as plastics in the oceanic food chain, loss of soil fertility and pathogens like coronavirus that the new initiative hopes to address. Ironically COVID-19 may delay TNFD, but the intention is that reporting frameworks will be developed next year – when the task force's scope, team and plan will be announced – and then tested and made available worldwide from 2022.

Critical implications for humanity

TNFD hopes that greater disclosure will help to reduce the financial sector's negative impact on biodiversity. Applying financial analysis to value natural assets was pioneered a decade ago by the UN Environmental Programme's TEEB (The Economics of Ecosystems and Biodiversity) report*. Over 100 scientific, economic and policy experts from around the world assessed the economic costs of biodiversity loss and ecosystem degradation in a study which became a foundation for the green economy movement.

Our greater understanding means that action is now required. A 2019 report* from the Intergovernmental Science-policy Platform on Biodiversity and Ecosystem Services (IPBES), which was modelled on the Intergovernmental Panel on Climate Change (IPCC), concluded that the loss of habitats and species poses as much of a threat to life on Earth as global warming. In the most comprehensive assessment of biodiversity ever undertaken, it found that "the global rate of species extinction is already at least tens to hundreds of times higher than the average rate over the past 10 million years" and one in eight living species is at risk of extinction.

Meanwhile, this year's Global Risks Report from the World Economic Forum* placed biodiversity loss among its top five risks in terms of likelihood and impact for the first time, arguing it to have "critical implications for humanity, from the collapse of food and health systems to the disruption of entire supply chains."

The complexity of biodiversity, which extends far beyond climate change, creates unique reporting issues. TNFD's ambition to increase understanding of the dependencies and impacts that different business sectors have on ecosystems is also challenged by the vast scale of our natural resources. A recent estimate put the monetary value of goods and services provided by global ecosystems at $33 trillion per year – nearly double the global production of human activities*.

Nature-positive opportunities

As well as helping to identify and quantify risks, TFND aims to increase recognition of investment opportunities. It will be an important step towards achieving some of the UN Sustainable Development Goals (SDGs) – particularly Life on Land (SDG 15) and Life Below Water (SDG 14) – which are increasingly becoming a lens through which the financial sector’s success is measured. According to the World Economic Forum* nature-positive initiatives could generate up to US$10.1 trillion in annual business value and create 395 million jobs by 2030:

Source: The Future of Nature and Business Report, WEF, July 2020

Storebrand has a long-standing commitment to biodiversity, which is integral to our group-wide sustainability and climate policies, with the latter acknowledging the vital role of ecosystems in climate change mitigation and adaptation. We have also pledged to exclude companies involved in the unsustainable production of palm oil, soy, cattle and timber from our investment universe and recently signed the Sustainable Blue Economy Finance Principles to protect the world's oceans, which are its largest ecosystem and home to 80% of the planet’s biodiversity.

We hope to play a leading role in TNFD and that the task force will have an effective role in improving access to the data financial institutions need to manage biodiversity risk. Immediate action is needed to protect our planet and we look forward to keeping you updated on our progress.

*Source: Living Planet Report, WWF, September 2020

*Source: Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy, World Economic Forum, January 2020

*Source: TEEB (2010), The Economics of Ecosystems and Biodiversity Ecological and Economic Foundations

*Source: The Global Assessment Report on Biodiversity and Ecosystem Services, IPBES, 2019

*Source: The Global Risks Report 2020, World Economic Forum, 2020

*Source: Tomorrow's production systems will be closer to nature, blog, January 2017

*Source: The Future of Nature and Business, World Economic Forum, July 2020

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