A new ENCORE biodiversity
module by the Natural
Capital Finance Alliance — a collaboration
between the UN Environment Program (UNEP) World Conservation Monitoring
Centre, the UNEP Finance Initiative and Global Canopy — enables banks
and investors to analyze the potential impact of their investment activities in
agriculture and mining on biodiversity loss, with focus on species
extinction and loss of ecological integrity.
The ENCORE biodiversity module is an extension of the free, online ENCORE
(Exploring Natural Capital Opportunities, Risks and Exposure) tool,
launched in
2018
— which assists the finance sector in visualizing the links between the economy
and nature. Since then, more and more evidence — including startling research
from
CDP
and the UK
government
(to name a few) — has reiterated the escalating risks from nature loss that
financial institutions face in the coming decades. US$44
trillion of
economic value generation (over 50 percent of global GDP) is moderately or
highly dependent on nature and its services; but the world’s ecosystems have
declined by 47 percent globally on
average compared to their earliest estimated states, with 1
million species at risk of extinction.
This creates material risks and opportunities for banks, and asset owners and
managers, as they invest in and lend to companies facing increasing physical,
market, regulatory and reputational threats associated with biodiversity loss.
Momentum is building and leading corporations and financial institutions are
increasingly taking biodiversity into account, seeking ways to align financial
flows to global biodiversity goals: Kering, for example, has committed to
having a net-positive impact on biodiversity by
2025;
the Science Based Targets Network recently issued interim
guidance showing
companies how to protect and restore nature in line with science; and just last
month, HSBC, WRI and WWF launched their $100 million Climate Solutions
Partnership,
of which projects that protect and restore biodiversity are a key focus.
“Data is key to unlocking finance sector action on biodiversity loss, and the
missing link that financial institutions tell us they urgently need to shift
their financing and investment away from nature-negative activities and towards
nature-positive ones,” says Niki Mardas, Executive Director of Global
Canopy. “The ENCORE tool has already been used by key finance sector players,
like the Dutch Central Bank, to explore nature-related risks across entire
markets. Now, the new ENCORE biodiversity module enables individual financial
institutions to take further targeted action in sectors like agriculture and
mining, which have high impacts and dependencies on nature.”
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Developed in partnership with over 30 financial institutions, the ENCORE
biodiversity module lies at the forefront of sustainable
finance
— allowing financial institutions to take immediate action, activate stakeholder
engagement, and transition their portfolios towards a nature-positive future.
Banks and investors can use the module to map their current exposure, and
explore future scenarios, as well as identifying potential pathways to increase
positive impacts within agricultural and mining portfolios. The module provides
guidance on company engagement, enabling financial institutions to work with
stakeholders in high-priority areas to adapt production practices with the aim
of making them nature-positive.
“Financial institutions are increasingly aware that biodiversity loss is an
urgent issue they must tackle. The challenge has been to gain a more granular
understanding of how biodiversity risks and opportunities show up in specific
portfolios,” says Corli Pretorius, Deputy Director of the UNEP World
Conservation Monitoring Centre. “Now, financial institutions can use the new
module to understand the biodiversity risks and opportunities in their
portfolios; they can prevent or account for the negative impacts on nature,
while directing investments to better outcomes for people and planet.”
The ENCORE tool and biodiversity module are available by signing up
here.
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Sustainable Brands Staff
Published Jun 3, 2021 8am EDT / 5am PDT / 1pm BST / 2pm CEST