Now business wants to get better at valuing nature
On 7–19 December, representatives from the whole world meet at COP15 in Montreal, Canada. This time, the interest from the business sector to participate is record high, says Susanne Arvidsson, Associate Professor at Lund University School of Business and Management. She is also the director of a large research programme on biodiversity and the financial sector.
The business sector has focussed on climate change and emissions for a long time. This has been featured in sustainability reporting and a certain adaptation of business models and investments. When it comes to biodiversity there is a large knowledge gap, and the issue is much more complex. Now, businesses want to understand more and be drivers for change.
” We notice that it is important to industry and the financial actors to get involved and face the challenges related to biodiversity loss today. They want to contribute and find solutions. They turn to us for cooperation, says Susanne Andersson.
Turning complex data into actions
Simplified and applicable definitions or indexes are what is requested by the market, but this is hard to produce with regards to biodiversity. There is no single indicator such as CO2 equivalents. Biodiversity entails both species and genetic variation within populations as well as habitats and the balance in and between whole ecosystems. To provide measures on all these interdependencies, there is a need for other kinds of data sets and analytic methods.
The financial sector is looking for tools and guidance on how to work to halt and reverse biodiversity loss. This entails species, the genetic variation within species as well as their habitats and inter-dependent factors that ensures that whole ecosystems function and are balanced. There is a great need for more knowledge and better methods.
” Today, the tools are inadequate, and we must also take into account the interactions between climate and biodiversity. We are in the process of developing new solutions for measurements and implementation, says Susanne Arvidsson.
Clear and standardised guidelines need to be integrated into decision-making so that businesses, investors, and public sector understand how to act. Susanne Arvidsson underlines that one should not expect perfect tools that cover all aspects to one hundred percent.
“At first, we will have to settle with models that are good enough, maybe to 60 percent if they can be implemented to 80-90 per cent by the financial system. Later, these implemented metrics can be adjusted and refined”, says Susanne Arvidsson.
Furthermore, she believes that it may be necessary to set different goals for different ecosystems to make it manageable for various actors and adaptable to their specific area of business.
“We use different languages when we talk about the values of nature. The language of economics is not adapted to handle the complexity of ecosystems. We will probably need to use other narratives and descriptions rather than traditional indexes, Susanne Arvidsson explains. “
Transition to nature positive approaches
There are several international initiatives that are driving this transition. The EU taxonomy launched in 2020 provides a framework for classifying sustainable financial investments for the financial sector actors such as asset managers, banks, and pension funds as well as companies that are required to produce sustainability reporting.
CSRD, a new directive for accounting that entails biodiversity, comes into effect in 2023. It will ensure that businesses in EU will report the social and environmental effects their activities have. An initiative in 2021 is the TNFD, the Task Force on Nature related Finance Disclosure. It is inspired by the TCFD that deals with climate related effects and is used globally today.
“We have started to work on TNFD in the Mistra BIOPATH programme, says Susanne Arvidsson and continues: Today, the TNFD is still in a pilot phase, but we aim to work together with our industrial partners to provide contributions to the recommendations that are to be launched in fall 2023.
The coming years will show if all the good intentions and joint efforts by experts in biodiversity and the financial sector are sufficient to halt and reverse the loss of biodiversity.
“For the first time, the conference on the Convention of Biodiversity, COP15, will have two days on Business and Biodiversity and one full day on Finance and Biodiversity. I will attend online and follow the current momentum where we see chances of forceful change, concludes Susanne Arvidsson.
COP 15 Finance and Biodiversity Day 14 december
https://www.cbd.int/article/cop15-finance-and-biodiversity-day
COP 15 Finance and Biodiversity Day 14 december
https://www.cbd.int/article/cop15-finance-and-biodiversity-day
About TNFD
TNFD – Taskforce on Nature-related Financial Disclosures