The Inevitable Policy Response (IPR) launches first integrated nature and climate scenario

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© Rui Silvestre

The Inevitable Policy Response (IPR) has launched FPS + Nature, (FPS+N) the first integrated nature and climate scenario published for use by investors. FPS+N incorporates interrelated climate and nature trends to IPR’s flagship 1.8C Forecast Policy Scenario to create a realistic assessment to help investors respond to the climate and nature emergency.

FPS+N analyses forceful responses to both climate change and nature loss out to 2030 and 2050, grounded in existing and emerging policy action. With calls to action and mandatory reporting of biodiversity-related risks gaining increasing global support, FPS+N provides investors and policy makers with a credible, high conviction base demonstrating how the effects of both nature and climate policies could shape the future of land use.

IPR FPS+ N sees nature-related policies increasingly impacting the land use sector with effects filtering through the whole economy and interacting with climate action across:

• food
• energy
• nature-related goods, service and assets
• supply chains and
• the global environment

COP 15 in December foreshadowed a new wave of momentum towards protecting nature and halting global biodiversity loss with increased emphasis on public and private finance aligning financial flows with the Global Biodiversity Framework and the 2050 Vision for Biodiversity.

FPS+N incorporates additional policy levers that support the nature transition, land protection / restoration, and nature markets to help investors understand how the effects of both nature and climate policies could shape the future of land use.

It fills a crucial gap in conducting robust risk / opportunity assessments, providing investors with a forward-looking view on how policy, technological and social trends could impact investment value drivers.

FPS+N forecasts growth in nature markets through formalisation of nature-related targets, creation of market infrastructure and that could support emergence of voluntary biodiversity credit markets, and potentially be integrated with NBS-based carbon markets. Revenue potential estimates from generation of biodiversity credits could be USD18 billion annually by 2050.

NBS could grow to reach USD 22 billion in annual revenue in 2030, and USD 204 billion in annual revenue in 2050, as corporates and governments pursue cost-effective carbon mitigation options that also produce nature co-benefits.

The new scenario also covers six other policy areas at the nexus of land use, climate and nature (carbon pricing, bioenergy, diets, deforestation, sustainable agriculture and food waste) and includes a detailed analysis of six different types of Nature Based Solutions (NBS), including blue carbon options such as mangrove restoration.

Accompanying the release is an FPS+ Nature Value Drivers Database, an open access resource for incorporating over 80 Land Use Value Drivers for financial institution and policy maker use and complement the previously released Value Drivers datasets for Energy, Land Use & Tropical Soft Commodities.

Mark Fulton, Project Director, Inevitable Policy Response: “Biodiversity loss is fast emerging as a disaster that needs to be addressed now. The Inevitable Policy Response is unique in embedding biodiversity into a land scenario and interlinking with an energy scenario, all in a climate transition context.”

Daniel Gallagher Head of Climate Technical Guidance, Principles for Responsible Investment “IPR’s underlying value is built in part on an ability to synthesize forward looking assessments against current developments to aid investor analysis and decision making. IPR Nature expands for investors an understanding of the growing interrelationship between climate, nature and land use outcomes and the impacts across multiple asset classes.”

Jason Eis, Executive Director, Vivid Economics “The policy response to the nature crisis could result in material shifts to economic and financial value in critical sectors. Regulators increasingly expect financial institutions manage these naturerelated impacts and risks alongside climate risk. This new analysis demonstrates how financial institutions can deploy forward-looking scenarios to assess both nature and climate related risk in an integrated fashion and meet regulatory requirements for nature-related disclosure.”

 

All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.