INSIGHT by Dr Rebecca Drury and Gemma James, Chronos Sustainability
This year’s World Biodiversity Day theme is “From Agreement to Action: Build Back Biodiversity”. In December, the United Nations Biodiversity Conference (CoP15) ended with a landmark biodiversity agreement, clearly signalling action stations for investors. In a rapidly evolving landscape for biodiversity assessment and disclosure, it can be challenging for investors to know where to begin. However, there are a clear areas where investors can take immediate and ambitious action on biodiversity. From the high seas to transition plans, here are three areas of progress that have been on our watchlist since COP15, why they matter, and what the finance sector needs to prepare now to do their part on biodiversity.
| Oceans: The High Seas Treaty
In March this year, the text of the Biodiversity Beyond National Jurisdiction treaty (BBNJ) – also known as the High Seas Treaty – was agreed. International waters that lie outside of official state boundaries comprise of nearly two-thirds of the oceans, are largely unregulated, and are exposed to overexploitation and pollution.
The treaty sets the groundwork to regulate activity in these areas and protect marine biodiversity, which is an important element in achieving the Global Biodiversity Framework target to protect 30% of the world’s land and marine areas. It is anticipated to pave the way for new marine protected areas, equitable benefit sharing of marine genetic resources and more rigorous Environmental Impact Assessments. The treaty still needs to be formally adopted and ratified, and there is significant work ahead to determine how it will be managed and implemented.
To drive agreement to action, investors can engage with existing investments in companies dependent on oceans (such as seafood and shipping) to address overexploitation and pollution. There is also an opportunity for investors to hold governments accountable to the High Seas Treaty to promote development of a sustainable blue economy that protects marine biodiversity.
| Nature-Related Disclosure: Finalising TNFD
TNFD is a key disclosure framework which will bring some necessary consistency to nature reporting. After a highly collaborative consultative process, the final TNFD framework is nearing release (due September), with a number of key additions in the latest release of the beta framework (V4.0). Highlights are:
〉Disclosure Recommendations: a complete set of disclosure recommendations applicable to all sectors. This builds on the TCFD with a change to the risk management heading to include impact management so that impacts and dependencies can be disclosed as well as risks and opportunities.
〉LEAP approach: additional guidance on doing the assessment such as scoping questions for corporates (in addition to those which already exist for financial institutions), criteria to identify priority locations, metrics to assess responses to risks and opportunities, and specific guidance on sectors and biomes.
〉Metrics: Core disclosure metrics which are mandatory for TNFD alignment reporting and additional metrics which are suggested to complement but not mandatory. The core disclosure metrics are split into global (applicable to all) and there are sector specific metrics too. For the core global metrics, there are four metrics on risk, one on opportunity, and 10 related to the IPBES impact drivers although invasive species is not yet incorporated
〉Additional guidance: There are also additional materials on engaging affected stakeholders, target setting and scenarios.
Investors should prepare for disclosure on nature by screening and assessing portfolios for nature-related risk and opportunities aligned to the TNFD framework. They can also engage portfolio companies on assessing nature-related impacts, dependencies, risks and opportunities, and in turn on mitigating risks and promoting opportunities.
| Climate and nature: Guidance on integrating nature into transition plans
WWF released a guide, in which Chronos was a partner, on how to integrate nature into net zero transition planning. Nature and climate are two sides of the same coin and addressing them together through transition planning provides an opportunity to identify the interdependencies and co-benefits of tackling these dual challenges together, as well as any trade-offs between them. Whilst nature can support climate mitigation activities, some decarbonisation activities have the potential to have a detrimental effect on nature, making safeguarding nature a priority. The guide utilises the frameworks on transition planning developed by GFANZ and TPT and identifies links to nature and to existing tools and approaches that can be used as part of an integrated assessment.
Investors can drive integration of nature into transition plans to mitigate both climate and nature-related risks. Using this guidance, investors can first assess the interdependencies, co-benefits and trade-offs between climate and nature in their own transition plans, as well as encouraging portfolio companies to do the same. This includes assessing nature-related impacts and dependencies of the transition plan. Investors can also be advocates for the integration of climate and nature through other frameworks and standards to ensure that climate risk activities are implemented with safeguards for nature considered.
| Conclusions
Translation of the targets in the Global Biodiversity Framework into the High Seas Treaty, into disclosure requirements, and into transition plans is a positive signal that we are moving in the right direction. It is now critical that governments, companies and finance move from agreement to action through addressing and implementing these areas in full. As outlined here, there are clear immediate actions for responsible investors to assess their impacts and dependencies on nature, engage with their investees and identify interdependencies between climate and nature to align their operations and portfolios with the global biodiversity framework, and to prepare for expected policy changes. At Chronos, we will continue to monitor developments and work with our partners to deliver the Global Biodiversity Framework and drive positive impact for nature.
| about
Dr Rebecca Drury, Senior Manager, Biodiversity and Nature. Rebecca supports the development and execution of Chronos’ biodiversity and nature-based programmes through providing technical and programme management support. Rebecca joined Chronos in June 2022 from Fauna & Flora International (FFI), where, as Head of Wildlife Trade, she led FFI’s Wildlife Trade Initiative which focuses on preventing illegal and unsustainable trade in wild species, with an emphasis on community-based approaches and integrating social dimensions into conservation practice. In previous roles, Rebecca focused on developing the institutional resilience of civil society organisations globally to deliver conservation impact. She has extensive experience of developing and delivering projects and partnerships across a range of landscapes.
Gemma Janes, Head of Biodiversity and Nature. During her career, Gemma has developed global expertise in biodiversity, water and environmental issues and has deep knowledge of investment research and decision-making. As Chronos’ lead for biodiversity and nature programmes, she is responsible for supporting clients to deliver nature-led engagement, research and intervention programmes. Gemma joined Chronos in early 2022 from the Principles for Responsible Investment (PRI) where, as Senior Lead and previously Head of Environmental Issues, she was responsible for overseeing investor initiatives, research and engagement on environmental themes including plastics, biodiversity and water. Prior to the PRI, Gemma worked for the International Council on Mining and Metals (ICMM), where she focussed on environmental and climate change issues.
| 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.
