Finance Sector and Biodiversity Conservation - Best Practice Benchmarking - Outcome of a workshop by the European Union Business and Biodiversity ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Finance Sector and
Biodiversity Conservation
Best Practice Benchmarking
Outcome of a workshop by the
European Union Business and Biodiversity PlatformBackground
The EU B@B Platform has been working with the selected sectors to benchmark best practices in
each sector with regard to the conservation of biodiversity.
This document is the outcome of the EU B@B Platform sectoral workshops which were held at
the European Commission premises in Brussels on September 13 (Food Supply and Extractive
industry), September 14 (Agriculture and Forestry) and September 15 (Finance and Tourism).
These workshops aimed to present and discuss case studies linked to this Sectoral Guidance
document, and to present and discuss benchmarking methodologies towards designing the
European Business and Biodiversity Award.
This Sectoral Guidance document includes examples of best-practice guidance concerning the
main risks, responsibilities and opportunities for companies in relation to nature and biodiversity
conservation. It has been built upon existing guidelines and handbooks previously produced with
business organisations and private companies, as well as other relevant materials. It also takes
account of the EU nature legislation, notably biodiversity-relevant EU agreements and directives.
This Sectoral Guidance Document is meant to provide companies with tools and methods,
guidance and best practices already implemented to help them introduce biodiversity
conservation into their strategies and operations.
2Summary
The current document aims at providing guidance to the finance sector in Europe with regard to
pro-biodiversity business opportunities and strengthening the role that the finance sector can play
with regard to biodiversity conservation.
The document summarizes the key findings resulting from a literature search, a collection of best
practices and stakeholder input during a sectoral stakeholder workshop held in September 2010.
At the moment, biodiversity is too abstract for most stakeholders in the finance sector to
incorporate it into their core business and develop products to invest in biodiversity or
opportunities deriving from it. The main reason given for this is the lack of accessible knowledge
in a language that is comprehensible for the sector and the lack of communication with the
environmental sector. In essence both sectors do not speak each other’s language and as such
are unable to cooperate in developing sound biodiversity investment opportunities.
To develop a biodiversity business case for the finance sector, it is therefore important to develop
sources of knowledge and information for the sector in relation to biodiversity and financial
instruments and products. To facilitate this process it would be good to link biodiversity to
financial risk mitigation and other financial topics to make it more visible and comprehensible for
the sector.
Furthermore, awareness about the importance of biodiversity and possibilities for biodiversity
investments amongst senior management and clients needs to be increased in order to create a
supply and demand of biodiversity investments and other related products. Leadership in this field
from both key stakeholders and the regulatory sector is necessary to raise the issue and
incorporate biodiversity into long-term business thinking.
3Table of Contents
1. Introduction ..............................................................................................................................5
1.1. Background to the document – why a guidance document?............................................5
1.2. Purpose, scope and target of the document ....................................................................5
1.3. Nature and structure of the document ..............................................................................5
2. The finance sector, related sectors and biodiversity ...............................................................6
2.1. Definition of the scope and interdependencies with other sectors ...................................6
2.2. How is the finance sector connected to biodiversity (impacts, dependency, benefits)? ..6
2.2.1. Impacts .....................................................................................................................7
2.2.2. Dependency ..............................................................................................................7
2.2.3. Benefits .....................................................................................................................8
2.2.4. Policy and legislative context relevant to the finance sector and biodiversity (global
policy) ..................................................................................................................................9
2.2.5. EU Biodiversity policy ...............................................................................................9
2.2.6. Pan-European Biological and Landscape Diversity Strategy ................................ 12
2.3. Main stakeholders .......................................................................................................... 13
2.3.1. The policy sector .................................................................................................... 13
2.3.2. The finance sector ................................................................................................. 13
2.3.3. Private companies ................................................................................................. 14
2.3.4. NGOs and platforms .............................................................................................. 15
3. Classification and evaluation of available best practices ...................................................... 15
3.1. Common approach and key steps of biodiversity integration in business ..................... 15
3.1.1. The business case for biodiversity and ecosystems ............................................. 16
4
3.1.2. The key action points for business ....................................................................... 16
3.1.3. Biodiversity business risks and opportunities ........................................................ 17
3.1.4. Pro-Biodiversity Business – financial sector approach .......................................... 18
3.1.5. What are the benefits of pro-biodiversity business? .............................................. 18
3.1.6. Can markets work for biodiversity management? ................................................. 19
3.2. Sectoral specific approach to implement Business & Biodiversity actions .................... 19
3.2.1. How to integrate biodiversity into the financial sector? ......................................... 20
3.2.2. Biodiversity risks for the financial sector ................................................................ 20
3.2.3. Biodiversity opportunities for the financial sector .................................................. 21
3.2.4. Business and Biodiversity guidelines for the financial sector ................................ 21
3.3. Classification and analysis of existing best practices .................................................... 23
3.3.1. Introduction to analysis grid ................................................................................... 23
3.3.2. Selected best practices .......................................................................................... 23
4. Gaps and needs: Best practices analysis in the sector ........................................................ 29
4.1. Key needs ...................................................................................................................... 29
4.2. Key success factors ....................................................................................................... 30
5. Conclusions........................................................................................................................... 30
6. References ............................................................................................................................ 31
41. Introduction
1.1. Background to the document – why a guidance document?
The finance sector is one of the most influential business sectors. By the nature of their core
business and products, financial institutions are able to influence the behaviour of other
businesses, but also policy sectors and, up to some extent, even private parties. The sector
therefore has the possibility to provide a positive contribution to biodiversity on a large scale. Very
few sectors are able to not only take biodiversity into account in their own business activities, but
also stimulate other sectors to do the same. In essence, the positive effects of a finance sector
that takes up biodiversity and its conservation as one of their main issues is virtually unlimited.
However, biodiversity is at the moment too abstract for most stakeholders to actively incorporate
it into their investment policies and business practices. There is a clear need to provide easily
available guidance based on existing knowledge, best practices and publications in a form that
can easily be understood and implemented by finance sector stakeholders.
This guidance document, developed in the framework of the EU Business @ Biodiversity
1
Platform , is intended to respond to this need and guide the finance sector towards more
biodiversity friendly business operations.
1.2. Purpose, scope and target of the document
Business stakeholders play an important role in integrating biodiversity into different EU policy
areas. The EU Business @ Biodiversity Platform aims to strengthen the link between the
business sector and biodiversity conservation. The Facility works with the selected sectors
(agriculture, food supply industry, forestry, extractive industries, financial sector and tourism) to
benchmark best practice in each sector with regard to the conservation of biodiversity. The EU
intends to develop means to establish pro-biodiversity business, help business to find solutions to
change their activities and to ensure a fair income while considering biodiversity and creating new
business opportunities.
This includes the development of best-practice guidance concerning the main risks,
responsibilities and opportunities for companies in relation to nature and biodiversity
conservation. The guidance builds on existing guidelines and handbooks previously produced
with business organizations and private companies, as well as other relevant materials. Insofar as
relevant, the EU nature legislation, notably biodiversity-relevant EU agreements and directives
are also taken into account.
1.3. Nature and structure of the document
In order to carry out an analysis of sectoral best-practice guidance, a bibliographic research was
carried out. This research aimed at gathering for the finance sector the main documents, reports
and programmes giving details on best practices for biodiversity protection. A synthesis by sector
of the overall best practices will allow having an overview of the lack of guidance and identifying
key needs.
The document is made up of 5 main sections:
• Section 1: provides an introduction and background to the document.
• Section 2: introduces the perimeter and interdependencies between the finance and other
sectors. It explores the impacts, dependency and benefits between the finance sector and
biodiversity, describes policy and legislative context, and gives information about the main
stakeholders.
• Section 3: examines the common and sector-specific approach and key steps of
biodiversity integration in business and focuses on selected best practices.
• Section 4: identifies gaps and needs based on best practices analysis in the sector.
5• Section 5: concludes with the key issues of further research needs and cooperation
between the relevant stakeholders.
2. The finance sector, related sectors and biodiversity
2.1. Definition of the scope and interdependencies with other sectors
The financial sector is involved in every other business sector in the world. Amongst other roles,
the sector provides loans to start-up businesses or to businesses that want to develop; it has the
role of shareholder in a wide variety of businesses and develops financial instruments for other
business sectors to invest in. Through these instruments, the financial sector can influence other
sectors and with that provide a positive contribution to biodiversity and biodiversity conservation.
The financial sector is the set of institutions, instruments, and the regulatory framework that
permit transactions to be made by incurring and settling debts, that is, by extending credit. The
financial system makes possible the separation of the ownership of wealth from the control of
2
physical capital .
Because of its role as provider of loans and investments into other business sectors, the financial
sector can steer the development of pro-biodiversity business and set strict requirements in
relation to the biodiversity performance of a business in order for it to be eligible for funding.
Nowadays, the development of ‘green funds’ and ethical investments is relatively common
amongst investors and as such business sectors seeking funding need to respond to this
development. Green funds and ethical investors screen companies not just on their financial
performance, but also on their environmental and biodiversity performance, favouring those
businesses that meet their ethical standards. This is known as Socially Responsible Investing
(SRI). In order to be eligible for a loan from these investors, businesses need to rethink their
practices and make sure they fit within these ethical standards. Due to social and legal pressure,
more and more investors are taking ethical conduct, sustainability and biodiversity into account in
relation to their investments, which increases the pressure on businesses to adhere to strict
ethical and environmental standards in order to remain able to conduct their business practice.
In this context, the finance sector is becoming more of a pressure instrument for businesses to
review their business conduct. Social and legal pressures are two instruments already in use to
stimulate businesses to conduct good biodiversity practice. This can be illustrated by the
involvement of the finance sector in agribusiness initiatives. The sector is a major provider of
funds and credit for the new developments and the functioning of agriculture. Next to that, the
finance sector also provides insurance for crops and related assets and activities. The incentive
coming from the financial sector has always been a strong one and the shift towards ethical
investments is just as big a pressure.
But as a business sector of its own, the financial sector is also subject to the different pressures
regarding sustainability and biodiversity. Through social and legal pressure, the financial sector
also needs to take biodiversity into account and to evaluate its own business conduct as well as
that of the sectors and individual businesses it is investing in. The business sector can influence
other sectors into adopting certain ethical standards, but it is also dependent on adhering to this
conduct itself to keep its license to operate.
2.2. How is the finance sector connected to biodiversity (impacts, dependency,
benefits)?
Despite the recent financial crisis, the financial sector remains one of the largest business sectors
3
in the world. By the end of 2008 global financial assets had a total worth of US$ 178 Trillion .
6For a long time the financial sector remained absent from the environmental domain and did not
4
take the environment or biodiversity into account in their core business activities . Nature and
biodiversity were seen as common public goods that yielded no direct return on investment,
which made them apparently uninteresting to the private financial sector. However, there is a
strong case for the financial sector to get involved in the finance of biodiversity and ecosystem
services and to explore opportunities for private investment in this domain.
2.2.1.Impacts
‘All companies, regardless of sector, both impact on biodiversity and ecosystems and depend on
5
ecosystem services.’
At first glance, the impact of the financial sector on the environment and biodiversity is less clear
than for other business sectors, such as agriculture or the extractive industry. The financial sector
generally does not have big production sites or products that take up a large amount of natural
resources. Even so, the financial sector has both direct and indirect impacts on biodiversity and,
depending on the size of the business and the geographical scope, these can be substantial and
of global importance.
Like every other business, financial sector businesses generate direct impacts on biodiversity by
their own business activities. The location of an office building next to a rich nature area, the
disposal of waste and the consumption of energy are just a few examples of these direct impacts.
In recent years, awareness and recognition of these types of direct impacts have grown in
society. Businesses in different sectors are aware of their direct impact and, due to social
pressure and their own commitment to a healthy and sustainable environment, have started to
take measures to mitigate their negative impact on biodiversity. Where mitigation measures have
proven to be insufficient or impractical to implement, offsetting direct impacts (e.g. carbon
offsetting in regard to business travel or funding the creation of a nature area in a different
location to compensate for the impact of a new office building) has become an important tool for
the financial sector to lower its direct impacts.
Business sector impacts generally tend to be looked upon as negative to the environment and
biodiversity, but this does not necessarily have to be the case. To take the mitigation of direct
impacts by businesses a step further, some businesses have started to adapt activities in such a
way that they generate positive direct impacts on the environment and biodiversity; fitting a new
office building with a green roof or making the building fit for habitation by local fauna. Through
such measures, the direct impacts of the financial sector can even be positive and not require
mitigation or offsetting at all.
In addition to the above mentioned direct impacts, financial sector businesses can have
significant indirect impacts on biodiversity by conducting their core business of lending, investing
and project financing. The provision of these financial services to other businesses, that impact
biodiversity directly or even indirectly, can mean that the financial sector has a considerable
indirect impact on biodiversity itself.
While the direct impacts of a financial sector business are quite easy to point out, the indirect
impacts can be far larger but also harder to identify since the financial sector is usually situated at
6
the beginning of the production chain . The financial position towards businesses seeking
investment gives the financial sector a significant instrument to influence impacts on the
environment and biodiversity. Careful assessment of the possible investment and the utilization of
the financial instrument towards the receiving party will significantly influence the indirect impact
of the financial sector.
2.2.2.Dependency
Until recent years, the main conception was that biodiversity conservation was the domain of
public sector funding. Apart from a few cases where direct negative impacts by businesses were
either fined or needed to be compensated, biodiversity was seen as a common public good to
which no economic value could be assigned. The involvement of private sector businesses in
7biodiversity conservation was limited to charity or sponsorship of civil initiatives for good public
relations.
However, in recent years it has become apparent that public funding alone will not be sufficient to
reach the goals set for biodiversity conservation. Increasingly, national and international policy is
moving towards involving the private sector and private sector funding in the conservation effort.
There is an important role for the financial sector in this regard, including:
• The management of biodiversity risks in lending and investment decisions.
• The setting up of new innovative financial mechanisms for pro-biodiversity businesses and
7
biodiversity conservation areas.
Stakeholders in the environmental field generally lack the expertise regarding financial
instruments and how to create bankable conservation possibilities. On the other hand, the
financial sector suffers from a lack of awareness regarding potentially fundable biodiversity
projects and the means to incorporate biodiversity into assessment procedures for investments.
Financial sector businesses can play an important role for biodiversity, but biodiversity also
contributes to their license to operate. From a corporate social responsibility point of view,
biodiversity needs to be taken into account in the current social climate even if a business is not
involved in biodiversity financing at all.
The financial sector is increasingly being held responsible by the public and (international)
environmental activists for the business conduct of companies they finance. Thus many savings
account owners have indicated that they would change banks if the bank in which they have an
8
account turns out to be involved in financing companies that severely damage biodiversity .
Financial sector businesses are no longer seen just as providers of loans and investors in sound
business opportunities, but more and more as being responsible for what happens with that
investment.
While financial institutions are generally not directly dependent on ecosystem services, they are
exposed to biodiversity and ecosystem services (BES) risks through the loans, investments and
4
insurance cover they provide to companies and projects . In addition to pressure from the public
and their peers, there are other reasons why businesses should take biodiversity into account. As
a reaction to the worsening situation and the goals set for 2010, international legislation has been
adopted to protect the environment and biodiversity. Businesses need to comply with these new
(inter)national environmental regulations. These social and legal pressures only strengthen the
‘naturally’ existing dependence of the financial sector on BES.
2.2.3.Benefits
The financial sector is known for seeking new investment opportunities and tapping into new
markets. Biodiversity conservation is now slowly starting to be explored and presents numerous
opportunities for the development of new instruments, financing schemes and sound investment
opportunities. Biodiversity is a relatively new market which can yield benefits for the financial
sector. Biodiversity investments should no longer be seen as charity or public relations activities,
but as sound investment possibilities in products that can yield a real return for the investing
body.
Portfolio managers are increasingly looking for sustainable investments for their portfolios and
investment opportunities into biodiversity and biodiversity projects provide a new set of products
that can be presented to the customers and utilized for their own investments. Practical examples
have shown that it is possible to develop instruments that provide sound biodiversity investment
opportunities which yield a return on investment that conforms with other markets.
For investors to invest in certain areas or biodiversity projects, it is important to assign a certain
value to these elements and translate it into a sound financial product. Investing in biodiversity
means long-term investments when it comes to direct asset value. Moreover, biodiversity
8investment opportunities exist which yield a return on investment, such as investing in eco-
tourism or sustainable agriculture.
Financial sector involvement can yield benefits for both biodiversity and the financial sector itself.
Public funding will not be sufficient; finding ways to turn biodiversity into sound investment
opportunities generates funding for biodiversity projects and conservation. Creating sound
investment possibilities will ensure the interest and involvement of the financial sector and
provide the right tools to further develop private biodiversity financing.
2.2.4.Policy and legislative context relevant to the finance sector and biodiversity
(global policy)
The UN Convention on Biological Diversity (CBD) was adopted at the Rio de Janeiro Earth
Summit in 1992. It committed governments to the development of national strategies for the
conservation and sustainable use of biological diversity. The European Community is one of the
191 signatory parties to the CBD.
In 2005, two multi-stakeholder meetings, organized by the CBD Secretariat and others, examined
ways to strengthen business engagement in the implementation of the CBD. This emerging
consensus to engage business in the conservation and sustainable use of biodiversity is reflected
9
in the Decisions of the CBD . Decision VIII/17 was the first decision by the Conference of the
Parties focusing exclusively on business and was adopted at its eighth meeting in Curitiba, Brazil,
in March 2006. It covers the engagement of Parties with the business community when
developing and implementing national biodiversity strategies and action plans; the participation of
business in Convention processes; the compilation, dissemination and strengthening of the
‘business case’ for biodiversity; and the compilation and development of good biodiversity
10
practice .
2.2.5.EU Biodiversity policy
th
At the Gothenburg summit in 2001, EU leaders adopted the 6 Environmental Action Programme.
This programme sets the objective to ‘halt the loss of biodiversity by 2010’. This very ambitious
goal surpassed the goal set by world leaders in 2002 to ‘achieve a significant reduction in the
current rate of biodiversity loss by 2010’.
th
This 6 Environmental Action Programme was an addition to the Lisbon Strategy, an action and
development plan for the European Union between 2000 and 2010. The Strategy’s aim is to
make the EU ‘the most competitive and dynamic knowledge-based economy in the world capable
of sustainable economic growth with more and better jobs and greater social cohesion’ by 2010.
The main fields are economic, social, and environmental renewal and sustainability. EU leaders
decided to add the environmental dimension, commenting that ‘failure to reverse trends that
threaten future quality of life will steeply increase the costs of society or make those trends
irreversible’.
th
Within the first years after the adoption of the 6 Environmental Action Programme it became
clear to policy makers and stakeholders within different sectors that reaching the goals set for
2010 would require a major shift in thinking on the role of business in biodiversity. In response to
CBD Decision VIII/17 on private sector engagement, the European Initiative on Business and
Biodiversity was developed. The initiative was developed in a multi-stakeholder consultation
process which involved EU, governmental, business and NGO representatives. It stresses that
business has a crucial role in biodiversity conservation and seeks strong commitment from the
business sector.
The initiative was concluded at the High-Level Conference on Business and Biodiversity which
was held in Lisbon, Portugal, in November 2007. At this meeting the ‘Message from Lisbon’ was
issued, stating that ‘…there is a strong business case for biodiversity, including the competitive
advantage gained from conserving biodiversity and using biological resources in a sustainable
way, and recognizing that competitive markets also have an enormous potential to mobilize
private resources and stimulate innovation’.
9The Business @ Biodiversity Platform is one of the technical facilities being developed to facilitate
the process following the Message from Lisbon to involve businesses into biodiversity
conservation.
Natura 2000
Natura 2000 is the centrepiece of EU nature and biodiversity policy. It sets an EU-wide network of
protected areas established under the Habitats Directive aimed at assuring the long term survival
of Europe’s most valuable and threatened species and habitats as designated under the 1992
Habitats Directive and the 1979 Birds Directive.
Natura 2000 includes:
• The Special Areas of Conservation (SAC) designated by Member States under the
11
Habitats Directive upon the Sites of Community Importance (SCI) status.
• The Special Protection Areas (SPAs) designated by Member States under the Birds
2
Directive.
Over the last 25 years, a network of 26,000 sites has been set up in all the Member States. This
2
network covers over than 850,000 km , representing 18% of the EU-27 land area.
Information on progress in the establishment of the Natura 2000 network is given by the Natura
2000 Barometer.
The map of Natura 2000 can be found at:
http://www.eea.europa.eu/data-and-maps/figures/distribution-of-natura-2000-sites-across-eu-
member-states-1.
The Birds Directive
12
The Birds Directive , adopted in 1979, relates to the conservation of wild birds and ensures
protection for all of Europe’s wild birds, including 194 species and sub-species identified among
EU-27 Member States as particularly threatened and in need of special conservation measures.
While aiming to ensure species survival over the long term, this should consider ecological,
scientific and cultural requirements as well as economic and recreational requirements (Article 2).
This Directive requires:
• Member States to designate Special Protection Areas (SPAs) for 194 particularly
13
threatened species and all migratory bird species.
• Member States to ban activities that directly threaten birds, including the deliberate killing
or capture of birds, the destruction of their nests and taking of their eggs, and associated
activities such as trading in live or dead birds (with a few exceptions).
• The establishment of rules that limit the number of bird species that can be hunted (82
species and sub-species) and the periods during which they can be hunted. It also defines
hunting methods which are permitted (e.g. non-selective hunting is banned).
More information on the Birds Directive can be found at:
http://ec.europa.eu/environment/nature/legislation/birdsdirective/index_en.htm .
The Habitats Directive
14
The Habitats Directive was adopted in 1992. This Directive aims to promote the maintenance of
biodiversity including economic, social, cultural and regional requirements. The Directive includes
about 450 species of animals and 500 species of plants considered as rare, threatened or
endemic. 230 habitat types, which are considered as being in danger of disappearing, are also
targeted for conservation in their own right.
The Directive provides rules banning the downgrading of breeding and resting places for certain
strictly protected animal species, with some exceptions granted under very specific conditions.
10The Directive also establishes the Natura 2000 network of protected areas, providing a high level
of safeguards against potentially damaging developments.
More information on the Habitats Directive can be found at:
http://ec.europa.eu/environment/nature/legislation/habitatsdirective/index_en.htm.
What still needs to be done in Natura 2000 sites?
Some of the main areas still in development are:
• Completion of the selection of sites, particularly in the offshore marine environment.
• Ensuring appropriate legal protection and management of the sites, e.g. through the
establishment and implementation of management plans containing conservation
objectives and measures.
• Improving financial sustainability for Natura 2000 site managers, e.g. through improved
public, private and innovative funding mechanisms.
• Improving stakeholder participation and general communication and public awareness
about the importance and benefits of Natura 2000.
What are the business opportunities and constraints within the Natura 2000 network?
Human activities are not excluded from Natura 2000 areas. The Natura 2000 network includes
nature reserves. However, most of its areas continue to be privately owned, with the insurance
that these lands are sustainably managed both ecologically and economically. Increasing the
focus on sustainable site management is recognized to ensure long-term conservation.
Investment opportunities promoting sustainable use of sites and access for visitors are highly
important in achieving the role of the Natura 2000 network to contribute to local economic
development.
Small and medium enterprises’ (SME) operating nature-based activities are well settled within the
Natura 2000 network. Hence, the network provides obvious opportunities for “pro-biodiversity
businesses”. Indeed, many of them directly depend on biodiversity. Moreover, many Natura 2000
sites, thanks to their Natura 2000 status, attract visitors and funding for specific types of activities.
Natura 2000 has different implications depending on the sector. Some opportunities can be
highlighted for each sector; however, the legislation also presents constraints. Article 6
(Managing and protecting Natura 2000 sites) of the Habitats Directive includes some general
15
constraints, such as :
“Paragraphs 6(1) and 6(2) require that, within Natura 2000, Member States:
• Take appropriate conservation measures to maintain and restore the habitats and species
for which the site has been designated to a favourable conservation status.
• Avoid damaging activities that could significantly disturb these species or deteriorate the
habitats of the protected species or habitat types.
Paragraphs 6(3) and 6(4) lay down the procedure to be followed when planning new
developments that might affect a Natura 2000 site. Thus:
• Any plan or project likely to have a significant effect on a Natura 2000 site, either
individually or in combination with other plans or projects, shall undergo an Appropriate
Assessment to determine its implications for the site. The competent authorities can only
agree to the plan or project after having ascertained that it will not adversely affect the
integrity of the site concerned (Article 6.3).
• In exceptional circumstances, a plan or project may still be allowed to go ahead, in spite of
a negative assessment, provided there are no alternative solutions and the plan or project
is considered to be of overriding public interest. In such cases the Member State must take
appropriate compensatory measures to ensure that the overall coherence of the N2000
Network is protected (Article 6.4).
11The goal of halting the loss of biodiversity by 2010 was not achieved, and new and improved
policy steps therefore need to be taken to take forward the efforts in the coming years.
Biodiversity conservation and the financial and business sector involvement must now be
integrated into new long-term economic strategies for Europe. In September 2010, the Belgian
presidency hosted the conference ‘Biodiversity after 2010 – biodiversity in a changing world’. A
European policy message was developed for the 10th Conference of the Parties to the
Convention on Biological Diversity in October 2010, Nagoya, Japan.
2.2.6.Pan-European Biological and Landscape Diversity Strategy
The Pan-European Biological and Landscape Diversity Strategy (PEBLDS) was endorsed at the
3rd Ministerial Conference 'Environment for Europe' in 1995. It provides an innovative and
proactive approach to stop and reverse the degradation of biological and landscape diversity
values in Europe. The Strategy reinforces the implementation of existing measures to ensure
conservation and sustainable use of biological and landscape diversity and identifies additional
actions that need to be taken over the next two decades. The Strategy also provides a 20-year
vision for Europe and a framework to promote a consistent approach and common objectives for
16
national and regional action to implement the Convention on Biological Diversity .
The overall objective, as agreed by the governments participating in the 'Environment for Europe'
ministerial process – that includes all 56 UN/ECE countries and a number of international
organizations participating in the Strategy – is to halt the loss of biodiversity at all levels by the
year 2010. PEBLDS recognizes full involvement of the economic sectors in biodiversity
conservation as a priority action. In light of that, it supports possibilities for funding and
investment by sources not traditionally associated with conservation efforts.
Following the request of the Fourth Ministerial Conference ‘Environment for Europe’ which took
place in Aarhus, the European Biodiversity Resourcing Initiative (EBRI) was initiated in the
PEBLDS framework in order to make financial resources available. It was also a European
response to the growing interest in the CBD framework for additional financial resources. The
initiative marked the start of a comprehensive dialogue between the financial and biodiversity
sectors.
The EBRI has been mandated with the implementation of the Kyiv Resolution. During the Fifth
Ministerial Conference ‘Environment for Europe’ which took place in Kyiv, Ukraine, in May 2003,
the specific objective of the Resolution on Financing Biodiversity was stated as follows:
‘By 2008, there will be substantially increased public and private financial investments in
integrated biodiversity activities in Europe, via partnerships with the finance and business sectors,
that have resulted in new investment opportunities and facilities as outlined by the European
Biodiversity Resourcing Initiative, taking into account the special needs of the countries of Central
and Eastern Europe, Caucasus and Central Asia.’
Early in 2004, the Financing Biodiversity Action Plan, proposed by the PEBLDS Council at the
Kyiv Conference, was adopted to facilitate the implementation of the Kyiv Biodiversity Resourcing
target while taking into account relevant CBD decisions, in particular via the establishment of the
Biodiversity Technical Assistance Facility and the European Biodiversity Investment Partnership,
and support the establishment of the Biodiversity Finance Facility by European financial
institutions.
In October 2007, the Sixth Ministerial Conference ‘Environment for Europe’ was held in Belgrade,
Serbia. The European Environment Ministers adopted the declaration ‘Building Bridges to the
Future’, which stated:
‘We recognize that adequate funding is necessary for environmental improvement. Insufficient
institutional capacity hinders the exploitation of emerging opportunities. We welcome a strong
commitment of all involved countries in the UNECE region to support effective use of financial
resources from all sources, including domestic budgets and donor support, where available,
to strengthen institutional capacities at national and local levels, and to promote the
12effective use of these resources for the preparation of feasible, cost-effective and action-
oriented environment programmes, anchored in their general development plans, poverty
reduction strategies and United Nations Development Assistance Frameworks, as appropriate.
We welcome better cooperation of donors’ activities and, as appropriate, synergies amongst
institutions and programmes.’
2.3. Main stakeholders
2.3.1.The policy sector
European Union (EU) and its Commission (EC)
The issue of business and biodiversity including the role of financial institutions is receiving more
and more attention within the EU framework. During two high level conferences, the EU
Conference “Business and Biodiversity”, November 2007, Lisbon, Portugal and the EU
Conference “Biodiversity Protection – Beyond 2010”, April 2009, Athens, Greece, the main EU
policy on business and biodiversity was formulated.
United Nations Environment Programme Finance Initiative (UNEP FI)
UNEP FI is a global partnership between the UN, the financial sector and other interested
stakeholders. Its work stream on biodiversity and ecosystem services focuses on engaging the
financial services sector in identifying and addressing the challenges arising from the loss of
biodiversity and the degradation of ecosystem services.
United Nations Development Programme – Global Environment Facility (UNDP – GEF)
The GEF was established in 1991 to combine international cooperation and finance actions
targeted at decreasing biodiversity loss, climate change, degradation of international waters,
ozone depletion, land degradation and persistent organic pollutants. The GEF works mostly with
grants targeted at developing countries and countries in transition. GEF members are
governments, development and research institutions, the private sector and NGOs.
Convention on Biological Diversity (CBD)
The Convention on Biological Diversity (CBD) entered into force on 29 December 1993. Its
objectives are: the conservation of biological diversity, the sustainable use of the components of
biological diversity and the fair and equitable sharing of the benefits arising out of the utilization of
genetic resources. The CBD has been working to engage business in the implementation of the
Convention.
2.3.2.The finance sector
European Bank for Reconstruction and Development (EBRD)
The EBRD is paying attention to biodiversity issues in mainstream investments. EBRD has also
been involved in the development of the EU Biodiversity Technical Assistance Units project, and
is exploring other options of biodiversity investment (mainly though SMEs).
European Investment Bank (EIB)
EIB has incorporated biodiversity as a priority area in its updated Environmental Policy. The need
to finance biodiversity is stressed by the EC. For example, there is a clear role for building up
Public Private Partnerships (PPP) for biodiversity. These approaches can help mobilize the
available resources and more effectively facilitate their use. Public money can support private
activities and resources and private resources can be pooled into public objectives. Two
possibilities for these kinds of partnerships are:
13• The introduction of loans/grants to support Payments for Ecosystem Services (PES) to be
used by private or public partners.
• The mobilization of support for the creation and management of biodiversity offsets by
private/public companies. Frequently, development has a negative impact to nature, so the
17
developers need to compensate through offsets (habitat banking, restoration, etc) .
There is also a need for micro-finance, i.e. small projects that can have significant impact and
generate income to become self-sustainable. For these, however, there is a need for capacity
building, and for access to credit that is available quickly and at a preferential rate.
The World Bank
The World Bank is the world’s largest financier of biodiversity.
International Finance Corporation (World Bank Group)
IFC’s work in biodiversity aims to enhance the achievement of the triple bottom line of financial
profitability, environmental sustainability and social responsibility.
ASN Bank (The Netherlands)
The ASN Bank in the Netherlands has investment funds which have strict environmental and
social criteria. The bank does not invest in companies that do not comply with these criteria and
pro-actively invests in companies that improve social and environmental well-being. With regard
to biodiversity, the bank has a specific investment policy based on international conventions and
scientific research such as the Millennium Ecosystem Assessment or the Convention on
Biological Diversity. Sustainability is the guiding principle in all of ASN Bank’s activities.
Fundacio Caixa Catalunya (Spain)
Caixa Catalunya is one of the leading savings banks in Spain and was the first one to provide
funds for conservation in the country. Their geographical area of work is mainly Catalunya, but
they do hold accounts and offices throughout the whole of Spain. In being a Savings Bank, they
are legally obliged to do social works. Fundacio Caixa Catalunya is the legal entity for the bank to
commence in these social works. It aims to give back to society part of the business profit through
adequate response to social and environmental issues. The budget of the foundation is made up
on the basis of the bank’s profit in the previous year. The management of the bank makes a
proposal on how the funds are being divided and the assembly need to agree on this.
2.3.3.Private companies
OFI Private Equity Capital
OFI Private Equity Capital is an investment company making capital investments but also
investing in "mezzanine" type instruments in order to provide its shareholders with an annual rate
of return. Since 2005, OPEC has created a portfolio with 12 companies, all solidly established
within their niche markets and led by very experienced management teams. In only a few years,
OPEC has become a dynamic actor on the buyout market in France, serving as a long-term
shareholder but without interfering in the development of each of its equity interests. Finally,
OPEC's investment strategy includes extra-financial criteria in the area of Sustainable
Development (environmental, social, societal and governance). This initiative allows the
economic models of its equity interests to evolve, while increasing their valuation over the
medium term.
FMO
FMO was founded in 1970 by the Dutch government, private sector, employers and employee
organizations. Since its inception, FMO’s aim has been to empower entrepreneurship in emerging
14economies in order to further development. In investing in entrepreneurship, they have sought to
apply best practices, adopted international performance standards and created their own
benchmarks if they did not already exist.
2.3.4.NGOs and platforms
European Sustainable Investment Forum (EUROSIF)
EUROSIF is a pan-European not-for-profit group whose mission is to address sustainability
through financial markets. It represents assets totalling over €1 trillion through its affiliate
membership.
The Principles of Responsible Investment (PRI) Secretariat
The PRI reflects the core values of a group of large investors whose investment horizon is
generally long, and whose portfolios are often highly diversified. In 2005, 20 Institutional investors
accepted ownership of these principles, stimulated by the United Nations. The Principles are
open for all institutional investors, investment managers and professional service partners to
support. Following the launch of the Principles, the PRI Secretariat was created to help co-
ordinate the adoption of the Principles by additional investors, provide comprehensive resources
to assist investors in implementing the Principles, and facilitate collaboration among signatories.
Green Development Mechanism (GDM)
The GDM 2010 Initiative is working with a network of biodiversity finance specialists to establish a
market-based Green Development Mechanism (GDM) under the Convention on Biological
Diversity along the lines of the Clean Development Mechanism (CDM) for climate change. The
GDM would support trade in certified biodiversity-protected landscapes.
The Natural Value Initiative (NVI)
The NVI has worked with the financial sector to develop a toolkit to evaluate the investment risks
and opportunities posed by a company’s dependence and impact on biodiversity and ecosystem
services. Its pilot research has focused on the food, beverage and tobacco sectors.
3. Classification and evaluation of available best practices
3.1. Common approach and key steps of biodiversity integration in business
Economic activity is one of the major drivers of biodiversity loss, and Europe is still losing
biodiversity at an alarming rate. Key direct drivers of biodiversity decline are habitat change,
climate change, invasive species, over-exploitation and pollution. Business can help reduce these
pressures by managing and mitigating their impacts on biodiversity and ecosystem services.
They should systematically review their operations in relation to biodiversity and ecosystem
services (BES) and assess how direct and indirect drivers of change in ecosystem services may
4
affect their business.
Practically all businesses have an impact on biodiversity, either through their supply chains or
through the investments they make. The EU Business and Biodiversity Platform therefore
promotes the practical integration of biodiversity issues in the selected financial and economic
sectors and addresses the market-based approach to conservation and viable use of biodiversity
and its ecosystem services. The links between business, biodiversity and ecosystem services
vary across sectors and even within sectors. These links depend on the location of the business,
the source of its raw materials, in some cases the location of its customers, and/or the production
technology employed. Broadly, these links can be grouped into business impacts on biodiversity,
4
on the one hand, and business dependence on ecosystem services on the other.
153.1.1.The business case for biodiversity and ecosystems
Biodiversity business is defined as: “Commercial enterprise that generates profits through
production processes which conserve biodiversity, use biological resources sustainably and
18
share the benefits arising out of this use equitably.”
This definition reflects the three overarching goals of the United Nations Convention on Biological
Diversity (CBD), which also calls for increased efforts to enlist the private sector in biodiversity
conservation, sustainable use and equitable benefit sharing. In both the environmental and
business communities, there is growing recognition of the potential to conserve biodiversity on a
commercial basis.
The business case for biodiversity is easy to make when a firm depends directly on biodiversity to
operate. Nature-based tourism is one example where the income stream to private enterprise
depends very clearly on the health of the surrounding ecosystem. In such cases, business
owners and managers need little persuasion to invest in biodiversity management. For
businesses that are not directly and apparently dependent on ecosystem services, the emphasis
needs to be on how BES indirectly impacts their core business. For the financial sector, this
emphasis is usually placed on the risks of biodiversity and ecosystem degradation for the
business through the loans or investments provided in companies and projects. For example:
• Loss of biodiversity can slow down economic growth which causes a reduction in the
companies’ return on investments or causes a company to be less productive or even lose
its core business (for example, the loss of pollinators for the fruit producing sector).
• Bad biodiversity conduct can steer public opinion and reduce the stock value of a business
invested in (or the financial institution itself).
• Biodiversity has been proven to increase health and wellbeing, improving employee
productivity.
• Loss of clients who choose the savings or investment products of financial sector
businesses that take biodiversity and ecosystem services into account.
4
3.1.2. The key action points for business
The business case for biodiversity and ecosystems is getting stronger. The companies that
understand and manage the risks presented by biodiversity loss and ecosystem decline, and that
move quickly to seize business opportunities, are more likely to thrive.
Business can show leadership on biodiversity and ecosystems:
1. Identify the impacts and dependencies of your business on biodiversity and
ecosystem services (BES). The first step is to assess business impacts and
dependencies on biodiversity and ecosystems, including both direct and indirect linkages
throughout the value chain, using existing tools while also helping to improve them.
2. Assess the business risks and opportunities associated with these impacts and
dependencies. Based on this assessment, companies can identify the business risks and
opportunities associated with their impacts and dependencies on BES, and educate their
employees, owners, suppliers and customers. Economic valuation of BES impacts and
dependencies can help to clarify risks and opportunities.
3. Develop BES information systems, set SMART targets, measure and value
performance, and report your results. Biodiversity and ecosystem strategies for
business are likely to include improved corporate information systems, development of
quantitative BES targets and performance indicators, and their integration into wider
business risk and opportunity management processes. A key step for building trust with
external stakeholders, while creating peer pressure within industry, is for business to
measure and report their BES impacts, actions and outcomes.
4. Take action to avoid, minimize and mitigate BES risks, including in-kind
compensation (‘offsets’) where feasible. BES targets may build on the concepts of ‘No
Net Loss’, ‘Ecological Neutrality’ or ‘Net Positive Impact’ and include support for
16biodiversity offsets where appropriate. Industry associations will continue to play a key role
in developing and promoting robust and effective biodiversity performance standards and
impact mitigation guidelines for their members.
5. Grasp emerging BES business opportunities, such as cost-efficiencies, new
products and new markets. Business can support the growth of green markets and help
design efficient enabling conditions for biodiversity and ecosystem service markets. Such
opportunities may be facilitated by engaging with public agencies, accountancy and
financial standard setting bodies, conservation organizations and communities.
6. Integrate business strategy and actions on BES with wider corporate social
responsibility initiatives. There is potential to enhance both biodiversity status and
human livelihoods, and help reduce global poverty, through the integration of BES in
corporate sustainability and community engagement strategies.
7. Engage with business peers and stakeholders in government, NGOs and civil
society to improve BES guidance and policy. Business can bring significant capacity to
conservation efforts and has a key role to play in halting biodiversity loss. Business needs
to participate more actively in public policy discussions to advocate appropriate regulatory
reforms, as well as developing complementary voluntary guidelines.
Not all businesses may be capable of implementing measures and policies to facilitate these
processes. SMEs might lack the resources or capacity to address these issues all by themselves
but would still want to show leadership and be proactive in sustaining the environment and
biodiversity. These businesses should be supported by NGOs in addressing biodiversity issues
and perhaps join other organizations to create a case for biodiversity in their own organization as
the market demand for biodiversity develops. To further support SMEs, it would be good to
identify cases of businesses that are already supporting biodiversity without deriving benefits from
it and try to apply these in other situations.
3.1.3.Biodiversity business risks and opportunities
4
According to the TEEB Report for Business , there are several categories of risk that businesses
are facing. These are:
• Operational – disruptions to business operations caused by natural hazards and higher
insurance costs for disasters such as flooding.
• Regulatory and legal – restricted access to new markets, emergence of new fines, new
user fees, government regulations, or lawsuits by communities or groups that challenge
business activities.
• Reputational – damage to corporate reputation from media and non-governmental
organization (NGO) campaigns, shareholder resolutions and changing customer
preferences.
• Market or product – customers switching to other suppliers that offer products with lower
ecosystem impacts or governments implementing new sustainable procurement policies.
• Financial – higher costs of capital or difficulties acquiring debt or equity as banks and
investors adopt more rigorous lending and investment policies.
Not all these risks are equally likely to affect the financial sector. Risks regarding markets or
products are smaller for this sector than risks regarding reputation or finance. Even so, while the
financial sector does not appear to be directly dependent on BES, for all of the above mentioned
categories there are risks which should be managed.
A variety of tools has been made available for companies to identify and manage biodiversity and
4
ecosystem risks. For example :
• Standards, frameworks and methodologies – multi-stakeholder efforts such as
ISO14001 and the Forest Stewardship Council (FSC), or individual company standards.
• Data Collection Tools – access to appropriate data is required to make a responsible risk
assessment. Tools for collection of the appropriate date have been developed, such as the
Integrated Biodiversity Assessment Tool (IBAT).
17You can also read
