Previously, banks and members of the financial industry were either not aware or unsure of how to help when it came to biodiversity. However, that seems to be changing.
Speaking to FinextraTV off the back of a busy COP15, Jessica Smith, nature lead, UNEP Fi said that “we had an unprecedented surge of interest from the financial sector, so even though the COP was in Cali which is - for many in finance - a little bit harder to reach than Montreal, there was actually more from the financial sector. We had the estimate of around 5,000 individuals from around the green zone and the blue zone.”
Despite ESG not being as prevalent a topic as it perhaps once was, ethical finance and biodiversity issues are still on the agenda for many in the financial sector. As well as more obvious, gradual efforts such as investing in regenerative activities, conservation and restoration, Smith believes crucial issues are being missed:
“The larger challenge is Goal D which is overarching how aligned finance is. The climate equivalent of the article 2.1c is ‘how much of the finance that’s flowing around this system is actually in line with the goal of halting and reversing nature loss?’ In that one, I would say we still see 140x more harmful finance than positive finance. So, a big concern would be, for example, getting deforestation out of portfolios. It seems like there's a lot of low-hanging fruit that somehow we still haven’t managed to act on.”
The impact of these ‘low-hanging fruits’ and harmful finances can have a vast impact on the wider industry effort to improve outdated, damaging practices and enforce greater regulation and restore finances’ reputation as a force for planetary good. Smith believes the apprehension some may feel does not outweigh the risk if they do not act fast:
“It comes back to risk for financial institutions […] society won’t accept that they can’t track these issues or they don’t understand their supply chains or they can’t get data. We’ve heard these excuses now for many years, so we need action on these low hanging fruit where we’re really undermining action in the net zero space by continuing to finance activities that are converting in-tact ecosystems and our Amazon is close to a tipping point. We really need to prioritise that avoidance of harm as the urgent priority.”
Smith’s strong words echo a common concern amongst biodiversity experts and climate commentators alike. This and Smith’s many other insights and suggestions for those in the space with the ability to make a change pose the question: if you can, why not now?