Australian Environment Minister Tanya Plibersek will soon board a plane to lead a delegation of Australian officials to an event that will be almost as consequential for the future of the planet as the much talked-about climate conferences.
Walking the halls of the UN Biodiversity Conference (COP15) in Montreal, Canada will be the usual green groups, conservation lobbyists and environment consultants. But this year, joining the calls for robust international action to protect nature will be a sizeable contingent representing the interests of investors.
Investors have long known environmental risks are real and they have made strong inroads in recent years in factoring environmental considerations into decision making. Investors are now increasingly seeking to understand the impacts on nature of their investments, as well as how their portfolios are dependent on ecosystems for the very viability of some assets.
Take an agricultural landholder that relies on the presence of native vegetation or native pollinators for its harvests. Or a manufacturing plant that uses local water sources to drive its operations. The viability of these assets depends on the health of local ecosystems.
Nature forms a significant basis upon which Australia’s economy thrives – so many of our industries, such as tourism, agriculture, mining, infrastructure, property and energy are reliant on healthy, functioning ecosystems; in fact, 49 per cent of Australia’s GDP is dependent on biodiversity and ecosystem services. These ecosystems provide things like clean water and air, productive soils, waste management services, the protection of coastlines, and – importantly – carbon storage.
Biodiversity vital for economy
Like the government, investors increasingly understand that we can’t meet climate targets without protecting and restoring our precious biodiversity, and a thriving economy is not possible without both climate and nature being protected and managed. They go hand in hand.
To lay the pathway for nature-related risks, impacts, dependencies and opportunities to be appropriately considered, investors are calling for strong national and international biodiversity targets, which will provide certainty in the same way that climate targets provide certainty to inform industry’s carbon emissions reduction plans.
If we’ve learnt one thing from the past decade of climate policy, it’s that the sooner we can achieve this certainty, the better.
The Biodiversity COP15 will decide on global targets ranging from reducing species extinction to ending subsidies for harmful activities.
On top of the sweeping – and very welcome – national reforms announced last week by Minister Plibersek, it is in Australia’s economic as well as environmental interests for these global targets to be robust and seek to halt the decline of nature.
Investors are starting to measure the nature-related risks in their portfolios in the same way they measure climate risks. But they also want to be first in harnessing the opportunities that the global growth in sustainable finance solutions will bring. This will require them to understand and assess the positive outcomes of reducing their impact on nature or contributing to its restoration.
The global Taskforce on Nature-related Financial Disclosures (TNFD) – which Australia’s private sector is getting behind – is making this possible by developing a globally consistent disclosure framework that will require companies and investors to report on their exposure to nature-related risks.
The TNFD will incorporate nature into mainstream risk management processes for enterprises and portfolios and help companies identify, assess, respond to and disclose nature-related dependencies, impacts, risks and opportunities. The Australian government has signalled its strong support.
In addition to calling for a robust international framework, it is in Australia’s economic interests to implement its own targets. The government has already pledged to protect 30% of Australia’s land and oceans by 2030.
Just as Australia’s recently legislated carbon target (net zero by 2050) helps the private sector factor the transition to a net zero economy into decision-making, strong international and national targets on biodiversity will help nature to be factored in as the world moves towards a nature positive economy.
‘Nature positive’ will soon be as much a part of the private sector lexicon as ‘net zero’. The government can do much to ensure the private sector plays its part in getting us there.
Estelle Parker is executive manager, programs at the Responsible Investment Association Australasia, the convenor of the official TNFD Consultation Group for Australia and New Zealand.