$200B Banking Giant Picks Nature as the World’s Most Under-priced Asset
With over half of the world's GDP tied to nature, organizations are encouraging businesses to invest in biodiversity preservation.
Big Idea:
Climate discussions are now expanding beyond carbon emissions to focus on biodiversity and nature as integral to sustainability and achieving the 2030 Sustainable Development Goals (SDGs).
The Big Picture:
The Taskforce on Nature-Related Financial Disclosures (TNFD) framework was introduced in October 2023, just before COP28 in Dubai, which refocuses on climate goals set during COP15 in Paris in 2015, aiming to limit global warming to two degrees Celsius.
Why It Matters:
The TNFD framework highlights the crucial role of nature and natural capital for both society and businesses. With over half of the world's GDP, estimated at $58 trillion, moderately or highly dependent on nature, it's vital to protect natural resources.
Dive Deeper:
The TNFD framework provides a method for corporations to assess and disclose the impacts of degrading natural capital, biodiversity loss, and aquatic ecosystem destruction on their operations and bottom lines.
Investment in nature, regenerative commodities, and the emergence of nature-based asset classes are gaining momentum. It underlines the importance of nature as an investment, aligning business objectives with environmental responsibility.
What To Watch:
Japan has initiated a pilot program for companies to obtain "support certificates" by backing government-certified biodiversity projects for reporting under the TNFD framework. The program focuses on Other Effective area-based Conservation Measures (OECMs) to help meet the Global Biodiversity Framework target of protecting 30% of land and marine areas by 2030.
How That Works:
The support certificates, akin to biodiversity credits, cannot be traded but serve to document corporate support for biodiversity activities within the TNFD framework. The support may include donations, investments, or other contributions.
What’s Next:
The support certificates initiative targets companies seeking to contribute to biodiversity projects, even if they don't own suitable land plots, and is expected to roll out fully in 2025 following pilot assessments.
The 30 by 30 Alliance's Economic Incentives Review Committee highlighted the significance of this approach, stating, "This initiative bridges the gap between corporate interests and biodiversity preservation, fostering a collaborative ecosystem for sustainable development."
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