Business, investors call for clearer regulations around nature

Business leaders and investors are calling for clearer and more stringent regulations around how to treat nature.

Since the last global nature agreement — the Aichi accords — expired in 2020, there is currently no global agreement in place to protect nature.

Meanwhile, more than 1 million species are threatened with extinction, according to the United Nations.

Now businesses are agitating for concrete specifics: what goals to focus on, how to mandate risk reporting and how to regulate corporate activity.

“We want to see a framework that’s really providing clear targets, clear definitions to enable action to be taken,” Tamsin Ballard, the climate and environment director at the U.N.-backed investor network Principles for Responsible Investment, told Reuters.

That is the first step to implementing “a pipeline of nature-positive projects and investments,” Ballard added.

The conference goal is to see “nature” — which has been in a long period of decline for most of settled human history — to begin to increase again by 2030.

That will require substantial new sums of money — as well as a recasting of the very idea of what constitutes a financial asset.

More than half of global gross domestic product — about $44 trillion — is dependent on nature and its systems, according to the World Economic Forum. 

The OECD estimates it may be higher: $125 trillion to $140 trillion.

But according to financial news site Morningstar, only $1.6 billion in funds are invested directly into biodiversity and natural capital.

By comparison, climate funds in general boast $350 billion in assets, according to Morningstar.

The U.N. has said that $384 billion is necessary to fund nature projects, as The Hill reported.

“Nature needs to be thought of as an asset – and we invest in assets,” Tony Goldner, executive director of the Taskforce on Nature-Related Financial Disclosures, told Reuters.

“If we take that mindset to nature, it leads to the investment models that would allow us to invest in nature as infrastructure,” he said.

Biodiversity investment has lagged far behind clean energy investment, according to Reuters.

Nature-conscious investors want clarity from the large companies they invest in about the risks they cause to nature — and what they’re doing about it.

“Companies have recognised biodiversity is a relevant issue for investors, but they’re struggling to communicate a top-down strategy,” Cassandra Traeger, who handles responsible investment at Columbia Threadneedle, told Morningstar.

“We’re expecting a more clear, ambitious framework from COP15 similar to what we’ve seen from COP26 on greenhouse gas emissions and climate change,” Traeger added.

Currently, just over half of top asset managers disclose the details of how their investments impact biodiversity, Morningstar reported.

More than 330 companies and financial institutions signed an October letter calling for nature-related disclosures to be made mandatory by 2030.

“More than 100 multi-billion-dollar revenue companies support this ask,” Eva Zabey of Business for Nature, the group behind the call for mandatory disclosures, told Morningstar. 

Mandatory disclosure of nature-related impacts and risks “will go a huge way in transforming our economies and repairing our broken relationship with nature,” Zabey added.

“For us to really fulfill our role as an asset manager, we need a robust understanding of what those nature-related risks are,” Whitney Sweeney, investment director at fund manager Schroders, told Reuters.

Another signatory, Andre Hoffmann, vice-chairman of Roche Holdings, told Reuters, “many were surprised to see businesses call on governments for enhanced regulation.” 

But he said regulation was necessary to get boards to take it seriously. 

Another investor group — representing $10 trillion in assets — called on Wednesday for more progress in cutting deforestation, Reuters reported.

While some progress has been made, it “remains unacceptably slow, and not commensurate with the urgency and scale of the challenge,” IPDD co-chairs Jan-Erik Saugestad, the CEO of Storebrand Asset Management, and Graham Stock, partner at RBC BlueBay Asset Management, said in the report.

The COP15 headline goals — of reversing nature’s decline by 2030 — may not be realistic, an international group of scientists wrote in OneEarth.

The earliest date possible to reverse biodiversity loss is likely 2050 — a date by which the Montreal conference already expects humans to be living “in harmony” with nature.

Even a 2050 target to reverse nature loss is “based on the most simplistic assumptions, it doesn’t even accommodate climate change,” David Obura at Coastal Oceans Research and Development in the Indian Ocean told New Scientist.

“It sounds great, we want to do it … but I think the inertia in the system is such that it is just not possible,” Obura added.

Other scientists echoed Obura’s critique. Existing targets are “very unlikely to be met,” said Mark Burgman of Imperial College London, while Tom Oliver at the U.K.’s University of Reading said that “full recovery [of nature] is not possible within just a couple of decades.”

But we’re at a point where ambitious targets are needed, E.J. Milner-Gulland at the University of Oxford told New Scientist.

“The 2030 target is what we actually need in order to ensure that our natural capital begins to be restored to safe levels for people and the planet,” she said. “Even if we can’t make it, we need to start to put serious effort into trying, and I don’t believe that a delayed target will provide the urgency that we need.”

Delaying that goal simply contributes to risks of world governments “kicking the can down the road in terms of the fundamental systemic change we need,” she said.