Conservation Finance from across the Atlantic

I’m in London this week for the 11th edition of the Nature Finance Conference. After a 10-year run in New York City hosted by the Conservation Finance Network, the meeting has been a fresh take on ways to bring innovative finance to ecosystems and the benefits they provide us.

The biggest shift from past meetings is the rise of disclosure.? Financial disclosure requirements from EU regulators, coupled with the framework from the Taskforce on Nature-Related Financial Disclosures (TNFD) on how to identify and assess nature dependencies and impacts from a corporate perspective, is on everyone’s mind and a huge new driver of activity around conservation.? The framework may technically be voluntary, but some pension funds (e.g. Japan's) are requiring companies they invest in to use them.? Lots of others see the writing on the wall.? So, figuring out how to comply is a big deal.? It will drive lots of avoidance in the mitigation hierarchy and business opportunities for companies that provide products or services that allow supply chains and operations to damage nature less or not at all.

Yet the last stage of the mitigation hierarchy is still needed – compensatory action for remaining effects of economic activity on nature. Because unlike GHGs from fossil fuel use, our food and economic systems can never eliminate biodiversity and nature impacts.? And a lack of tools and structures that allow companies to avoid and compensate for nature impacts is getting in the way of they volunteering to go through the disclosure process.?

Why?? Because it is not a great look to share an audit of the negative without an action plan for the positive.? Imagine disclosing to your teenager that you’ve had to return the Taylor Swift tickets and don't have a plan on what to do about it.? It doesn’t go well.?

American companies that depend upon European investment might just be noticing the power and reach of these disclosure rules and norms, but its coming. US government agencies and the non-profit sector (and probably for profit advisory sector) are way underprepared to help.

A few other take aways from the meeting:

• Sir Partha Dasgupta’s succinct description of the problem, paraphrased: We are pilfering stuff because Mother Nature doesn’t have a checkout counter. Pay for what we use.
• Amazing progress is happening in our ability to measure things (like nature change) and to pinpoint activity and supply chains and sourcing (like deforestation history and events in production activity).? It seems that regardless of this progress, there will always be calls for more.? I think those arguments are excuses and delay tactics – there is a lot of operational intel available already for immediate nature impact mitigation.? We can act, build better, facile nature data systems, and take second and third rounds of action.? The foresightful banks and companies are already doing so. (Check out Trase Initiative’s work on supply chain impact mapping.)
• A really helpful list from one speaker of the finance products that are trending 1) debt conversion with bonds, 2) private equity and venture capital for nature, 3) biodiversity credits, and 4) actively managed funds and EFTs. European investment banks are joining with environmental nonprofits to create biodiversity funds.? Apparently, there are already 25 biodiversity-focused funds in existence.? That is a big shift since the last 2-3 meetings.
• From a global south perspective: Offsets are where our communities get capital. “The media says communities are not benefiting from offset programs which is just not true.”
• Shaming early corporate actors in climate or nature work is really not helpful.? Global innovation and change for social progress almost always depend on volunteers who step forward to do the right thing, even when the financial incentives to do so are weak.? Now we are not just missing those positive incentives, we have a global PR machine providing punishing disincentives to action.? Billions of dollars are now not being spent on positive steps because the costs of being embarrassed in public for sincere efforts, regardless of whether they are doing well or poorly, now outweighs the benefits.?