PRB_Bob-Watson_Why-Banks-should-Care-about-Biodiversity_April-2022.pdf
- 1. Biodiversity: what is it, why should we care, and how should we respond, a scientist’s perspective. ROBERT T. WATSON Former Chair of the Intergovernmental Science-Policy Platform for Biodiversity (IPBES) and Ecosystem Services & Intergovernmental Panel on Climate Change (IPCC) UN Principles for Responsible Banking Biodiversity Community April 27th, 2022
- 2. What is biodiversity? The variety of life at all levels… …. genes, populations, species and ecosystems… …. land, water and air. …. and the interactions between living things
- 3. Nature, underpins and sustains human quality of life Ecosystems provide provisioning services, regulating services and non-material services – all essential for human well- being The conversion and degradation of our ecosystems is adversely impacting human well-being, especially poor people in poor countries We have exploited the services that have market value, i.e., the production of food, fiber, energy and medicines, at the expense of the services that have no market prices but have economic and social value
- 4. Global trends in nature’s contributions to people since 1970 regulating material Non-material
- 5. The biosphere upon which humanity depends, has been deeply reconfigured by human activities 1 million species (500,000 plants and animals and 500,000 insects) are at risk of extinction assuming a total of 8.1 million species (2.6 million plants and animal and 5 million insects) 90% of land is projected to be significantly altered, by 2050 >85% of wetland area has been lost 75% of the land area has been significantly altered, negatively impacting the well-being of 3.2 billion people 66% of the ocean area is experiencing increasing cumulative impacts only 3% of the oceans is unaffected by human activities
- 6. DIRECT DRIVERS Terrestrial Freshwater Marine Direct drivers of change have accelerated during the past 50 years to levels unprecedented in human history S O C I A L V A L U E S Underpinning the proximate causes of deterioration in nature are the root causes, or indirect drivers of change, e.g., economic growth, population growth, trade.
- 7. • While climate change has not been the dominant driver of biodiversity loss to date, it is projected to become as important or more important than the other direct drivers in the coming decades • Meeting the Paris climate agreement goal is crucial to limit the loss of biodiversity. • A 50% reduction in current GHG emissions is needed by 2030 to be on a pathway to 1.5oC and a 25% reduction is needed to be on a pathway to 2oC • We need to be net zero-carbon emissions by 2050, and we may need negative carbon emissions after 2050 • Nature-based solutions can offer cost- effective mitigation and adaptation opportunities Climate Change and Loss of Biodiversity
- 8. Progress towards the 2020 Aichi Targets, which were negotiated in 2010 None of the Aichi Targets were fully met
- 9. . While each of these issues is an environmental issue, they are also Societal Implications of Loss of Biodiversity and Climate Change Development issues affecting poverty, food and energy security and human health Economic issues - Climate change incurs significant economic costs. Biodiversity usually has no market price but has economic and social value Security issues - these issues can lead to local conflict Equity/ethical issues - industrialized countries have largely caused the problems - developing countries and poor people are most vulnerable Moral issues - we humans have no right to destroy the environment These issues are both inter-and intra-generational and in each case the problem gets more serious over time
- 10. Transforming humankind's relation with nature is the key to a sustainable future Human knowledge, ingenuity, technology and cooperation can transform societies and economies and secure a sustainable future This transformation will involve a fundamental change in the technological, economic and social organization of society, including world-views, norms, values and governance Major shifts in investment and regulation are key to just and informed transformations that overcome inertia and opposition from vested interests Earth’s environmental emergencies and development challenges are all interconnected, and should be addressed together to achieve sustainability
- 11. Environmental degradation threatens the achievement of the SDGs Elimination of poverty, zero hunger, good health & reduced inequalities ✓ 1.3 billion people remain poor and some 700 million are hungry ✓ Environmental decline ways heaviest on the poor, the young and future generations ✓ Wealthy people and nations have the largest footprint and often export it ✓ 1/4 of the global burden of disease stems from environmental risks ✓ Environmental degradation is weakening the Earths capacity to feed 9 billion more wealthy and urban people in 2050
- 12. Actions need to be aligned for protecting and restoring life on Earth The loss of biodiversity can only be halted and reversed by providing space dedicated for nature and integrating biodiversity concerns into the productive landscape. All direct drivers need to be addressed together: • changing land and sea use, • over-exploitation, • climate change, • pollution and • invasive alien species
- 13. Transformed economic, financial and productive systems can lead and power the shift to sustainability Society needs to include natural capital in decision-making, eliminate environmentally harmful subsidies, embrace a circular economy, incorporate externalities into the prices of goods and services, and invest in the transition to a sustainable future Biodiversity, climate and other environmental finance could be ramped up by redirecting some of the direct and indirect fossil fuel, agriculture, fisheries and transport subsidies The food, water and energy systems can and should be transformed to meet growing human needs in an equitable, resilient and environmentally friendly manner
- 14. 14 We are underpricing nature Most of nature’s valuable goods and services are provided for free. They do not appear in markets, and largely ignored in policy and business decisions. Many ecosystems and their services are often given a “negative price”, as we pay (subsidize) economic activities to destroy nature. IMF: The production and burning of coal, oil and gas was subsidized by $5.9tn in 2020 (cost and tax breaks, air pollution, global warming, congestion and accidents). OECD: Environmentally harmful subsidies in agriculture amount to around $112 billion annually Around $90-$120 billion spent each year on nature globally. If we removed all environmentally harmful subsidies in agriculture and reallocated the funds, we could double the financing for nature worldwide.
- 15. 15 Loss of ecosystem goods and services not reflected in markets, policies or business decisions Excessive environmental and ecological damages Human impacts on nature, ecosystems and biosphere increase Declining natural and ecological capital Rising ecological scarcity Increasing global environmental risks The vicious cycle of underpricing nature Modern economies are: • squandering valuable natural and ecological capital • failing to act on rising global environmental risks. • Rising global environment risks = greater business risks Source: Barbier (2022), Fig. 1.2
- 16. 16 (Mis)management of economic wealth Economic Wealth Physical capital Dwellings, factories, structures, equipment, inventories, consumer durables, etc. Human capital The skills, education and health embodied in the workforce Natural capital Land, forests, fossil fuels, minerals, fisheries Ecological capital Ecosystems providing goods and services Difficult to value Irreversible conversion Prone to collapse Economic wealth, or the total capital stock, comprises physical, human and natural capital. It should be managed to sustain per capita human welfare and to limit global environmental risks. One challenge is that an important type of natural capital – ecosystems providing goods and services – is difficult to value, subject to irreversible conversion Ecosystem decline and degradation Rising ecological scarcity Increasing global environmental risks Source: Barbier (2022), Fig. 3.3
- 17. 17 Financial benefits from biodiversity conservation Edward B. Barbier et al. Science 2018;360:486-488 Published by AAAS If agriculture also contributed 10% of the $235–577 billion it receives annually in wild and managed pollination services to conserve, create and restore wild pollinator habitats, this would amount to around $20-60 billion per year in additional financing.
- 18. 18 Business and environmental risks World Economic Forum: $44 trillion of global value added in 163 industry sectors and their supply chains is moderately or highly dependent on nature and its services. This amounts to over half of the world’s GDP The WEF reported that loss of biodiversity was one of the greatest risks to the business community Improved environmental risk management by firms affects their overall cost of capital and their attractiveness to potential investors. Meta-analysis of 132 published studies: 78% of studies found a positive relationship between corporate sustainability and financial performance Concerns by financial investors, institutions and regulators over environmental risks are leading to a surge in green finance. World Bank: “Firstly, investors are looking for investment opportunities arising from the conservation, restoration, and sustainable use of nature—to use the language of climate finance, to ‘finance green’. Secondly, investors are trying to direct financial flows away from projects with negative impacts on biodiversity and ecosystem services, and towards projects that mitigate negative impact or pursue positive environmental impacts as a co-benefit.”
- 19. 19 A strategy for green transformation of business Ending the underpricing of nature Policies for greening finance and business Taxing major biosphere exploiters Environmental risks included in business and investment decisions Strategies limit environmental risks in management and operations Actions to conserve and restore critical environmental sinks and stocks Source: Barbier (2022), Fig. 9.1
- 20. Selected key biodiversity messages for the Finance Sector a) Disclose climate-related financial risk and the use of natural resources, and the impact of these activities on the environment b) Align lending to the global net-zero carbon emissions objective with an immediate decarbonizing of portfolios – in order to minimize the impact of climate change on biodiversity c) Increase the share of adaptation and resilience finance to at least 50 per cent of their climate finance to support activities such as agriculture and forestry d) Develop and promote innovative financing mechanisms for the conservation and restoration of biodiversity, including through payments for ecosystem services e) Support the expansion and better management of protected areas and other effective area- based conservation measures f) Assist in the transformation of the economic, financial and productive sectors
- 21. Conclusion o Biodiversity is central to human well-being o Human-induced loss of biodiversity is undermining human well-being o Natural capital should be used in decision-making o Loss of biodiversity undermines the 17 UN Sustainable Development Goals o Loss of biodiversity is not only an environmental issue, but a development, economic, social, security, moral and ethical issue o Current Government and private sector actions are totally inadequate to conserve and restore biodiversity o Transformative change is needed – cost effective and socially acceptable response options are available o Biodiversity and climate change are strongly interconnected and must be addressed together