Industry’s role in fighting biodiversity crisis
A report focusing on the biodiversity crisis is the latest wake-up call by business organisations for the inhabitants of the planet.
Waking up to nature – the biodiversity imperative in financial services, a report launched by EY, in collaboration with Microsoft and Earth Knowledge, makes it clear that business organisations must take a leadership role in finding solutions.
Biodiversity loss includes the global extinction of species, as well as the shrinking or loss of species in specific habitats.
The world’s top experts have long said that it is people who have been killing the globe’s great biodiversity.
The International Union for Conservation of Nature has reported that in the past decade alone, some 467 species have been declared extinct. And many more are nearly there.
But EY points out that insurers, investment funds and banks are well positioned to help to restore nature’s health through their outsize influence on human economic activity.
Released weeks before the COP26 and the Green Horizon Summit, which is sponsored by EY, the biodiversity paper highlights the nature-related challenges facing the financial sector today.
The report highlights the depletion of natural resources at a pace that has outstripped Earth’s rate of regeneration, to the point that we would require an estimated 1.7 Earths for the world’s expanding population to maintain its current living standards.
We have lost half of our forests, 85 per cent of our wetlands and half of our coral reefs, while approximately a million species are under threat of extinction.
Financial institutions can help to change this trend by ensuring that their investments, capital allocation, loans and insurance coverage support “nature positive” activities by companies across the world.
Craig Redcliffe, EY Bermuda partner and regional insurance leader for the EY region of Bermuda, the Bahamas, British Virgin Islands and Cayman Islands, said: “By the nature of their business, global insurers and reinsurers in Bermuda have a deep understanding of the relationship between changes in the natural world and the risks that they underwrite.”
Bill Bailey, EY Bermuda managing partner and regional tax leader, added: “By integrating considerations of biodiversity into their decision-making in both underwriting and investing, re/insurers can exert a significant, positive influence in helping to protect essential ecosystems that underpin all aspects of our economy and the Earth’s sustainability.”
The report lays out four clear steps that financial companies can take to help essential ecosystems return to full health: include biodiversity and “nature positive” outcomes in sustainable finance strategy; engage with companies on priority biodiversity issues, such as deforestation; advocate at the policy level for appropriate regulation; and, develop methodologies to measure and manage progress.
Eleanor Fisher, strategy and transactions partner, and regional sustainability leader, said: “This is not only about financial services companies doing the right thing to help ensure that future generations will be able to sustainably use the Earth’s air, land and water — it’s also a financial opportunity.
“The biodiversity finance gap is estimated at $800 billion and is growing every year, while more than two thirds of savers seek investments that support sustainability. Those firms who find solutions to match the supply and the demand will be the leaders in the fast-growing sustainable finance market.”