There is growing recognition that climate risk is not only about emissions but also about protecting biodiversity and the associated environmental and financial risks stemming from biodiversity loss.
A key deal struck at the summit outset between more than 130 countries — including the US, the UK, China, Canada, Brazil, Russia, Indonesia — backs a plan to end deforestation and land degradation by 2030. This is important not only because reforestation helps with decarbonization, but also because the deal puts a spotlight on the use of natural resources in commercial activities. This will have implications for companies in related fields as they look to find viable alternatives, in a similar manner as fossil fuel phase outs have driven changes in other sectors.
In the spirit of “what gets measured/reported gets managed”, the Taskforce on Nature-related Financial Disclosure (TNFD) is now up and running. (State Street is a member of the TNFD forum.) Experience from the Task Force on Climate-related Financial Disclosure (TCFD) may help accelerate the development of disclosure standards related to natural capital.
Meanwhile other coalitions such as the Sustainable Markets Initiative (SMI) — where State Street leads the asset owner and manager task force — are actively encouraging investments in natural capital.