MARKET EFFICIENCY AND INNOVATION
Data is the lifeblood of the of financial system. For nature impacts and risks to be integrated in decision making requires timely, good quality, usable information. Biodiversity data, such as about the state of forests or species often come from public sources.
Developing standards and methodologies for data is the starting point for aligning finance to protecting biodiversity. Metrics make biodiversity related risk and value visible to financial decision making, and can be part of a process of creating materiality.
The materiality of biodiversity impacts depends in part on associated liabilities. Liabilities might arise through the application of the rule of law and relevant regulations and standards.
Legal liability may be direct, a matter of breaking rules concerning biodiversity, or indirect, such as where biodiversity loss is linked to illicit financial flows and other criminal activities.
There are widely accepted precedents for extended liability to financiers. Banks today can be held legally liable for providing financial services to international organised crime gangs, assisting enemy governments, corrupting governments, and complicity in bribery. With the rights of nature being codified in many countries, and the potential for 'ecocide' to become a crime, extending liability to the providers of finance is an important route for crystallising material risks on the balance sheets of financial institutions.
Citizens are the ultimate owners of the world’s financial assets, as well as being members of the families, communities and nations that live within and depend upon nature and biodiversity. They should have rights, information and mechanisms to make decisions on how their money is deployed, as savers, investors, those insured, consumers, taxpayers and voters.
Calls for a more citizen-centric finance align well with technological advances. Digitalisation can be a game-changer in empowering citizens in financial decision-making. Radical increases in accountability can be secured through digitalised transparency, with significant advances made in the sphere of public spending.
Exploring the potential for mobile payment platforms for nature
Informing and engaging with civil society advocacy
Mapping efforts to link finance, biodiversity and values
CATALYSING NATURE MARKETS
“Nature positive markets” create revenues by internalising nature’s products, services and attributes such as clean water, flood protection and certified seafood.
The global challenges of climate change and biodiversity collapse cannot be overcome without a market exchange that can efficiently match varied demand for nature’s services with a clear and trustworthy source of supply.
However currently the markets are failing both on the supply side, and on the demand side. The nature markets that do exist today such as voluntary carbon markets are small, restrictive, and risk-averse, and thus typically incapable of “making nature pay.”
It is therefore essential to create vibrant, functional, liquid nature markets that can match nature’s products and services with our equally broad and complex needs.
F4B is developing a major new programme to overcome systemic barriers and catalyze high momentum growth of nature markets.
Nations across the globe are reeling from the economic and financial impacts of the COVID-19 pandemic. The collapse in government revenues threatens to reverse years of steady economic growth, particularly in emerging markets.
F4B’s contribution in this area is to examine the response to the COVID crisis, and the opportunity to consider new pathways that alleviate pressure on governments, while locking in sustainable finance solutions and increasing biodiversity resilience.
THE FOOD FINANCE NEXUS
Our food-finance nexus workstream is cross-cutting and draws from the entirety of F4B’s Portfolio.
This workstream aims to advance analysis and recommendations on how best to align global finance with the needs of the transition to an inclusive, effective, sustainable food system.
This effort is part of a collaboration with the Food System Economics Commission (FSEC), [link] in the context of the UN Food Systems Summit taking place in September 2021.