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Biodiversity next big wave in sustainability

Right now, the COP26 climate summit is a big area of focus around the world. To some extent this has overshadowed COP15, the UN Biodiversity Conference, which was held earlier this autumn. Many believe it represents the next major wave in sustainability.

“Companies and investors are in the starting blocks to work more actively with biodiversity. But uncertainty is great, and the questions are many. Here we have a vital role to play in increasing knowledge, helping businesses draw up science-based targets and in innovating financing solutions,” says Susanne Gløersen, deputy head of Sustainable Banking in Norway.

She was also one of the speakers when SEB at the end of October hosted a customer seminar on biodiversity. Other participants included representatives of the major Norwegian companies Storebrand and Hydro, which talked about how they are working with the issue. The speaker list also included experts from WWF and other interest organisations.

UN Convention

It was back in 1992 that the UN adopted its Convention on Biological Diversity, with biological diversity defined as the variability among living organisms from all sources including terrestrial, marine, and other aquatic ecosystems. The convention has been ratified by 195 countries, but despite this, biodiversity continues to decrease. According to data from WWF, the number of mammals, birds, fish, reptiles, and amphibians decreased by 68 per cent between 1970 and 2016.

In October, the 15th UN Biodiversity Conference (COP15) was begun. It was actually scheduled to begin in 2020 but was postponed because of the pandemic. The conference is now broken down into a virtual phase, which was held in October, and an in-person phase, which will be held in spring 2022 in Kunming, China.

“The aim of COP15 is to raise protections against biodiversity loss and work to rebuild ecosystems. The goal is to agree on global targets for biodiversity in the same way as for the climate. This will also lead to an expectation that companies and investors set their own targets that are aligned with the global targets,” says Susanne Gløersen.

Climate and biodiversity are, of course, interconnected. Healthy ecosystems, especially forests and oceans, have a large capacity to sequester carbon dioxide. On the other hand, the need to reduce global warming is great as this reduces the risk of extinction of species.

“With respect to the climate, companies have the opportunity to set science-based targets for emissions reductions that are in line with what is needed to achieve the goals of the Paris Agreement and that are approved by the Science Based Targets Initiative. We are now seeing the contours of a similar Science Based Targets for Nature evolve", says Susanne Gløersen.

Matter of survival

Biodiversity is not only a matter of protecting threatened species; just like the climate, it is a finanical matter for companies and investors According to WWF’s annual risk assessment, biodiversity together with the climate represents one of the greatest economic challenges in the next ten years. Roughly half of the world’s gross national product is dependent on biodiversity.

Biodiversity loss gives rise to physical risks in the form of natural disasters and problems with invasive species, water shortages, the spread of diseases and land degradation. This, in turn, leads to major financial risks.

“A clear example of the financial risk of weakened diversity applies to companies operating in agriculture and food production. 76 percent of our edible raw materials and crops are dependent on bees and other pollinators. The reduced bee populations impact companies throughout their supply chain as a financial loss for companies like Orkla due to increased lack of access to raw materials and higher and more volatile prices, she says.

Increased awareness

Awareness of this issue has grown in the business sector, but still there are many companies that lack a clear strategy for biodiversity. According to a survey conducted by the Swedish sustainability magazine Aktuell Hållbarhet, three-fourths of listed companies say that they do not have a strategy in place, but that they have begun identifying their role in the matter.

Says Susanne Gløersen: “Many companies have made great progress and have worked for a long time with issues such as deforestation. But going forward we will see companies and investors working more broadly with issues related to biodiversity and nature. There are even those, such as the Danish energy company Ørsted, that have set a target to be net positive – that is, to work to restore and improve biodiversity. We will increasingly see companies setting such targets to become ‘net nature positive’.”

Advice and financial solutions

In her view, as a bank SEB has a key role to play in advising companies and investors on this issue – but also in developing novel financial solutions.

“I believe that sustainability-linked financing will emerge in this area. We will see biodiversity bonds, where companies can tie science-based targets for nature to their financing.”