Biodiversity Briefing for the Financial Sector · 2007-04-24 · ©2004 sustainable finance ltd.,...

©2004 sustainable finance ltd., 23 swan hill, shrewsbury, shropshire, sy1 1nn, ukt. +44 (0) 1743.367.971

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www.sustainablefinance.co.uk

Biodiversity Briefing for the Financial Sector

Andre Abadie

Director

Sustainable Finance Ltd

April 5 2007

Biodiversity and the financial sector

©2007 Sustainable Finance Ltd

•What are the issues?

•What is changing?

•What the Biodiversity Briefing note might aim to

achieve?

•Feedback

The World is Changing


•Millennium Ecosystem Assessment

•Stern Report

•Recognition that Climate Change and biodiversity are linked (see

IGCC report due Friday)

•Corporates and industry sector led approaches to understand and

manage biodiversity risks (and opportunities)

Financial Sector Beginning to Recognise

Risk and Opportunities


•Financial sector has been slower than other sectors to recognise

biodiversity as a business issue. Why?

•Unclear attribution of financing / investment to biodiversity impacts

and risks (though clearer where use of proceeds known –e.g.

project finance);

•Scientific uncertainties;

•A lack of understanding of the links between biodiversity loss,

ecosystem services and business performance; and

•The perception of biodiversity loss as a societal issue rather than

an issue that the finance sector has a role in addressing.

•This is changing now –and changing rapidly for a variety of reasons:

•Reputational risks

•Poor investment returns

•Opportunities

Recent Exposures in the wrong place


HSBC, Credit Suisse and

Macquarie bank all

targeted by a consortia of

38 NGOs over their

involvement in the listing

of Samlingon the HK

stock exchange…

…this notice from recent

edition of International

Herald Tribune

HSBC brand attack


Linking biodiversity loss to financing –Soy

in Brazil


Sakhalin and the Western Grey Whale


Location of oil and gas assets translates

into…

•More remote

(offshore

and

onshore)

•More

complex

exploration

and

production

areas

•Often with

significant

biodiversity

risks and

issues


Gorgon

Sakhalin

Niger delta

Camisea

ANWR

…emerging risks and future “access to

finance”issues

•Reputational risks to financiers

growing

•Risks for banks increasing (down-

time, licensing, project delays)

•Transaction costs and complexities

increasing for clients

•Access to capital becoming harder /

more costly

•More information and greater re-

assurance will be required


©2003 Adam Goldstein/Amazon W

atch

©2001 Antoine Bonsorte/Amazon W

atch

The Response: Policy, Disclosure and

Engagement

ABN AMRO Mining & Metals Policy

For client eng

agem

ents, w

e ap

ply a client asses

smen

t

tool, w

hich

rates

the ex

tent to

which

clients ha

ve

proc

esse

s an

d po

licies to add

ress th

e en

vironm

ental

and so

cial im

pacts of th

eir bu

sine

ss. F

or projects, th

e

Equ

ator Prin

ciples

are app

lied to ens

ure that projects

we fin

ance

are dev

elop

ed in

a soc

ially res

pons

ible

man

ner an

d refle

ct sou

nd env

ironm

ental m

anag

emen

t

prac

tices

. For single as

set inv

estm

ents, w

e us

e a filter

to asses

s whe

ther th

ere are an

y se

nsitive

impa

cts

asso

ciated

with

the tran

saction.

The

ban

k will app

ly m

ore co

mpreh

ensive

due

dilige

nce

proc

edures

for projec

ts th

at pos

e grea

ter ris

k of m

aterial

adve

rse en

vironm

ental o

r so

cial im

pacts. The

ban

k will

not finan

ce project eng

agem

ents lo

cated in W

orld

Herita

ge Site

s, and

in prin

ciple no

t con

side

r

enga

gemen

ts whe

re ta

iling

s are disp

osed

dire

ctly in

to a

riverineen

vironm

ent.

•Policies

•Env

ironm

ental a

nd

Soc

ial d

ue dilige

nce

•Rep

ortin

g

•Eng

agem

ent w

ith

NGOs


Opportunities also evident


•Along with investment and

reputational risks, clear that there

are opportunities also

•To date most clearly linked to

carbon and forest management but

also evident in the water sector

where ecosystem management of

catchments is becoming a

significant opportunity

•Also (and often under-recognised)

the benefits that accrue in terms of

staff motivation and interest

because of an institution’s

commitments to biodiversity

Biodiversity Briefing Note

Proposed structure and content:

•Executive Summary:(2 pages)

•Section 1, Overview of the issues:

Bio

div

ers

ity a

nd E

cosyste

m S

erv

ices

Tre

nds a

nd t

he

Fin

ancia

l S

ecto

r(2 pages)

•Section 2, Biodiversity and the Financial Sector:

Und

ers

tandin

g e

xp

osu

re

and r

isks

(inclu

din

g c

om

menta

ry o

n d

rivers

acro

ss t

he f

ina

ncia

l la

ndscap

e

and in

dustr

y s

ecto

r specific

issues a

nd o

pport

unitie

s (3 pages)

•Section 3, The Financial Sector Response:

Managin

g R

isk:

Pro

posed

appro

aches t

o m

anag

ing b

iod

ivers

ity r

isk(3 pages)

•Section 4, Understanding Opportunities:(3 pages)

•Section 5, Guidance for Financial Sector on Practical Next Steps:(1-2

pages)

Biodiversity Briefing Note


•The time seems ripe to capture lessons learned and best practices,

but against this backdrop what should the Briefing Note convey?

•Move from bespoke / niche activities and responses to broader

mainstreamed understanding and management of these issues

(scale and replication)

•Who are the key audiences?

•What are the key messages?

•What form

at and what length?

•What sector, financial product, or geographic focus?

•What are the stories that you think will galvanise your colleagues /

institutions?

•What cases best support the above –BRICs, emerging markets

broadly, OECD?

Biodiversity Briefing for the Financial Sector · 2007-04-24 · ©2004 sustainable finance ltd.,...

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