Winning without win-win: recommendations on financial market strategies for Biodiversity and Nature

Preventable Surprises is pleased to release Winning without win-win: recommendations on financial market strategies for Biodiversity and Nature.

Switching gears on Nature

The biosphere supports life. Soon it may be on life support. Investors can make a meaningful contribution to changing the course of biodiversity and Nature loss if they set adequate ambitions, learn from the strengths and shortcomings of climate action, demonstrate leadership, and engage in proper collaboration. However, they should also understand that the growth models on which markets and capitalized retirements depend no longer work in a carbon constrained world, and that their unchecked power curbs their ability to behave responsibly. Preventable Surprises believes that new solutions are needed to overcome existing barriers to change. Buckminster Fuller reminds us, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” In other words, it is time for social and technical innovation. It is also time to recognize that finance is one piece in larger economic, natural, and social systems, and that its role should never be viewed in isolation.

February 2021 Online dialogue

Winning without win-win represents Preventable Surprises’ own take-aways from an online dialogue on setting an investor agenda on biodiversity hosted in February 2021, as well as from many more recent developments on Environmental, Social and Governance (ESG) finance and climate action. They aren’t meant and do not claim to be a consensus view of dialogue participants.

The dialogue brought together close to ninety global participants from finance, science, policy, and civil society. The goals were to broker honest conversations and to build an investor agenda on biodiversity loss, commensurate with the scale of the crisis. Guided by daily provocations from experts on critical scientific, business and policy issues, this dialogue sought to identify gaps in practice and ambition and propose actionable solutions that investors and others can apply immediately. The dialogue was held under the Chatham House. An extensive summary captures the wealth of the conversations with daily provocations and syntheses, select responses and observations from the participants, a list of actionable ideas and survey data.

Question

Preventable Surprises believes that new solutions, beyond current ESG finance approaches, are needed to address the biodiversity crisis and overcome barriers to change. Investors should focus on adequate levers, embrace the limits of their own interventions, and understand that ultimately their unchecked powers need to be curbed to address a systemic challenge of this magnitude. Deep market reforms will be required, but the urgency of the crisis makes intermediary solutions necessary.

Ambitions

• Investors should devote most of their energy on policy levers, globally and locally, to establish guardrails to stay within planetary boundaries. They should support goals to set aside 30% of Nature by 2030, protect key ecosystems and ensure half the earth’s land mass and oceans become protected conservation areas by 2050.
• Engagement with the private sector should focus on business transformation first and foremost. Current approaches focused on disclosure are too slow. Investors should require companies to stop and reverse negative impacts and then regenerate natural systems.
• All data and disclosure should embrace context, moving away from a firm-centered approach (changes in a company’s “Nature performance” year on year) to one that sets this performance in an economic, ecological, and social context.

Design

• Whether acting alone or in conjunction with others, investors should adopt 21st century governance principles. They should engage with scientists, stakeholders, and local communities. They should implement free prior and informed consent, co-creation, and gender parity.
• Investors should organize around landscapes and ecosystems as they are doing in the Amazon rainforest.
• They should adopt a culture of learning and innovation to make sure that the solutions they deploy are effective.
• They should work at pace and scale in recognition of the urgency of biodiversity loss challenges, giving companies no more than two years to show meaningful course correction.

These recommendations are designed with a broad audience in mind – investors themselves, regulators, scientists, stakeholders, funders – all those with a stake in the success of financial market strategies for Nature. They draw from different disciplines, practices, and schools of thought. Applying its own medicine, Preventable Surprises does not profess to know better. Rather, the recommendations follow a deliberate intention to broaden the lens through which to view how markets and Nature interact, beyond ESG. They offer and invite contradiction. Feedback is invited, and welcome.

Key links

• Winning without win-win: recommendations on financial market strategies for Biodiversity and Nature.
• Extensive summary from Preventable Surprises’ online dialogue on building an investor agenda on biodiversity loss.