The report provides a status of existing analytical tools and public and private strategies that ensure that public and private investments strengthen, not weaken, biodiversity. The report also looks closer at the approaches to working with biodiversity in the Nordic financial institutions Nefco (Nordic Environment Finance Corporation), NDF (Nordic Development Fund) and NIB (Nordic Investment Bank), and examines their methods to ensure promotion of biodiversity through their financial activities. Moreover, it is studied how nature-based solutions and the EU Taxonomy are included in the biodiversity efforts of the banks.
Finance institutions have facilitated the expansion of business activities detrimental to biological diversity. By investing in sectors such as agriculture, fisheries, fossil fuels, and energy, and providing funding to polluting industries, the finance sector has supported activities that have led to biodiversity loss. However, the demand for investing in activities with positive impact on nature is rapidly rising, and the financial sector is increasingly urged to align their portfolios with biodiversity positive outcomes. Several opportunities are pointed out to step up initiatives, and many nature positive investment activities are already in place. These activities include initiatives and forums for knowledge sharing, standards and framework for application of new procedures, and tools for incorporating considerations to biodiversity into operations.
Financial institutions commonly apply safeguards to prevent that their financial activities weaken biodiversity. This includes criteria and procedures to identify biodiversity features of high concern, a risk-based approach to financial activities, and application of the mitigation hierarchy.
The Nordic Development Fund (NDF), the Nordic Investment Bank (NIB) and the Nordic Environment Finance Cooperation (Nefco) are all international finance institutions who together make up the Nordic Finance Group. The Nordic financial institutions have a clear environmental mandate and are all working with the biodiversity agenda more or less actively. Although the aim for biodiversity positive impact is mentioned at the strategic level for all institutions, they have no set targets for the number of financial activities that should include nature-positive outcomes. Biodiversity is considered in the project design and screening, concretely through for example exclusion lists, but it is less clear how biodiversity impacts are addressed through the project implementation and monitoring. The Nordic financial institutions are thereby on the forefront of biodiversity financing, but they can increase their efforts to ensure that they strengthen, not weaken, biodiversity through their operations. This can be done through a number of recommendations synthesised from the report findings:
Recommendations
Examine exposure to physical and transitional biodiversity risk of the operations.
Educate staff and investors on biodiversity.
Educate clients on biodiversity considerations and reporting.
Develop or adopt biodiversity safeguard framework/action plan for the operations.
Integrate and combine biodiversity and climate considerations in financing activities.
Focus financing activities directly towards nature-positive outcomes.
Change the assessment horizons of financing to better include the long-term perspective of biodiversity impacts.
Create partnerships between finance and biodiversity actors