Biodiversity loss - why it is material and relevant for banks
Biodiversity is the variability of living organisms, including diversity within and between species. This biodiversity, together with water and soil, forms the ecosystems and the services these provide, which underpins the economy and sustains life on earth. These ecosystem services include climate, soil fertility and air quality regulation, water storage and filtration, pest and disease control, among other services. However, global wildlife populations have plummeted by 69% on average since 1970, painting a sobering picture on the current state of nature and biodiversity.
As biodiversity loss continues and awareness of the implications grows, companies will increasingly face a range of potential risks. The World Economic Forum have also estimated that over half of the world’s total GDP is dependent on nature and the associated ecosystem services it provides, representing a potential systemic risk to the global economy.
This is the particularly the case for banks, who have wide and diverse exposure across a range of economic sectors, as well as more direct exposure to some higher biodiversity impact and dependency sectors, such as agriculture. It is positive to see that banks globally are already recognising these potential risks and calling for greater biodiversity protection. In October 2021, over 50 banks signed a declaration, coordinated by the China Banking Association, supporting biodiversity conservation, and seeking to strengthen biodiversity risk management and disclosures.
Interested in learning more?
Given their exposure to a range of economic sectors, banks need to account for biodiversity impacts across their operations. We’ve found however, that many need to improve their approach. Read about our best practices following engagement with the banking sector, including a robust approach to governance, a clear approach to evaluation and disclosure, and target setting. Download the full viewpoint to discover more.