The financial sector plays a central role in European policy on climate change mitigation. Will this also be the case for biodiversity protection? “Over the past five years, central banks have played a key role in tightening climate protection. This experience must be repeated and accelerated for central banks, regulators, financial institutions and the real economy when it comes to preserving and restoring biodiversity,” said Murray Birt, DWS senior ESG strategist.
The UN Virtual Biodiversity Summit on September 30th, 2020 aimed to reach a new agreement when the UN meets next May in China on biodiversity. Time is definitely pressing: since 1970, mankind has already exterminated 68 percent of all mammals, birds, fish and reptiles.
The loss of biological diversity is being accelerated and exacerbated by climate change. Moreover, the destruction of forests and trade in wildlife species has made pandemics like the present one more likely. Covid-19, Zika, AIDS, SARS, and Ebola originate from animal populations whose habitat has been severely damaged by human activity.
Read more about the importance of biodiversity for financial institutions and find the latest business news with the Born2Invest mobile app.
Incentives for the financial sector?
Exactly like the climate has come in the focus of investors a few years ago, biodiversity could now become increasingly important for financial institutions. The promise of the heads of state and government aims to integrate biodiversity into all relevant policy areas and international agreements.
The financial sector should be given national and international incentives to take the value of nature and biodiversity into account. Capital should be mobilized to promote the conservation, restoration and sustainable use of nature in financing and investment decisions and in risk management.
According to DWS, these goals should be self-evident. But it could also motivate the financial industry that biodiversity can be a growth driver.
Global GDP growth is threatened by a lack of measures to conserve and restore biodiversity. If things continue as they are, this could lead to a 0.67 percent decline in annual GDP growth by 2050. According to DWS, this would correspond to a decline of $10 trillion. In a “global conservation scenario”, however, GDP growth could accelerate by 0.02 percent by 2050.
Green financial sector
Just how important biodiversity is for regulators and institutional investors is shown by the figures: 69 financial regulators and central banks are members of the so-called “Network for Greening the Financial Sector” (NGFS). Even more central banks are likely to join the NGFS in the future. Currently, 39 members are located in countries with high or high middle income. However, as with climate change, it is often the poorer countries that are particularly affected by the loss of biodiversity. According to the WWF, low-income countries are most at risk from GDP losses due to the destruction of biodiversity.
However, much of the exploitation of resources and the destruction of biodiversity is due to higher income countries, companies and individuals who produce and buy products.
Institutional investors are now heavily involved in climate change. According to a study by the CFA Institute, 40 percent of institutional investors worldwide integrate climate aspects into their investment decisions.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in dpn, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Urbanitae Launches a €5M Crowdfunding for Residential Development in Tenerife
Urbanitae, whose CEO is Diego Bestard, has financed thirteen real estate projects worth $14.6 million (€12.5 million) during the first...
Cardano (ADA) Price Forecast After the Annual Cardano Summit
Cardano held its virtual conference over the weekend. The daily chart shows that the ADA price has been under pressure...
High Time to Invest in Medical Marijuana?
As states and regions look to harness the monetary potential of the legal marijuana market, it is expected that licensing...
How the U.S. Dollar Influences the Price of Cotton Futures
Cotton futures were higher on Friday in response to a stronger U.S. dollar and a strong weekly export sales report. The...
Deutsche Bank Acquires Berlin-based Fintech Company Better Payment
Deutsche Bank has acquired the Berlin-based payment fintech company "Better Payment". Through the full acquisition, the Frankfurt-based bank not only...
Cannabis2 weeks ago
Are Cannabis Social Clubs in Barcelona on the Verge of Closure
Crypto2 weeks ago
Coinbase Pro Accidentally Relists the Troubled XRP
Featured2 weeks ago
Speculative Long Liquidation Negatively Impacted the Price of Cocoa
Featured2 weeks ago
The Rise of Fintech Companies Accelerates the Transformation of Traditional Banks