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  • Bredhill Consulting

Banks and Biodiversity ?

Updated: Apr 27, 2023




In the 2021 Sustainability Reports of the major banks, the word biodiversity appears only very rarely, whereas commitments to environmental transition are widely highlighted. When it is mentioned, it is frequently indicated that it is a "new" commitment on which the bank has decided to position itself.


However, the degradation of biodiversity presents significant risks for financial institutions: a risk to their investments (a drop in the market value of exposed portfolios), risks in terms of legal liability (for damage caused by operations resulting in a loss of biodiversity), obvious image risks and finally exposure to regulatory risks. A tightening of French and European regulations is expected in the relatively short term.


Aware of their exposure to these different risks, banks are wondering what actions to take to really address the issue of biodiversity (beyond symbolic and friendly actions: beehives, etc.). The first more ambitious initiatives on the theme of reforestation and water conservation are coming.


To go truly further, one of the key issues is that of measurement, data and evaluation methods. Asset management has begun to develop its models to integrate biodiversity and most banks are working on acquiring the data necessary to evaluate practices and impacts. Some banks are also committed to assessing all of their corporate clients on biodiversity-related criteria by 2025 (almost tomorrow).


To support these initiatives, joint French and international initiatives are multiplying, notably the Taskforce on Nature-Related Financial Disclosures (TNFD), founded in 2020 and financed by governments, financial institutions and companies, which takes the form of working groups with the aim of creating a methodology for analyzing biodiversity-related risks.


Some of these "alliances" have recently made recommendations to financial institutions. For example, the Natural Capital Finance Alliance (NFCA), made up of leading financial institutions and environmental experts, recommends that banks analyze the entire value chain of the companies in their portfolio and identify their impacts on biodiversity, set specific internal targets, and then implement changes in financing activities based on this data.


The time seems ripe for the major banks to take a more proactive approach. They have everything to gain by doing so: they could improve their sensitivity to risks and make a significant contribution to the preservation of biodiversity.

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