The Natural Capital Declaration and Roadmap

Transcription

1 The Natural Capital Declaration and Roadmap Financial sector leadership on natural capital Liesel van Ast, NCD Programme Manager

2 Landscape Natural Capital Initiatives Initiative Focus Banking Investment Insurance Finance Corporate Government Natural Capital Declaration - UNEP FI and GCP (integrating ecosystem goods & services risks and opportunities into products and services, accounting and reporting at banks, asset owners, fund managers and insurers) Natural Capital Coalition accounting and valuation of ecosystem goods & services in business (focus on apparel, food) System of Environmental Economic Accounts (UN SEEA) Banking Principles for Principles for World Business Council The Economics of Environment Responsible Sustainable for Sustainable Ecosystems and Initiative, Cambridge Investment Insurance, UNEP FI Development (WBCSD) Biodiversity (TEEB Institute for (integrating (Including ESG issues UNEP) Sustainable environmental, in insurance) Leadership (soft social, governance commodities) ESG issues in fund management) Equator Principles Natural Capital Leaders WAVES Partnership (environmental & Platform, CISL (Wealth Accounting and social issues in the Valuation of mainly project Ecosystem Services) finance) Global Reporting Natural Capital Initiative (GRI) Committee (UK Government) Natural Capital Project, Universities of Stanford and Minnesota, WWF, and The Nature Conservancy

3 40+ NCD signatories 40+ institutions have endorsed the NCD at CEO level. Most have contributed financially (annual contribution, project contribution). A number of institutions have observer status. Growing number interested and committed to actively participate in one or more pilot projects. 5 FI representatives are part of the NCD Steering Committee

4 30+ NCD supporters 30+ organisations support the NCD: crucial to create broader acknowledgement and support A number are part or (planned) pilot projects. 2 representatives are part of the NCD Steering Committee

5 The NCD Commitments Working Group NCD commitment 1. Understand Build an understanding of risks and opportunities linked to the natural capital impacts and dependencies of portfolio companies. 2. Embed Integrate natural capital factors into financial products and services - including loans, investments and insurance products. 3. Account Work towards a consensus on including natural capital in accounting and decision-making. 4. Report Work towards consensus on Integrated Reporting, including natural capital disclosures.

6 The NCD approach Finance focused: Finance-led projects to develop and test opensource methodologies for the financial sector. Quantative and evidence-based for information efficiency: Bring science-based data and analytics to integrate natural capital indicators into capital markets. Foster innovation: Work with core teams to manage risk and catalyse new products to protect natural assets. Active participation: Credit analysts/portfolio managers provide time and expertise to ensure practical outcomes that are beneficial and can be implemented widely.

7 Linking financial, corporate and natural capital data Corporate environmental profiles in context Natural capital in finance Corporate environmental profile Natural capital risks and opportunities across portfolio of companies Economic value of impacts and dependence Geospatial information on natural resources and state of the environment

8 83 Pipeline of pilot projects No. Title Institutions Asset Class Partner 1 Framework to evaluate Bank and Investor Risk Policies for Soft Commodities to address deforestation risk 2 Advancing Natural Capital Accounting in externalities heavy sectors for financial institutions Rabobank, IFC, FMO, Banorte, Pax World, Calvert, MN Services, ASN Bank, Standard Chartered, Sumitomo Mitsui National Australia Bank, TBC Various TBC/Sector dependent Sustainalytics, UN-REDD Programme UNEP TEEB, KPMG

9 84 Pipeline of pilot projects No. Title Institutions Asset Class Partner 3 Accounting for natural value to assist credit risk assessment in the agri sector 4 Tool to assess waterrelated natural capital risks of mining companies for investors Agri-lending NAB TBC Equities Bloomberg, NCC

10 Pipeline of partnership pilot projects 85 No. Title Institutions Asset Class Partner 5 Tool to include water risk metrics in financial analysis of corporate bonds Calvert, Pax World, Sarasin, TBC Corporate bonds VfU, GIZ 6 Understanding and integrating natural capital risks into credit risk assessments IFC, Banorte, National Australia Bank, Unicredit, Caisse des Dépôts, Pax World, Calvert Corporate finance; equities, corporate bonds, project finance TBC (IFC Feasibility Study)

11 86 Options to participate (i) (ii) Join stakeholder group to be updated and consulted on methodology developments Provide input into needs analysis and methodology and tool development (iii) Participate in project research & development and test draft methodologies/tools in relevant selected asset classes

12 Emerging initiatives Finance (banks, investors, insurers) Financial regulation To reduce systemic risk Compliance with (new) laws and regulations Government Methodological foundation to mitigate financial risks and develop sustainable finance Controls on high-impact sectors Incentives to reduce impacts Corporate sector Measuring economic value of ecosystems Integrating natural capital into business decisions Impacts on ecosystems (e.g. deforestation, pollution) Dependency on ecosystems (e.g. water, fish, etc) Ecosystem goods and services Risks - Reputational - Regulatory (e.g. license revoked) - Operating risk (e.g. limited access) - Litigation (damages /liabilities)

13 7 Growing examples of policy innovation Banking Securities Investment Insurance Brazil - Resolution No (2014) Kenya Sustainable Finance Initiative (2014) China Green Credit Guidelines (2012) Colombia - Green Protocol 2012 Nigeria - Sustainable Banking Principles (2012) Bangladesh ERM Guidelines (2011) Lebanon Reduced reserve requirements for energy efficiency (2011) Indonesia Green Protocol (2009) Peru & Mongolia developing Guidelines Australia - Stock exchange reporting requirement (2014) EU - Directive on Disclosure of nonfinancial information (2013) France Grenelle reporting Law (2012) USA - SEC climate disclosure guidance (2009) Malaysia Investor Code (2014) Japan Principles for Financial Action towards a Sustainable Society (2012) South Africa - Regulation 28 of the Pension Funds Act (2011) UK Pensions Act Reporting (1999) UK Prudential Regulatory Authority exploring climate change & insurance supervision (2014-5) USA NAIC climate reporting (2009)

14 15 Critical issue: improving transparency Long-standing focus on corporate disclosure Next generation reporting standards, with a greater focus on materiality and investment decision making. Mobilising global stock markets through the Sustainable Stock Exchanges Initiative including Colombia, Egypt, India, Mexico, Nigeria, Poland, South Africa, Thailand, Turkey, UK, USA, Growing focus on investor disclosure First portfolio footprint in 2005 and now Portfolio Decarbonisation Coalition will convene a critical mass of investors committed to measuring, disclosing and reducing carbon impact How can securities, investment & accounting rules strengthen voluntary leadership to drive both disclosure and use of sustainability information?

15 Thank you Dankuwel