©2004 sustainable finance ltd., 23 swan hill, shrewsbury, shropshire, sy1 1nn, ukt. +44 (0) 1743.367.971
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www.sustainablefinance.co.uk
Biodiversity Briefing for the Financial Sector
Andre Abadie
Director
Sustainable Finance Ltd
April 5 2007
Biodiversity and the financial sector
©2007 Sustainable Finance Ltd
•What are the issues?
•What is changing?
•What the Biodiversity Briefing note might aim to
achieve?
•Feedback
The World is Changing
©2007 Sustainable Finance Ltd
•Millennium Ecosystem Assessment
•Stern Report
•Recognition that Climate Change and biodiversity are linked (see
IGCC report due Friday)
•Corporates and industry sector led approaches to understand and
manage biodiversity risks (and opportunities)
Financial Sector Beginning to Recognise
Risk and Opportunities
©2007 Sustainable Finance Ltd
•Financial sector has been slower than other sectors to recognise
biodiversity as a business issue. Why?
•Unclear attribution of financing / investment to biodiversity impacts
and risks (though clearer where use of proceeds known –e.g.
project finance);
•Scientific uncertainties;
•A lack of understanding of the links between biodiversity loss,
ecosystem services and business performance; and
•The perception of biodiversity loss as a societal issue rather than
an issue that the finance sector has a role in addressing.
•This is changing now –and changing rapidly for a variety of reasons:
•Reputational risks
•Poor investment returns
•Opportunities
Recent Exposures in the wrong place
©2007 Sustainable Finance Ltd
HSBC, Credit Suisse and
Macquarie bank all
targeted by a consortia of
38 NGOs over their
involvement in the listing
of Samlingon the HK
stock exchange…
…this notice from recent
edition of International
Herald Tribune
HSBC brand attack
©2007 Sustainable Finance Ltd
Linking biodiversity loss to financing –Soy
in Brazil
©2007 Sustainable Finance Ltd
Sakhalin and the Western Grey Whale
©2007 Sustainable Finance Ltd
Location of oil and gas assets translates
into…
•More remote
(offshore
and
onshore)
•More
complex
exploration
and
production
areas
•Often with
significant
biodiversity
risks and
issues
©2007 Sustainable Finance Ltd
Gorgon
Sakhalin
Niger delta
Camisea
ANWR
…emerging risks and future “access to
finance”issues
•Reputational risks to financiers
growing
•Risks for banks increasing (down-
time, licensing, project delays)
•Transaction costs and complexities
increasing for clients
•Access to capital becoming harder /
more costly
•More information and greater re-
assurance will be required
©2007 Sustainable Finance Ltd
©2003 Adam Goldstein/Amazon W
atch
©2001 Antoine Bonsorte/Amazon W
atch
The Response: Policy, Disclosure and
Engagement
ABN AMRO Mining & Metals Policy
For client eng
agem
ents, w
e ap
ply a client asses
smen
t
tool, w
hich
rates
the ex
tent to
which
clients ha
ve
proc
esse
s an
d po
licies to add
ress th
e en
vironm
ental
and so
cial im
pacts of th
eir bu
sine
ss. F
or projects, th
e
Equ
ator Prin
ciples
are app
lied to ens
ure that projects
we fin
ance
are dev
elop
ed in
a soc
ially res
pons
ible
man
ner an
d refle
ct sou
nd env
ironm
ental m
anag
emen
t
prac
tices
. For single as
set inv
estm
ents, w
e us
e a filter
to asses
s whe
ther th
ere are an
y se
nsitive
impa
cts
asso
ciated
with
the tran
saction.
The
ban
k will app
ly m
ore co
mpreh
ensive
due
dilige
nce
proc
edures
for projec
ts th
at pos
e grea
ter ris
k of m
aterial
adve
rse en
vironm
ental o
r so
cial im
pacts. The
ban
k will
not finan
ce project eng
agem
ents lo
cated in W
orld
Herita
ge Site
s, and
in prin
ciple no
t con
side
r
enga
gemen
ts whe
re ta
iling
s are disp
osed
dire
ctly in
to a
riverineen
vironm
ent.
•Policies
•Env
ironm
ental a
nd
Soc
ial d
ue dilige
nce
•Rep
ortin
g
•Eng
agem
ent w
ith
NGOs
©2007 Sustainable Finance Ltd
Opportunities also evident
©2007 Sustainable Finance Ltd
•Along with investment and
reputational risks, clear that there
are opportunities also
•To date most clearly linked to
carbon and forest management but
also evident in the water sector
where ecosystem management of
catchments is becoming a
significant opportunity
•Also (and often under-recognised)
the benefits that accrue in terms of
staff motivation and interest
because of an institution’s
commitments to biodiversity
Biodiversity Briefing Note
Proposed structure and content:
•Executive Summary:(2 pages)
•Section 1, Overview of the issues:
Bio
div
ers
ity a
nd E
cosyste
m S
erv
ices
Tre
nds a
nd t
he
Fin
ancia
l S
ecto
r(2 pages)
•Section 2, Biodiversity and the Financial Sector:
Und
ers
tandin
g e
xp
osu
re
and r
isks
(inclu
din
g c
om
menta
ry o
n d
rivers
acro
ss t
he f
ina
ncia
l la
ndscap
e
and in
dustr
y s
ecto
r specific
issues a
nd o
pport
unitie
s (3 pages)
•Section 3, The Financial Sector Response:
Managin
g R
isk:
Pro
posed
appro
aches t
o m
anag
ing b
iod
ivers
ity r
isk(3 pages)
•Section 4, Understanding Opportunities:(3 pages)
•Section 5, Guidance for Financial Sector on Practical Next Steps:(1-2
pages)
Biodiversity Briefing Note
©2007 Sustainable Finance Ltd
•The time seems ripe to capture lessons learned and best practices,
but against this backdrop what should the Briefing Note convey?
•Move from bespoke / niche activities and responses to broader
mainstreamed understanding and management of these issues
(scale and replication)
•Who are the key audiences?
•What are the key messages?
•What form
at and what length?
•What sector, financial product, or geographic focus?
•What are the stories that you think will galvanise your colleagues /
institutions?
•What cases best support the above –BRICs, emerging markets
broadly, OECD?