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The third session of the Chairperson Masterclass series commenced with Tengku Marina extending a warm welcome to esteemed guests. The session featured Helen Crowley, a partner at Pollination, a specialist climate investment and advisory firm founded in 2019 with a mission to propel the world towards a net-zero, nature-positive future. Helen’s presentation explored three key themes: Historical Context & Nature Explained, Current Context & Nature Risk, and Frameworks for Action & Opportunities. Over the past 3-5 years, there has been a significant shift, placing nature at the forefront of corporate and investor agendas. Catalysts for change include a heightened understanding of the interconnectedness of climate and nature, recognition of nature's value to the economy, and an alarming acceleration in nature loss. Emerging frameworks and regulatory levers guide investments towards nature-based solutions promising financial, societal, and environmental returns.
The crucial contributions of nature to human well-being, irrespective of socio-economic status, were emphasized, highlighting the need for recognition and protection for sustainable use. There's a growing acknowledgment among institutions, companies, governments, and consumers about nature's pivotal role in maintaining economic stability, fostering prosperity, and addressing the climate crisis. Reports like the World Economic Forum's "Nature Risk Rising" and the Dasgupta Review highlight the economic dependencies on nature, emphasizing the significant risks posed to global financial stability by biodiversity loss. Helen's presentation stressed the interconnectedness of climate and nature, advocating for the simultaneous and systemic actions to address of both crises to safeguard the global financial system.
To address climate change and nature loss, companies must undergo transformative change, guided by the COP26 Glasgow Climate Pact, emphasizing investments in nature-based solutions and comprehensive risk assessments within nature-positive strategies. Faced with 'double materiality,' companies grapple with risk exposure linked to both their impacts and dependencies on nature. Recognizing their pivotal role, companies must redirect investments away from activities harming nature, aligning with their portfolios' physical exposure to nature risk, presenting a unique opportunity for seamless integration of risk assessment and nature-positive strategies. Simultaneously, the legal landscape in corporate governance is undergoing a significant shift, expanding from a focus on directors' duties related to climate risk to include emerging considerations of nature risk. Case studies like the 'Hutley Opinion' and the 'Chapman Tripp Opinion' underscore this transformation, emphasizing increased legal responsibilities for directors in addressing nature risk. Ongoing Shell litigation highlights growing litigation and reputational risks directors face for inadequate handling of climate and nature risk, necessitating a holistic approach for fulfilling fiduciary duties. Precedents, such as the 'Hutley Opinion,' suggest liability for directors breaching their duty of care regarding climate risks. Recent thought leadership, as in the 'Chapman Tripp Opinion,' argues for a duty to identify and manage businesses' dependencies on nature, marking a paradigm shift in corporate governance. The vision of achieving a nature-positive future is gaining momentum, particularly in the Asia-Pacific region, which holds 43% of the global nature-positive economic opportunity. The International Union for the Conservation of Nature (IUCN) defines a nature-positive future as a collective effort to halt and reverse the current loss of nature, leading to measurable recovery for both living and non-living elements. This global endeavor aligns with the Kunming-Montreal Post-2020 Global Biodiversity Framework established at COP15, supported by 196 signatories, charting the course for regulatory frameworks and shaping government and corporate objectives.
Achieving a nature-positive future requires transformative change across all levels, from local to global. Diverse frameworks for action have emerged to guide this transformation comprehensively. Led by the Taskforce on Nature-related Financial Disclosures (TNFD), the Regenerative Production framework emphasizes adopting regenerative practices in production processes. Aligned with the EU's Corporate Sustainable Reporting Directive, the Transformative Supply Chains framework advocates for sustainable supply chain transformations, prioritizing environmental responsibility. The Financing Solutions framework, encompassing the Post-2020 Global Biodiversity Framework and Science Based Targets for Nature, focuses on financial strategies to support biodiversity and nature conservation efforts. The New Business Models and Services framework, represented by the 'Nature Action 100+' initiative, encourages the development of innovative business models that positively contribute to nature and biodiversity. The collective commitment to these frameworks represents a significant stride towards realizing a nature-positive future on a global scale. The Kunming-Montreal Global Biodiversity Framework (GBF) sets an ambitious goal to reverse biodiversity loss by 2030, targeting the conservation of 30% of lands and waters, the restoration of 30% of degraded ecosystems, and pollution risk reduction, with a call for Indigenous and local community involvement. The framework advocates for monitoring and disclosure of biodiversity impacts by large companies and financial institutions, as well as a phased-out reform of biodiversity-harming subsidies, totaling at least US$500 billion annually. To fund these initiatives, the GBF aims to mobilize US$200 billion annually by 2030, leveraging private finance through mechanisms like biodiversity offsets and credits. Simultaneously, organizations recognize their ties to nature, deploying ecosystem service frameworks to navigate complex connections, managing dependencies and impacts to address physical and transition risks, legal and regulatory considerations, and financial implications. This comprehensive approach aligns with the global push for robust science-based targets, emphasizing the mitigation hierarchy for effective assessment, interpretation, prioritization, measurement, disclosure, and continuous tracking in addressing nature-related challenges. Within the Asia-Pacific region, which accounts for nearly 50% of annual global greenhouse gas emissions, there is a dual challenge and opportunity. Climate action is crucial for risk mitigation and value creation, given the region's vulnerability to rising temperatures. The economic impact of climate-related losses at a 3.2-degree increase is substantial, but Asia also holds the largest share of business opportunities from climate action, constituting over 43% of the incremental business opportunity, equivalent to $4.3 trillion by 2030. Leading corporations, including GSK, BHP, Sainsbury's, Unilever, Nestle, and Brambles, actively align their strategies with a "nature-positive" future, committing to ambitious sustainability and biodiversity goals. GSK aims for a "net positive impact on nature by 2030," with targets like 100% sustainably sourced and deforestation-free materials. BHP focuses on achieving "nature-positive outcomes by 2030," aiming to conserve or restore at least 30% of its managed land and water. Sainsbury's, committed to a "Nature Positive" approach, pledges deforestation-free products by 2025 and reduced water footprint aligned with the Textiles 2030 initiative. Unilever, working towards a "nature-positive future," sets objectives, including a deforestation-free supply chain and biodegradable product formulations by 2030. Nestle aims to be "forest-positive" with targets for deforestation-free primary supply chains and significant tree planting. Brambles, under 'Planet Positive,' commits to sustainable timber sourcing and zero materials sent to landfills, exemplifying a paradigm shift towards nature-positive practices at the core of their operations, contributing to biodiversity conservation, and setting a standard for broader industry adoption of sustainable practices. Key findings in sustainable investments reveal a growing global momentum, with 68% of surveyed investors across the UK, France, USA, Australia, Japan, and Singapore planning to increase their commitments, particularly notable with a robust 87% in the US. Regional variations in risk perceptions, such as Private Equity in the UK and concerns about Property, Infrastructure, Agriculture, and Forestry in Singapore, the US, and Australia, highlight the nuanced nature of green investments. The survey, which includes insights from 2/3 of global asset managers, indicates an increasing focus on nature investments, with over 1/3 identifying new opportunities for financial returns, and more than half foreseeing the evolution of natural assets into a distinct asset class. Additionally, as the investment sector aims to address the biodiversity finance gap, biodiversity credits are recognized for providing systematic evidence of impact, and the rapid evolution of Nature tech underscores the potential for opportunities and action in the field.
In conclusion, the surge in political and private sector initiatives to address nature underscores a shift in focus akin to the playbook used for climate risk, albeit at an accelerated pace. The evolving landscape demands a strategic response, as policy, regulation, and stakeholder expectations center around measurable risk mitigation and value enhancement. This paradigm shift introduces new challenges for companies and their leadership, emphasizing the necessity for heightened awareness, stakeholder engagement, and alignment on measurement and valuation standards across the economic and financial spectrum. Encouragingly, practical actions are available for companies and financial institutions to proactively address nature risk and unearth value creation opportunities. These actions include recognizing the broader significance of nature beyond Corporate Social Responsibility (CSR), building expertise in Nature & NbS, preparing for TNFD, setting credible nature and biodiversity targets, and initiating incremental steps in a concerted effort – acknowledging that addressing nature is a relay, not a sprint.
Click here for the recordings and photos.