Preventing biodiversity loss must be given top priority – also in business

Biodiversity loss is progressing at a fast rate. Plant and animal species are dying out so quickly that experts now believe that we are experiencing the sixth mass extinction. Biodiversity loss is increasingly recognised as one of the two biggest concerns of our time, alongside climate change. The steep decline in biodiversity is affecting the functioning of society and the lives of us all. But are we helpless and powerless in the face of biodiversity loss?

Companies are also dependent on nature: if we have no natural capital, we have no capital at all. Human activity has exacerbated biodiversity loss to a point that it is now undermining the basic necessities of life and increasing business risks. Biodiversity decline is giving rise to significant financial risks and both direct and indirect costs also for financial sector companies. Halting and reversing biodiversity loss is not just a moral duty, but a bare necessity for companies to be able to ensure their operating conditions and sustainable business operations in the long term.

Financial sector companies such as banks, insurers and investors play a key role in promoting sustainable development: as a financier of growth and insurer of risks, the sector holds considerable influence. Risks of such magnitude as biodiversity loss should be reflected in the terms, conditions and prices of finance and insurance. This requires understanding and knowledge of the nature-related risks of business operations from all parties in the value chain.

The financial sector has both the responsibility and the capacity to promote biodiversity conservation. Sector participants must integrate the consideration of biodiversity into all their decision-making, product development, reporting and stakeholder dialogue.

The financial sector is already actively promoting biodiversity in various ways. For example, financial companies expect their clients and portfolio companies to operate in ways that protect and support biodiversity. But there is still room for improvement.

Financial sector companies can influence biodiversity also through active ownership in companies in which they are significant shareholders. Active and responsible shareholders have a duty to spur these companies on to make positive contributions to biodiversity. More money needs to be invested in projects that specifically aim to mitigate adverse impacts on biodiversity.

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It is crucial that financial sector companies identify and report
the adverse impacts their operations have on nature.
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There has been a stream of new tools that enable companies to analyse the environmental impact and risks of their business operations and to map out new nature-positive business opportunities. One of these is the Taskforce on Nature-related Financial Disclosures (TNFD) framework, which helps investors steer private financial flows to companies whose business promotes nature and biodiversity.

It is crucial that financial sector companies identify and report the adverse impacts their operations have on nature. For financial companies to be able to make genuinely sustainable financing and insurance decisions, they must also have enough information about their clients. Financial sector companies must not only create roadmaps but also work to constantly identify nature-related dependencies, impacts, risks and opportunities in their business operations.

Finnish financial sector organisations have created their own nature commitment, which includes a set of indicators to describe and monitor the sector’s measures to prevent biodiversity loss. The organisations are committing to give their full support to measures promoting the aims of the Kunming-Montreal Global Biodiversity Framework. The purpose of the nature commitment is to openly and transparently show how financial sector companies promote biodiversity and to track the progress of the sector’s biodiversity action between 2024 and 2028.

By making their biodiversity actions visible, companies across various sectors can inspire others to also increase their nature-related measures.

We must all become aware of the impact our actions have on nature. This allows us to mitigate biodiversity loss together and preserve a planet that is able to support future generations. We are not helpless and powerless in the face of biodiversity loss.