Global | Agriculture, reforestation, risk assessment for financial institutions, applying the ESVD | Status: Started, May 2023
Make Nature Count 2.0: an ASN Bank-FSD collaboration
Ecosystems deliver a broad range of ecosystem services (ES) that underpin human well-being. The loss of biodiversity and degradation of ecosystems has an increasingly negative impact on society and businesses, including the financial sector. Through their investments, financial institutions can be heavily dependent on ecosystem services and deterioration of nature therefore causes risks for financial institutions: physical risks, transitional risks and reputational risks. Assessing the extent of the different risks requires insights in the impact of investments and loans on biodiversity as well as insights in the dependencies on nature, biodiversity and related ES.
ASN Bank has set itself the long term goal to have a net positive effect on biodiversity by 2030 through all of ASN bank’s loans and investments. With this goal, the bank aims to prevent any additional loss of biodiversity and actively contributes to a net gains in biodiversity. Progress towards this goal is monitored annually and a Biodiversity Fund has been developed to invest in biodiversity positive projects.
To improve the aim of the ASN Bank to obtain a better understanding of its impact on biodiversit, the ASN Bank and FSD applied the ESVD to analyze biodiversity-related risks of 2 ongoing investments in the ASN Biodiversity Fund. For each investment we:
Use the ESVD to determine the impact of land cover changes on ecosystem services and their economic value in the selected investments.
Gain understanding of how to use this knowledge to assess biodiversity-related risks for financial investments and researching the potential of integrating outcomes of these impact assessments in financial decision-making.
The project is currently ongoing. We hope to share results in October 2023.
Ultimately, the `true` value of ecosystems and their services should be structurally integrated in the economic and financing system if we want to stop the continuing loss and degradation of ecosystems and biodiversity. As was stated by Frans Timmermans (Vice President of the European Commission) in his speech introducing the new Nature Restoration Law on 22 June: “Investment into nature restoration adds €8 to €38 in economic value for every €1 spent, thanks to the ecosystem services that support food security, ecosystem and climate resilience and mitigation, and human health”.
Involved user groups and ESVD applications
In this project we aim to show the benefits of using the ecosystem services approach to take the 'full' value of grasslands and forests into account. We are specifically targeting the following user groups through the following ESVD applications:
The ESVD can assist financial institutions in risk assessments through providing data on the flow of ES of different land covers and by further implementation of the LEAP methodology.
We show that current environmental assessments, which usually only account for ES traded at markets, miss important non-market values which benefit societies and businesses, and which also influence physical, transitional, reputational and systemic risks of financial institutions.