Key takeaways from the Finance and Biodiversity Day at COP15

Dominique Barker: Dominique Barker: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape with a view on addressing current issues in a concise format to help you navigate and take action. I’m your host, Dominique Barker. Please join me as we explore today’s most pressing matters with special guests that will give you some new perspective and help you make sense of what really matters.

Linda Scala: You know, where are those material impacts across different sectors and really then understanding what is the data that we need to be able to better assess what those risks are for, you know, today and into the future and out to 2050.

Dominique Barker: Today, we welcome Linda Scala. She works as a Sustainability Leader at CIBC. She works in our Enterprise Risk Management Group on environmental risks, and I will say it helps that she brings her engineering background to that job. Linda and I both attended the Convention on Biological Diversity, known as COP15, which recently convened in Montreal. On today’s episode, we’re going to be discussing our key takeaways from the conference, specifically from the Finance and Biodiversity Day and what it means for financial institutions. Welcome back to the Sustainability Agenda. Linda, I know you’ve been on this podcast before. Thank you for joining us today.

Linda Scala: Thanks, Dominique. I’m really glad to be here. And it was a very exciting conference, so happy to have a discussion on what we both learned.

Dominique Barker: Great. So a major goal of the COP15 conference was to finalize and adopt what they called the post 2020 Global Biodiversity Framework, which sets a plan for the implementation of broad based actions. Let’s talk about what goals or milestones or I suppose action targets stood out to you most.

Linda Scala: Yeah. So from the framework there were a few things that actually stood out for me and hopefully we’ll see them come to fruition. But one of them firstly was the fact that they’re looking at it to be outcome oriented and how that is going to be used to support the development of goals and targets. So focusing in on where we need to be and making sure that those goals and targets get us to that point. The other was a focus on better development of tools and solutions to implement what they call mainstreaming biodiversity. So bringing things and making them easier in terms of actually achieving what we need to do to get to where we have to be for the future. And lastly, there’s also really a gap that exists right now between financial requirements as well as what is needed to implement and achieve the vision for the future. And so their focus will be on closing those gaps. So I thought those were three main takeaways that if this framework is successful, will significantly help us in achieving those goals.

Dominique Barker: And the Finance and Biodiversity Day were held on December 14th, and those were dedicated to discussions on the linkages between the post 2020 Global biodiversity Framework and the economy and financial system. What roles and responsibilities were discussed for the financial sector in particular? I mean, that’s where you work. So talking about it from a finance perspective I think would provide some insight for our audience.

Linda Scala: Yeah. No, absolutely. You know, one of the key things that was discussed for the finance sector was really the need to scale support for projects that are biodiversity or nature positive, and that intersection between net zero and nature positive. So really the interconnectedness of those two objectives that we can’t consider either one of them in isolation because there is a strong connection and then really the need to grow biodiversity finance, really looking at addressing some key drivers of biodiversity loss. And I think in order to do that, we have to follow a very systemic kind of approach to this. We really need to measure and understand what business impact is on biodiversity and then how we can manage and encourage that change. And then lastly, how do we innovate and connect capital to those right channels to make that change happen? So I think that’s really a key role that financial institutions and finance in general will have.

Dominique Barker: And it’s interesting, if I may, I would just add, you know, when COP21 happened in the year 2015 in Paris, probably everyone coming out of that conference wondered, well, what does this mean for us? And I can tell you this week that’s what people are asking after COP15, It’s like, well, what does it mean? I’m fairly confident that that concept of that you mentioned nature positive will become more evident over the next few years. And that’s why it’s good to get on it early and for our clients and for our bank, frankly, to get on it early. So, Linda, from an environmental risk perspective, where do you see potential implementation risks for the industry?

Linda Scala: So I think, one of the things that we have in environmental risk is really the need to gain a better insight into that industry geography, value chain and exposure to biodiversity. It’s sort of similar to the heat map approach that we’ve used for climate that helps us better understand, you know, where are those material impacts across different sectors and really then understanding what is the data that we need to be able to better assess what those risks are for, you know, today and into the future, and out to 2050. That came out in many of the forums was, you know, understanding what those data needs are and then tapping into them so that we can assess where we need to go.

Dominique Barker: And I would just say there’s a long road ahead in terms of figuring out the data. And I’ve been saying, you know, for a tech company, for example, if you thought climate was data rich, biodiversity, biodiversity is just going to be off the charts, in terms of need for data.

Linda Scala: Yeah, exactly.

Dominique Barker: I’m not sure if you feel like something wasn’t addressed, but if you do feel like something was not addressed at during the Finance and Biodiversity day, can you share that with us?

Linda Scala: I think the one thing that was echoed by some of the panels that I sat in on was that we need to make sure that there is strong policy that gets ahead of this that helps us in order to quantify what we need to do to justify, you know, how we need to spend money on this and, you know, strong policies, strong government advocacy and targets from the top will help us as industry to make sure that we focus our priorities correctly, and I think that will come. But, you know, similar to a Paris agreement where you had countries coming together and making strong commitments, we need the same to happen on the biodiversity front.

Dominique Barker: Okay. Where can the industry go from here? And I suppose we’ll talk about the finance industry as a bank. Where where does industry go from here on integrating nature related risks?

Linda Scala: Yeah. So from a bank’s perspective, a couple of things that I would say we need to do is really we’re probably about five years behind on than we are on climate. So we really need to sort of start from the basics and build awareness in terms of why this matters. We need to engage our business leaders around understanding, you know, the risks, the transmission channels and materiality of some of those across the different sectors that we are engaged with and then understanding where those sources of data are that we can tap into to better measure, you know, what we need to measure and standards and start developing some standards around those measurements and then start to look further into the future on how we can innovate and connect capital to those right channels. That was more from a banking perspective. I’m just interested, Dominique, did you hear anything more from an industry perspective that you know in terms of how they’re approaching this?

Dominique Barker: Yeah, So clearly a lot like with 2015 and COP21 when we talked about Paris aligned portfolios and talk about Paris aligned scenarios, I think the takeaway for businesses today is that we’re going to have a Montreal aligned portfolio and it will be taking into account nature. And for those of you out there who don’t have a TCFD report, this is a great time to leapfrog and take into account nature as well as climate, because a new report will be coming out next year, or a new framework called TNFD or Task Force on Nature related Financial Disclosure. And I think, I’m sure a lot of people out there are shaking their heads or going, oh gosh, not another framework, but I think it is very important and I think we’re going to see the increased importance over time here, and the sooner we get going on it, get our management teams and boards to think about how your business is impacting nature, the better it will be, and I think a lot like carbon, mean at CIBC we see decarbonization as a opportunity set. That’s where the money is going to flow because of policy response such as the Inflation Reduction Act or consumer response. I think in a very similar way you’re going to see over the next few years a desire for more capital to go to nature, positive responses and therefore taking it into account today may may help. And so, I mean, that would be the the advice. I don’t know what your thoughts are on that, Linda, What do you think?

Linda Scala: Yeah. Yeah, no, I totally concur. And I think the other you know, how you were talking about the Montreal aligned. I think the other key thing that will come out of this is the the how we had net zero by 2050. In the case of biodiversity, it’s going to be 30 by 30. So 30% conservation by 2030. That seemed to be a common theme around where we need to get to. And I think the urgency around this, we will not take five years from sort of where we are today to get to where we are on climate. It’s going to be much more accelerated. There’s an expectation that we have an urgency and we need to act very, very quickly.

Dominique Barker: Thank you very much, Linda. And for full disclosure, this episode is being recorded on December 16th. So the actual outcomes of COP15 will likely come out over this weekend over the course of the next few days. So I expect that 30 by 30 will be a phrase that is repeated. But the outcomes of COP15 will come out over the next few days. Linda, thank you so much for joining us.

Linda Scala: Oh, you’re welcome. Thank you. It was a pleasure.

Dominique Barker: Please join us next time as we tackle some of sustainability’s biggest questions, providing different perspectives to help you move forward. I’m your host, Dominique Barker, and this is The Sustainability Agenda.

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