Finance Watch welcomes EU Biodiversity Strategy 2030, calls for strong public funding and governance frameworks

Ludovic Suttor-Sorel, Research and Campaign Officer and the co-author of Finance Watch’s May 2020 report on biodiversity financing, “Nature’s Return”, said:

“The strategy’s ambitious goals – such halving the use and risk of chemical pesticides, increasing organic farming or setting legally-binding restoration targets – are desperately needed to protect our environment from potentially catastrophic decline. It must be funded with the right mix of sources. Most conservation and restoration projects are not ‘bankable’ and will need significant public funding, while private investment is better suited to supporting transition projects. The strategy released today contains all the components, the EU just needs to promote them in the right combination.”  

Benoît Lallemand, Secretary General of Finance Watch, said:

“Today’s International Day for Biological Diversity reminds us of the importance of working together to transform our economy to live in harmony with nature. With its Biodiversity Strategy 2030, the European Union sends a strong signal to the world. Given the urgency of the situation, we must speed up the process for a binding biodiversity governance framework – including its financing component – to steer the implementation of commitments agreed at national, European or international level.”

Finance Watch comments as follows:

1. We welcome commitment to create a legislative environment which would enable private finance to play a greater role within its limits. The finalisation of the EU sustainable taxonomy and the ongoing reform of the non-financial corporate reporting framework can substantially improve the chain of ESG information between the real economy, investors and other stakeholders. Ensuring that biodiversity is well included may help to discourage biodiversity loss at source. Blended finance mechanisms can also help increase the role of private finance by reinforcing the attractiveness of some nature-related projects. But policymakers cannot expect too much from this approach, as there are inadequacies between private finance as we know it and the financial characteristics of most nature-related projects.
2. The strategy rightly makes the case for more and better mobilisation of public funding to tackle biodiversity loss. However, strengthening the EU biodiversity proofing framework to ensure that EU funding supports biodiversity-friendly investments won’t be enough. To close the funding gap for environmental targets, further increasing the amount of public funding dedicated to nature is required. An ambitious post-COVID Recovery Package aligned with the Green Deal and its biodiversity chapter is a timely opportunity to close this gap.
3. Building a new biodiversity governance framework is indeed key to steer the implementation of biodiversity commitments agreed at national, European or international level. Therefore, we are skeptical about the choice of a non-binding approach for this governance framework, and regret that this approach will only be considered after the 2023 assessment. The strategy also lacks important specifications on how it will contribute to the EU Semester. Integrating environmental goals fully in the EU Semester with at least the same priority and attention as economic and financial objectives is necessary to increase public investment in nature at member state level.
4. We strongly support the plan to develop methods, criteria and standards to measure the impacts of products and organisations on the environment. These are essential for economic and financial decision-making. Civil society, academia, environmental and finance experts among others should be involved in their elaboration to help avoid risks, such as misapplying natural capital accounting techniques in ways that might undermine biodiversity goals.
5. While we welcome EC’s willingness to promote tax systems and pricing that better reflect environmental costs, the strategy lacks concrete steps towards this result. A greater environmental focus of related economic instruments is key to shift profitability away from unsustainable activities, therefore incentivising a significant redirection of capital flows towards sustainable ones. Given the EU’s limited competence over Member States’ tax policies, concrete proposals on how to achieve this objective are needed.

ENDS

For further details or to request an interview, please contact Finance Watch’s Head of Communication and Networks, Charlotte Geiger, at charlotte.geiger@finance-watch.org or telephone 0032/474 331031.

NOTES FOR EDITORS

On 20 May 2020, the European Commission presented its “EU Biodiversity Strategy for 2030 – Bringing nature back into our lives”. A funding gap of at least €20 billion a year is mentioned in the strategy (3.3.2. Investments, pricing and taxation): “To meet the needs of this strategy, including investment priorities for Natura 2000 and green infrastructure, at least €20 billion a year should be unlocked for spending on nature.”

At the same time, for the EU to meet its environmental objectives, the European Commission recently estimated the funding gap to be around EUR 400 billion a year up to 2030 – including 260 billion for climate and 100-150 billion for other environmental objectives such as biodiversity conservation and restoration. (Source: Sustainable Europe Investment Plan – European Green Deal Investment Plan, 14 January 2020)

Illustrating the limits of private finance when it comes to biodiversity, recent evidence shows that ~80% of worldwide biodiversity-related investment comes from public sources (USD 70bn), in sharp contrast with a small share coming from private sources (USD 14bn). (Source: OECD’s “A Comprehensive Overview of Global Biodiversity Finance”, April 2020)

Finance Watch’s new report, “Nature’s Return – Embedding environmental goals at the heart of economic and financial decision-making” was published on 4 May 2020. The report’s four recommendations are:

• Fully integrate and prioritise environmental objectives, including biodiversity, in the EU Semester;
• Review the EU’s system for tracking the impact of public budgets on nature and biodiversity;
• Mandate the Sustainable Finance Platform to develop a harmonised system of metrics and methodologies to assess the impacts, risks, and dependencies of economic and financial activities on biodiversity and nature; and
• Assess the effectiveness and suitability of existing and new economic instruments against their environmental objectives.