Biodiversity loss matters for business

Although the global community has woken up to the urgent need to solve the climate crisis and there is broad consensus to achieve net-zero emissions by 2050, reducing the consumption of fossil fuels does not offer a complete solution. Residual carbon also needs to be removed from the atmosphere and communities must be made more climate resilient, says Alpa Bhattacharjee, Head of Corporate Sustainability at HSBC Australia.

Nature-based solutions are a viable option for achieving these goals if they can be implemented at scale, say a number of leading global environmental organisations. A nature-based solution involves the sustainable management and use of natural features to address socio-environmental challenges such as climate change. They are designed to address societal needs, biodiversity needs, and climate-mitigation or adaptation needs.

The urgent need for nature-based solutions was reinforced by a new report from the global Energy Transitions Commission, which found that carbon dioxide removals by nature — such as reforestation — is critical to achieving the Paris Agreement goal of limiting global warming to below 2°C.

A number of initiatives are in play to encourage greater recognition of the integral role of nature in our future. The Taskforce on Nature-related Financial Disclosures has released the first draft of a framework that will help organisations embed nature-related risks in corporate and financial decision-making.

HSBC is playing its part by providing funding to projects that aim to bring nature-based solutions to commercial reality. “There’s a need to create almost a proof of concept to demonstrate how these mechanisms work,” says Bhattacharjee.

A two-year partnership with London-based Earth Security, announced in September 2021, is developing a framework for a mangrove bond that could be used by issuers in Australia and other global markets. This would help protect mangrove forests which, in addition to sequestrating and storing carbon, provide storm protection and support for commercial fishing and tourism.

Another project, which began in May 2021 in partnership with The Nature Conservancy Australia, is called Blue Impact Bonds for Nature. It aims to identify nature-based restoration activities that could be undertaken on the mid-north NSW coast, and then used to help develop a template for a bond to raise conservation finance. More recently, HSBC has funded two projects to help accelerate an active blue carbon market in Australia.

While HSBC and other players can create suitable market instruments to drive change, it is ultimately up to Australia’s business leaders to recognise the economic value of nature and embed it in business decisions. Although it’s early days, Bhattacharjee is encouraged by the willingness she has seen to invest in natural capital.

Nature is core to our global economy, and also represents exciting new opportunities for better ways of doing business.

As appeared in Company Director Magazine June issue 2022.