Sustainable financeSustainabilityInvestments

The role of banks in conserving biodiversity – a key issues paper

Frederik Lange
Torsten Jäger

Alongside climate change, conserving biological diversity is one of the key challenges of our time. Most recently this was highlighted in the Global Risks Report 2023 from the World Economic Forum (WEF), which categorised biodiversity loss and ecosystem collapse as severe global risks over the next ten years. 

Compared to the high priority given to climate protection aspects, protecting ecosystems and biodiversity still play a somewhat niche role in the economy. But this is likely to change in the near future, not least as a result of the UN biodiversity conference held in Montreal in December 2022, which led to the adoption of a global biodiversity framework. The targets of the framework agreement refer directly to companies and financial institutions. In the future, they will have to give greater consideration to the impact of their activities on biodiversity and related risks.

Banks are concerned with the topic of biodiversity for a number of reasons. Firstly, they play an important role in the sustainable transformation because they will be providing the investment and financing capital for sustainable economic activities. As with the climate, there is a massive financing gap of between 600 and more than 800 billion US dollars per year until 2030 for conserving biodiversity – and this gap cannot be filled by public funds alone. Secondly, banks can also be directly affected by risks related to biodiversity. Similar to climate risks, biodiversity risks could have negative consequences for individual businesses, sectors and whole economies and will therefore affect financial institutions. In addition to the risks, however, it is worth remembering that there will also be opportunities for those businesses and financial institutions, which have a positive impact on nature or, at least, do not damage it through their activities.

In order to help banks get more involved with the topic of biodiversity, the Association of German Banks has written a key issues paper. This explains how banks can contribute to conserving biodiversity, what regulatory requirements already exist or are in the pipeline and what action needs to be taken as a result. In addition, the paper introduces key initiatives and tools to help institutions formulate, prioritise and implement their biodiversity goals. 

Furthermore, our key issues paper contains a series of policy framework conditions that we believe are crucial to ensuring the protection of biodiversity. As with “net zero”, the right prerequisites are vital in order for “nature positive” to succeed; this is where politics comes in. And it should ensure that the regulation is directly targeted at the polluter (“polluter pays principle”). Only direct regulatory measures can ensure that the causes of the problem are effectively addressed. 

Our key issues paper is available here. 

Frederik Lange
Frederik LangeAssociate
Torsten Jäger
Torsten JägerHead of Sustainability Finance, Director
Dr. Kerstin Altendorf
Dr. Kerstin AltendorfDirector, Media Spokeswoman