Sustainable Finance Taxonomies and Disclosure play a crucial role in mobilising finance for biodiversity and ecosystem protection and restoration in G20 countries. As the global community prepares for COP16 in Colombia, we co-hosted a webinar on 3rd September organised by our partners Climate & Company, to identify the main barriers to making sustainable finance taxonomies work in G20 countries.
This official T20 side-event both facilitated an exchange of the lessons learned and provided concrete recommendations for the inclusion of biodiversity and social aspects to achieve The Global Biodiversity Framework (GBF).
Key moments and takeaways:
This online event started with an opening statement by Nicolas Chenet – Head of the Sustainable Development Department at Expertise France, followed by a keynote by Dr. Sofia Carra from Climate & Company and Dr. Franziska Schütze from DIW on the Global Biodiversity Framework and its Connection to Sustainable Finance Taxonomies.
Dr. Franziska Schütze and Dr. Sofia Carra presented the concept of sustainable finance taxonomies, highlighting global progress and emphasising the need to incorporate biodiversity-related aspects, as most existing taxonomies still primarily focus on climate issues. Currently, only a few taxonomies mandate that market actors have to disclose their information on the alignment with the taxonomy, which helps us understand their capital allocation to nature-relevant economic activities.
This demonstrates the need to enhance transparency and disclosure on biodiversity-related data and to advance on the integration of biodiversity into taxonomies as addressed in Target 15 of the Global Biodiversity Framework (GBF). Enhancing transparency will lower the risk for investors and encourages more public and private capital flows into nature-related economic activities, and by the vmeantime will simultaneously supports achieving GBF Target 19.
The G20 encompasses a unique mix of developed and emerging economies as well as 8 out of the 17 recognized megadiverse countries. In that sense, the G20 can play an important role in developing comprehensive financing strategies aligned with nature-positive outcomes. For this reason, a strong leadership and an ambitious G20 roadmap is needed to facilitate policy dialogues on taxonomies aligned with the GBF.
In the main session, invited speakers confirmed that taxonomies are an important tool to address biodiversity and social aspects, while highlighting the challenges to making them work. Measuring biodiversity is most certainly one of the strongest one as not a single metric could not account for the full richness of biodiversity. Another identified challenge for sustainable finance taxonomies is their governance and the lack of availability of biodiversity related data.
Some of the recommendations proposed to overcome the challenges and make sustainable finance taxonomies successful in G20 countries were:
- Adapting sustainable finance taxonomies to local conditions and country-specific development trajectories.
- Fostering information systems to improve the availability of biodiversity data.
- Supporting effective biodiversity measurement and strategies to integrate social aspects.
- Setting similar criteria for taxonomies in countries located in the same region
- Promoting interoperability of taxonomies.
- Considering the risk of greenwashing and the costs related to taxonomies when implementing them, as well as considering their operational costs, such as transaction costs.
- Facilitating the dialogue between financial institutions and a third party (biodiversity experts) who can integrate biodiversity and social aspects.
- Facilitating financial inclusion and serving as a foundation for the development of micro finance products.
This session was held in an online format via Zoom in English with simultaneous interpretation in Portuguese.
You may find the recording of the webinar here.
The event was organised by Climate & Company with the support of the Post 2020 Biodiversity Framework – EU Support project, funded by the European Union and implemented by Expertise France, and in collaboration with DIW (Deutsches Institut für Wirtschaftsforschung) – German Institute for Economic Research. This webinar was part of the project “Enhancing Sustainable Finance Instruments Within Brazil’s G20 Presidency”.
Upcoming events to continue this high-level discussion will be announced. Besides capacity-building activities, the project has also published technical notes and policy briefs on nature disclosure and sustainable finance taxonomies.
Find out the recent Policy Briefs within the project:
