In Season 2 of Mission to Change, Katell Le Goulven sat down with Simon Zadek, the chair of Nature Finance (previously known as Finance for Biodiversity F4B), a not-for-profit working to make nature count in financial decision making. In the episode he discusses his mission, here are the 3 key takeaways.
Nature loss poses a significant risk for business, now and into the future. More than half the world’s economic output, a staggering USD $44 trillion dollars, is moderately or highly dependent on nature. Despite this inherent economic dependence on a healthy natural environment, many companies and financial institutions benefit from exploitation of nature and loss of biodiversity.
Environmental crime is shockingly one of the most profitable criminal enterprises. It generates around USD $110 to $281 billion in profits every year. Environmental crime covers a wide range of unlawful activities such as illegal logging, wildlife trade and waste trafficking. Simon Zadek is chair of NatureFinance, a not-for-profit working to break the environmentally destructive connection between environmental crime and legitimate investment. Simon and Nature Finance are trying to apply existing anti-money laundering laws to clean up the system.
1. Find your place
Know what type of impact you want to have and then find the sector where you can achieve this. Simon initially wanted to focus on social and environmental responsibility and began his career working for businesses like Ben & Jerrys. However, he realised he needed to shift into a different industry to have a larger impact. Zadek came to see the financial sector as the keystone of the global economy in dire need of transformation to include nature. This sector also had the biggest potential to make meaningful impact and protect nature.
2. Be inventive with what you have
New legislation is not always necessary to reform an old system. NatureFinance uses a number of different methods to ensure that nature is counted and prevent financial markets from profiteering from environmental crime. Their solution to protect nature in financial markets applies existing laws and frameworks related to money laundering. Today, an asset manager, bank or pension fund can enhance profitability of investments by virtue of cheaper nature services. Sometimes, these gains are the result of nature crimes.
Legitimate investments that benefit from nature crimes are not considered money laundering, but they should be. Requiring investment and financial institutions to ensure that there are no nature crimes in their finance value chain would make a huge difference in the rate of illegal deforestation and other major crimes. Often, governments are still figuring out how to mitigate this loss.
3. Research is key
If you work in a financial institution, it is never too late to reduce the environmental harm of your organization’s portfolio. But how do you know if your company is profiteering from nature crimes? According to Zadek, just a little bit of research is key. Here are some key questions to ask.
- Does your organization participate in the Taskforce on Nature-related Financial Disclosures process?
- Are partnerships with environmental organizations superficial and philanthropic, or are they serious about what they're actually doing with their portfolio?
- Is the organization building a good track record addressing climate issues?
- How about a good track record or real ambition to address nature issues?
- Does the institution have significant investments in nature or at-risk economic assets?
By asking these questions, one can better understand the values driving decision making and determine where there are opportunities to create change.
Business Bonus Takeaway: We are nature
“Our global economy is 100% comprised of nature, not five or ten or 15 or what the World Economic Forum helped by PwC, described, decides as 38.5%. It's 100%.”
Simon reminded us that our natural world is our biggest asset and should be protected and at the centre of financial decision making.
*This podcast was recorded when NatureFinance was known as Finance For Biodiversity (F4B)
To listen to the full conversation, visit the Mission to Change Podcast, and explore more episodes about changemakers and their journeys.
Season 3 of Mission to Change will focus on Impact Entrepreneurship and will launch in early 2023. Stay tuned!