Biodiversity, the next challenge for financial institutions?

Mulder, Ivo

doi:10.2305/iucn.ch.2007.11.en

Cited by 7 publications

(8 citation statements)

References 8 publications

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“…Financiers of hydropower projects are responsible, even if indirectly, for the biodiversity risks posed by the projects they choose to fund 18 . At the same time, they can influence their clients (project developers) to avoid, minimize or mitigate these risks by requiring safeguards as a precondition to their investments 19 .…”

Section: Mainmentioning

confidence: 99%

Biodiversity risks and safeguards of China’s hydropower investments in Belt and Road Initiative (BRI) Countries

Narain

Teo

Lechner

et al. 2021

Preprint

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The imperative of a global transition to renewables to achieve net-zero emissions by 2050 calls for an examination of the associated biodiversity risks. Hydropower is the biggest source of renewable energy globally, and its remaining untapped potential is concentrated in low and lower-middle income countries which are also among the world’s most biodiverse. China has emerged as a major overseas financier of hydropower dams under its flagship Belt and Road Initiative (BRI). We assess the biodiversity risk posed by proposed or under-construction hydropower dams being funded by China in BRI countries and compare it with that of dams being funded by Multi-lateral Development Banks (MDBs) – the other key overseas financiers of hydropower. We find that 48 hydropower dams are being financed by China in 18 BRI countries, likely impacting 14 free-flowing rivers and the ranges of 11 critically endangered freshwater fish species, and 130 km2 of critical terrestrial habitat(within a 1-km buffer distance). When compared to dams funded by MDBs, Chinese-funded dams are not located in riskier areas for biodiversity, but the total risk is higher due to their preponderance. We find that Chinese regulators and hydropower companies do not specify any enforceable biodiversity impact mitigation requirements. And while MDBs do specify binding safeguards, impacts on river connectivity do not form a part of the mitigation requirements, except in the case of the European Investment Bank (EIB). China is uniquely positioned to adopt a leadership role in specifying safeguards that will help BRI countries adopt an optimum renewable energy mix that minimizes biodiversity risks.

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Section: Mainmentioning

confidence: 99%

Biodiversity risks and safeguards of China’s hydropower investments in Belt and Road Initiative (BRI) Countries

Narain

Teo

Lechner

et al. 2021

Preprint

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“…62 The UO thesis has some conceptual weaknesses that suggest that such a shift in investor practice is no assurance that the environmental footprint of the financial sector would materially improve. 68 In any event, any UO would presumably not be interested in externalities proportional to their impact on social welfare, but rather only in those corresponding with their adverse effect on the prosperity of the economic assets the fund holds. Many externalities, such as the disappearance of species or toxic substances in the food chain, can occur without manifesting any discernible economic cost, at least not in the short term.…”

Section: The Universal Owner Thesismentioning

confidence: 99%

“…Also, some environmental values are too remote temporally or spatially for markets to recognize. 68 In any event, any UO would presumably not be interested in externalities proportional to their impact on social welfare, but rather only in those corresponding with their adverse effect on the prosperity of the economic assets the fund holds. Thus, we cannot assume that investors view the current health of the economy as a whole as a proxy for the long-term health of the biosphere.…”

Section: The Universal Owner Thesismentioning

confidence: 99%

Socially Responsible Investing for Sustainability: Overcoming Its Incomplete and Conflicting Rationales

Richardson¹

2013

TEL

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In the wake of the Global Financial Crisis and worsening collateral social and environmental problems, socially responsible investing (SRI) has garnered more interest internationally as a potential civilizing influence on the financial economy. In particular, SRI is increasingly conceptualized as a means to promote environmentally sustainable development by disciplining financial markets to be more attentive to their ecological impacts. In this sense, SRI emerges as a putative form of transnational governance that utilizes non-state actors and mechanisms to promote sustainability in an economic sector that traditionally has had little accountability for its environmental performance. But as a largely voluntary movement, with rudimentary legal support, SRI so far has wielded limited clout.A hindrance to the aspirations of SRI is deficiencies in its rationales. This article critiques the main theories advanced to justify SRI from the perspective of their contribution to promoting environmental sustainability: the complicity-based doctrine, leverage-based responsibility, and the universal owner thesis. Apart from gaps or limitations shown in each rationale, the article demonstrates that they conflict with the existing parameters of fiduciary law responsibility of financial institutions. An alternative rationale that emphasizes the temporal perspective to invest over the long term is suggested as a better approach for SRI if it is to be relevant to the pressing challenges of promoting sustainability and governing global financial markets.

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“…In a review of 20 rating agencies, investment indices and ranking services was conducted by IUCN (Mulder, 2007), only one made specific reference to biodiversitythe Business in the Community Environment Index, in which companies were invited to complete voluntary questions on biodiversity. A more recent study by the Nyenrode Business School, Amsterdam, showed that whilst there was demand from clients such as pension funds, rating agencies rarely supply their clients with biodiversity related informationin large part because metrics are unavailable but also because they perceived limited demand for such information.…”

Section: Educate Investors and Set Minimum Requirements For Bes In Fi...mentioning

confidence: 99%

Measuring and Reporting Biodiversity and Ecosystem Impacts and Dependence

Bishop¹

2013

The Economics of Ecosystems and Biodiversity in Business and Enterprise

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The assumptions outlined above have guided our approach to compiling arguments and evidence for this report. In general, we have sought out examples that show how integrating BES in decision-making can deliver real and tangible value to business, as well as positive environmental outcomes. Wherever possible, we have favoured case studies that provide financial and/or economic data on BES values.Unfortunately, business records and reporting on BES are sketchy, anecdotal and inconsistent, making it difficult to paint a complete picture of biodiversity in business today. We rely heavily on case studies from those few companies that are willing and able to provide information about their policies and actions in relation to BES, along with a handful of independent assessments. Almost by definition, the case studies highlighted here are not from typical companies.

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Biodiversity, the next challenge for financial institutions?

Cited by 7 publications

References 8 publications

Biodiversity risks and safeguards of China’s hydropower investments in Belt and Road Initiative (BRI) Countries

Biodiversity risks and safeguards of China’s hydropower investments in Belt and Road Initiative (BRI) Countries

Socially Responsible Investing for Sustainability: Overcoming Its Incomplete and Conflicting Rationales

Measuring and Reporting Biodiversity and Ecosystem Impacts and Dependence

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