What's Next for Nature and Sustainable Finance?

The event „Nature and Sustainable Finance“ highlighted the mounting challenges in integrating biodiversity into corporate strategies and financial market frameworks. In his opening remarks, Volker Moosbrugger argued that biodiversity should not be viewed in isolation but rather as part of the broader concept of natural capital, which includes air, water, soil, and life. The erosion of this capital poses a profound threat to global economic stability, with approximately half of the world’s GDP relying on biodiversity.

Bernd Hansjürgens called on policymakers and stakeholders to act now as neither business nor nature can wait. Despite sometimes insufficient data, the evidence of nature loss resulting from business activity is clear and the emerging regulatory landscape is needed to reverse this development. At the moment, however, biodiversity considerations remain poorly integrated into corporate reporting and decision-making processes.

Current frameworks are fragmented and inconsistent, particularly between industries with varying levels of exposure to biodiversity risks. Quantifying the impact on biodiversity is fraught with difficulties due to the complexity of ecosystems and the lack of standardized metrics. Many companies fail to connect biodiversity loss with their business models, often underestimating the systemic and location-specific risks it poses.

Bringing nature in corporate reporting and decision-making

The first panel focussed on Nature in Corporate Reporting and Decision-Making. Johannes Förster emphasized that biodiversity, people, and the economy form one interconnected system, noting that systemic risks—such as the impact of natural disasters on production sites—highlight the need for collaborative action. Gerrit von Zedlitz pointed out that companies’ reporting on biodiversity varies significantly, with high-risk industries focusing on quantitative metrics while low-risk industries rely more on qualitative governance targets.

Florian Heeb raised concerns that aggregated indicators, while useful for policymakers, are often unhelpful for individual companies and suggested that disclosure alone may not address the underlying issues of biodiversity loss. Tobias Wildner stressed the importance of companies understanding their supply chains, comparing the lack of knowledge about biodiversity risks to the financial sector’s blind spots before the 2008 global financial crisis. Carola Menzel-Hausherr emphasized the importance of gathering data to evaluate opportunities and risks even if collecting this data simultaneously from financial institutes and real economy sector players is challenging.

Need for simplified, actionable reporting standards

Regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD) are seen as a step in the right direction, but their complexity risks overwhelming businesses with excessive data requirements. The panelists emphasized the need for simplified, actionable reporting standards to ensure that biodiversity data informs meaningful decision-making. Addressing global disparities in biodiversity management, particularly in supply chains spanning the global south and north, was also identified as a critical area for improvement.

Pathways towards implementation

The second panel feature industry leaders and discussed pathways towards implementation. Speakers stressed the need for pragmatic and scalable approaches to incorporate biodiversity into corporate and financial practices. Christian Heller argued that while market-driven solutions can spur innovation and competitiveness, they are insufficient on their own due to externalities that markets fail to account for. Ralf Lütz highlighted the risk of overcomplicating reporting frameworks, advocating instead for a focus on material topics and streamlined metrics that can provide actionable insights.

The panel underscored the importance of aligning regulatory frameworks, such as the EU Green Deal, with practical business needs to ensure they drive meaningful change. The consensus was clear: progress requires simplicity in regulation, robust stakeholder collaboration, and a shift in mindset to view biodiversity as integral to economic and business success.

The financial sector, traditionally focused on climate-related risks, is beginning to recognize the implications of biodiversity loss. However, the absence of mechanisms akin to „cap-and-trade“ for biodiversity complicates efforts to incentivize corporate action. While some companies are voluntarily addressing these risks, the development of comprehensive frameworks and metrics remains in its infancy.

Balancing market-driven solutions with effective regulations help managing biodiversity loss

Ralf Frank identified the greatest impact on ecological behavior is not information but access. Considering this, he argued for a balanced regulation. Hendrik Leber presented a new metric on biodiversity value of areas. He introduced how that metric could be a baseline to calculate the impact on biodiversity.

Looking ahead, the discussion underscored the importance of balancing market-driven solutions with effective regulations to manage biodiversity loss. A transformative shift is needed to reposition biodiversity protection from being merely a risk to a fundamental component of a profitable and sustainable business model. Achieving this will require clarity in reporting, stronger regulatory frameworks, and an acknowledgment of biodiversity’s intrinsic value to the global economy. Progress, though evident, will depend on actionable steps and collaboration across sectors to embed biodiversity into the heart of corporate and financial strategies.

Call for simplicity and sufficiency

Florian Heider closed the day with a call for simplicity and sufficiency: the more complex the regulation, the more doors will be open and let institutions avoid the rules. So the complexity of regulation can and should be reduced to be realizable.