How to solve the annual biodiversity funding gap of more than US$700 billion? Experts provide advice on China-EU Dialogue on Strengthening Biodiversity Investment and Financing Mechanism
Biodiversity investment and financing and the formulation and implementation of mainstream policies are of great significance to protecting biodiversity and promoting sustainable development. Recently, the Environmental Economic Policy Research Center of the Ministry of Ecology and Environment and the European Environmental Protection Association jointly organized a China-EU Dialogue on Strengthening Biodiversity Investment and Financing Mechanism, aiming to promote in-depth exchanges and mutual exchanges between Chinese and foreign experts on key issues in the field of further strengthening biodiversity protection investment. Learn from each other, jointly promote the implementation of addressing the challenge of global diversity loss, and explore the supply of policies to strengthen financial support for biodiversity conservation. Expert representatives from relevant EU countries and international organizations, expert representatives from research institutions and enterprises of Chinese government departments, and representatives from local ecological environment departments attended the dialogue.
"The huge gap in investment and financing has become an important constraint in addressing biodiversity challenges."
"Research shows that more than half of global GDP's economic value relies on ecosystem services. If ecosystem services are lost, the first thing that will be affected is the economic value we create." said Zaneta Sedilekova, an EU biodiversity finance policy expert.
Donry Townsend, a consultant to the Paulson Institute and a biodiversity conservation expert, shares the same view. 50% of global economic activity is highly or moderately dependent on nature. For example, in the past few decades, 70% of the medicines put on the market have come from nature. If the accelerated trend of biodiversity loss is allowed, it will not only affect economic development, but also pose a threat to public health.
Tang Rui Townsend said that the world currently only has more than 120 billion US dollars for biodiversity conservation every year, while the biodiversity conservation funding gap reaches more than 700 billion US dollars every year. There is a huge gap between the funds used to protect biodiversity and the funds needed.
Experts attending the meeting said that in recent years, with the joint efforts of the world, global biodiversity protection has achieved positive results, but it still faces difficulties such as accelerating global species extinction, biodiversity loss and intensified ecosystem degradation. Huge gaps have become an important constraint in addressing biodiversity challenges.
"Biodiversity financing is a key pillar in ensuring the effective implementation of the Kunming-Montreal Global Biodiversity Framework." said Qiao Wanning, chief environmental economist at the World Bank Representative Office in China.
Donry Townsend believes that existing government subsidies that are not conducive to biodiversity conservation must be changed while reducing the investment risks of private enterprise investors. Support financial innovation and flow funds to areas that protect biodiversity. Investment by private enterprises is very important, and for them to play a key role, the government needs to pave the way.
Leng Fei, national coordinator of the United Nations Development Program's Biodiversity Finance China Project, said that more than 150 solutions can be adopted to narrow the biodiversity financing gap, including but not limited to taxation, green budgets, payments for ecosystem services, biodiversity compensation, carbon markets, natural debt swaps, green bonds, etc. At present, most of some financial products, such as green bonds, are invested in energy, construction and other fields, while green bonds that directly and indirectly contribute to biodiversity account for only about 0.5% to 1%, so development and investment in biodiversity Green bonds and other financial products still have great potential and market.
"Biodiversity investment and financing activities in the financial industry have not yet been fully mainstreamed"
In recent years, the financial industry has begun to pay attention to issues related to biodiversity in its own business activities and investment and financing activities. Especially after COP15 was held in Kunming, financial institutions in the banking and insurance industries have greatly improved their awareness of biodiversity, and some products have also been developed. Other domestically related financial bonds are also being explored, and biodiversity-related loan investment and financing activities have increased. Ye Yanfei, former first-level inspector of the State Financial Supervision and Administration, said: "Although some achievements have been made, due to problems such as lack of internal drive, lack of market incentives, and deeply linked policy support tools, compared with addressing climate change and reducing environmental pollution, Biodiversity investment and financing activities have not yet been fully mainstreamed, or the degree of mainstreaming has not reached the level expected."
In September 2023, the People's Government of Hainan Province issued a 1 billion yuan three-year biodiversity-themed bond by the Bank of China on the Stock Exchange of Hong Kong based on the Green, Social Responsibility, and Blue Sustainable Development Bond Framework. This is the first time that a local government in my country has issued a biodiversity-themed green bond in the international capital market. It reflects the practice of Hainan Free Trade Port as a national ecological civilization pilot zone and promoting green, low-carbon and sustainable development through green finance. Innovative exploration in the field of diversity finance.
Zhou Xueshuang, chief engineer of the Department of Ecology and Environment of Hainan Province, believes that biodiversity protection has a huge impact on economic development and environmental protection. Fully mobilizing social capital and giving full play to the function of financial markets are of great significance to filling the funding gap for biodiversity protection. As important stakeholders in promoting the allocation of social resources, financial institutions can not only avoid potential biodiversity damage through investment risk management in biodiversity protection, but also give full play to the advantages of innovative investment and financing models to provide diversification for biodiversity protection. Resources and financial support.
"The issuance of my country's ultra-long-term government bonds, which everyone has been paying close attention to recently, has also included the construction of a beautiful China, as well as equipment renewal and technological transformation, as key support directions. These have provided protection of the ecological environment and strengthening biodiversity from different perspectives. Supported." Sheng Lei, deputy director of the Investment Research Institute of the National Development and Reform Commission, said that at the end of 2023, my country's Central Economic Work Conference listed the in-depth promotion of ecological civilization construction and green and low-carbon development as one of the nine important tasks, and proposed to actively and steadily promote carbon peak. Neutralization and accelerate the creation of a green and low-carbon supply chain. To achieve this goal, we need to continue to improve the fiscal, taxation, finance, investment, price policies and standard systems that support green development. In the future, we must continuously improve green investment tools, which is of great significance for expanding effective investment to support green development and protecting biodiversity.
"Making positive financing of biodiversity more economical"
At present, dozens of banks across the country have signed the "Joint Oath of Banking Financial Institutions to Support Biodiversity Conservation." Bank of China successfully issued the first biodiversity-themed green bond by a global financial institution, with a scale of 1.8 billion yuan equivalent. Experts attending the meeting believed that the leading role of finance should be actively exerted and the enthusiasm of financial institutions should be fully mobilized.
Leng Fei mentioned that most financial institutions do not actually directly affect biodiversity, but have an impact on nature through investment activities in enterprises. Biodiversity finance not only refers to biodiversity financing, but should also be reflected in management and the practice of using financial and economic measures to support sustainable biodiversity management.
Qin Fengqin of the Resources, Environment and Ecology Research Center of the Chinese Academy of Fiscal Sciences said that government departments need to further improve the system, comprehensively consider pollutants, ecology, climate and other factors in the early, medium and late stages of investment, disclose environmental and social governance information of investment institutions, and provide investment institutions with more risk and benefit analysis related to climate, environment and biodiversity, and formulate incentive policies to make positive financing of biodiversity more economical.
According to Liu Yu, director of the Institute of Ecological Civilization of the Institute of Ecological Environment Science and Design of Zhejiang Province, in 2023, Kaihua County, Quzhou City, Zhejiang Province issued the "Biodiversity Risk Management Standards for Banking Institutions", which is also the first local standard for green finance to support biodiversity protection in China, providing methodological guidelines for financial institutions to avoid biodiversity risks and reduce the impact of project development on biodiversity. The standards screened out 21 industries with high biodiversity risks, including mining, energy, water conservancy, tourism, agriculture, forestry, animal husbandry and fishery, pharmaceuticals and biotechnology manufacturing, and formulated financial institutions 'review points and management methods for projects in the industry based on the main sources of biodiversity in each industry to help financial institutions identify and manage biodiversity risks in projects.
Experts attending the meeting said that biodiversity is not only the foundation of sustainable development, but also a goal and means. Cultivate the life of all things with the way of nature and seek development opportunities from protecting nature.
Yang Xiaoming, director of the Comprehensive Department of the Environmental and Economic Policy Research Center of the Ministry of Ecology and Environment, said that China has many explorations in promoting the realization of the value of ecological products through ecological protection and biodiversity protection. Among the more than 1000 cases in 240 areas of the "Two Mountains" base, there are a large number of cases in which economic development is promoted by protecting biodiversity. In Anhui, in order to protect China's endemic species, the Chinese alligator, more than 40 farmers in villages and towns around the reserve have relocated. Now the wild Chinese alligator population has increased from a dozen in the past to 60. At the same time, the Chinese alligator also "endorsed" 10,000 acres of local rice, proving that these rice fields have implemented strict pesticide and chemical fertilizer control, and the market price of rice has increased significantly.
Zhou Xueshuang said that Hainan is building a green, low-carbon and ecologically first-class free trade port. It welcomes financial institutions to actively participate in Hainan's biodiversity protection cause, encourages green financial technology innovation and design, and develops leading biodiversity protection industrial models. Achieve biodiversity protection while achieving investment income.
"To reverse the trend of natural loss, more public and private capital is needed"
"The global framework for biodiversity relies on the efforts of all stakeholders. Private capital must be better mobilized and various capital and resources mobilized. Everyone is critical to the effective implementation of the Kunmeng Framework." EU Ambassador to China Tuo Yaohui said.
"Biodiversity conservation funds are invested every year only to 1/5 of the target figure. To reverse the trend of natural loss, more public and private capital is needed." Qiao Wanning said.
Experts attending the meeting believed that companies should become one of the main investors in biodiversity. Goals 14 and 15 in the Kunming and Mongolia Framework are to promote the whole society, including enterprises, to pay attention to biodiversity protection from external promotion to internal incentives. Some places in my country are also actively trying to innovate, but they still need to coordinate advancement, actively guide enterprises to adopt sustainable production methods, and gradually build a biodiversity protection mechanism led by the government, active enterprise action, and extensive public participation.
According to Zaneta Sedilekova, the EU's implementation of Goals 14 and 15 of the Kunming Framework mainly adopts mandatory legislation and the implementation of voluntary initiatives. Goal 14 clearly requires corporate management or board of directors to take into account future short-term and long-term impacts on biodiversity when making decisions. Goal 15 requires companies to evaluate and disclose risks and negative impacts related to reducing biodiversity, and take appropriate legal, administrative and policy measures. Encourage and support enterprises, especially large multinational companies and financial institutions, to regularly monitor and evaluate, disclose their impact on biodiversity, and provide consumers with the information needed for sustainable consumption patterns. To this end, the European Union has issued laws such as the "Corporate Sustainable Development Reporting Directive" to set forth requirements for enterprises to implement social responsibilities for environmental protection, including biodiversity protection. The EU has also implemented some voluntary initiatives, such as TNFD, to promote companies to disclose risks related to production and consumption and encourage companies to implement biodiversity protection.
