GFI launches group convening financial giants for nature restoration

Image: Barclays Corporate & Investment Bank

Barclays, Natwest Group, Lloyds Banking Group and UBS are among the initial cohort of member businesses.

Also participating are the British Business Bank, Scottish National Investment Bank and the UK Infrastructure Bank – the latter of which was launched in 2021 to replace the role of the European Investment Bank in the UK post-Brexit.

Members of the initiative, called the GFI Hive UK Financial Institutions for Nature Group, will work collaboratively to identify ways in which the UK’s finance sector can contribute to its nature-related goals. These include leaving nature in a better state for the next generation, plus setting aside 30% of habitats for conservation this decade.

A key review of nature sent to the UK Government in early 2021 emphasised how the creation of an economy that conserves and restores biodiversity will not be possible without mobilising unprecedented levels of private sector investment. The Treasury responded to the Dasgupta Review by targeting £1bn per annum of private sector investment in nature by 2030 and by pledging to better embed nature-related impacts in Government spending decisions.

The GFI Hive UK Financial Institutions for Nature Group will develop a national database tracking private investments in nature-related projects to track progress towards the £1bn goal. There is also an understanding that they will endeavour to increase their own commitments to restoring, conserving and creating habitats.

Member firms will additionally advocate for a robust green finance taxonomy in the UK which would encourage investors to pour money into emerging nature-based asset classes. The taxonomy was due out earlier this year but is now due this autumn/winter. It will classify which investments can be labelled as ‘green’ or ‘transition-related’. Its primary focus will be sectors relating to energy, but there is a growing movement for robust guidance on investments relating to natural resources and nature-based climate solutions.

Explaining the rationale for launching the Group, GFI chief executive Dr Rhian-Mari Thomas said: “The market infrastructure is being put in place to enable the flow of private sector capital into nature recovery and nature-based solutions, but there is still much to be done. The support of the UK financial sector will be critical, in addition to the support of the broader UK private sector, and the GFI is delighted by the enthusiasm and leadership of those joining this new Group.”

Nature-related financial risk

PwC has calculated that more than half of the world’s GDP, equivalent to $58trn, is dependent on nature. It described the potential impacts of nature’s decline on the global economy as “far-reaching”.

As such, the new GFI-convened Group is tasked with supporting the uptake of nature-related financial reporting in the UK.

The key global framework for this emerging kind of reporting comes from the Taskforce on Nature-related Financial Disclosures (TNFD). Following the trial of a series of draft frameworks, the TNFD will publish a final version in September. This will enable companies to unify their measurement and disclosures of nature-related financial risk.

The TNFD’s framework draws on the existing Taskforce on Climate-related Financial Disclosures’ (TCFD) tool. Reporting in line with the TCFD has been mandatory for some large businesses in the UK since April 2022. As such, TNFD-aligned reporting could well be mandated in the coming years – especially as the UK has committed to mandating businesses to disclose their nature-related impacts by 2030.