Investors can help stop subsidies that are destroying biodiversity

During the 2010 UN Convention on Biological Diversity (CBD) Conference, 190 countries committed to phasing out or reforming subsidies harmful to biodiversity by 2020.

However, a study by The B Team supported by Business for Nature, the first in over a decade to provide an estimate of the total value of environmentally harmful subsidies across key sectors, shows governments have failed to deliver...

Doug Koplow, one of the report’s authors, tells Impact Investor that the purpose of this study was to identify the scale of the financial flows received by different sectors.

According to Koplow, the fossil fuel, agriculture and water industries receive more than 80% of all environmentally harmful subsidies per year “depleting natural resources, degrading global ecosystems, and perpetuating unsustainable levels of production and consumption, in addition to exacerbating global inequalities”...

Koplow believes that to successfully reform environmentally harmful subsidies, cross-sector action and collaboration from businesses and governments is needed.

But he notes that because EHS come in so many forms, from multiple levels of government, often only the business recipient knows their full scope and magnitude. “[Businesses] are not currently obliged to disclose these subsidies. This is why we need global bodies – such as the newly formed International Sustainability Standards Board (ISSB), TNFD, TCFD, GRI, CDP, the OECD and others – to urgently develop international standards and guidance to help organisations,” he says...

Koplow adds: “By setting expectations and disclosing who is and is not reporting, asset managers can have a dramatic effect on behaviour and norms on disclosure. Asset managers such as BlackRock can also convey expectations that portfolio companies install adequate emissions monitoring and publicly report emissions levels with standardised, machine readable information on insurance coverage.”