annual review indst 2024 public - Flipbook - Side 20
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with net zero. As shareholders in banks, investors have a
fiduciary duty to ensure that banks consider and manage
deforestation and the associated financial risks.
The document sets out investor criteria for banks on
eliminating commodity deforestation, conversion and
associated human rights abuses in their lending and
investment practices and builds on the general FSDA
expectations.5 While the EU’s deforestation due diligence
regulation has been postponed, it will still require
companies to achieve supply chain traceability.
Therefore, deforestation will continue to be a key focus
topic for 2025.
Q. How were these themes brought together at
the Biodiversity COP16, and what were the
key outcomes?
A. We attended COP16 as part of the Finance for
Biodiversity (FfB) Foundation delegation, where we cochair the Policy Advocacy Working Group. The working
group published a policy recommendations paper6 for
governments in April 2024. In the run up to COP16, we
led or joined engagements with policymakers and
negotiators to share the recommendations and
understand the progress being made on implementing
the Global Biodiversity Framework at the national level.
We contributed to developing the FfB Foundation
delegation’s position7 for COP16 and summarised our
expectations in an article.8 At COP16, we followed the
negotiations, particularly on resource mobilisation, and
participated in a range of events to share our policy
recommendations and our approach to engagement
with companies.
COP16 resulted in progress on Digital Sequencing
Information, with the formation of the Cali Fund to
recognise the value of nature for scientific research.
Companies in the pharmaceutical, cosmetic and other
sectors that rely on nature for research will be expected
to contribute to the fund, resulting in increased financial
resources for the protection and restoration of tropical
rainforests and other ecosystems. Additionally, more
The International Advisory Panel on
Biodiversity Credits also launched
a framework for high integrity
biodiversity credit markets.
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Our focus will remain on
sectors with material naturerelated risks and impacts.
formal participation of Indigenous people and local
communities in the negotiations was secured through
the creation of a subsidiary body.
At the Finance Day, we were pleased to see our policy
criteria well-reflected, including the need for policies
and economic incentives that enable private sector
action; sectoral transformation pathways and change in
the real economy; aligning public and private financial
flows with biodiversity targets alongside raising more
money for nature; and a whole-of-government approach
to this challenge.
Other announcements included a new milestone for the
TNFD, with over 500 organisations now committed to
adopting the recommendations. The International
Advisory Panel on Biodiversity Credits (IAPB) also
launched a framework for high integrity biodiversity
credit markets.9 We responded to an IAPB survey earlier
in 2024 to share our expectations on biodiversity credits,
emphasising that these should be a last resort, and that
the market would need robust governance and
independent oversight.
Q. What can we expect for 2025?
A. We look forward to more companies conducting
assessments and disclosing in line with the TNFD
recommendations. We will be examining sector impacts
on aquatic life and biodiversity more closely, as well as
the potential threats to ocean health from climate
change, acidification, pollution (including plastic waste),
over-fishing and deep-sea minerals mining. The goal is
to ensure that raw materials are responsibly sourced.
Collaborative engagement efforts through initiatives
such as PRI Spring, Nature Action 100, and the Valuing
Water Finance Initiative will continue to be leveraged to
amplify our requests on nature. Our focus will remain on
sectors with material nature-related risks and impacts,
with engagement continuing to encourage companies
to ensure meaningful natural resource stewardship that
contributes to the goal of halting and reversing
biodiversity loss by 2030.
FSDA Investor Expectations for Commercial and Investment Banks makes the case for eliminating deforestation.
Aligning Financial Flows with the Global Biodiversity Framework: Translating Ambition into Implementation – Finance for Biodiversity Foundation.
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FfB Foundation Urges World Leaders to Implement Concrete Actions to Align Financial Flows with the GBF Ahead of COP16 – Finance for Biodiversity Foundation.
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COP16 to challenge governments to deliver on Biodiversity Plan | Federated Hermes Limited.
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https://www.iapbiocredits.org/framework.
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