A speech by Alicia Kedzierski, Head of ESG and D&I at the UK’s FCA emphasised the urgent need for the finance sector to engage with nature-related financial risks.
According to ESG Investor, speaking at ESG Investor’s Nature Data for Institutional Investors, Kedzierski pointed out that nature is an immediate concern and should not be relegated to the sidelines awaiting regulatory intervention.
She underscored that the finance industry holds significant leverage and resources that could be harnessed to pre-empt environmental risks, encouraging a unified approach amongst industry players, policymakers, and regulators. “This is bigger than regulation. We cannot fix this solely by making rules. This is about you, your firm, your incentives, your commitments and your actions. By doing so, we protect our planet for ourselves, our children and the generations to come,” Kedzierski stated.
Kedzierski heralded the sector’s current mobilisation around climate change, highlighting the wide adoption of the Task Force on Climate-related Financial Disclosure (TCFD) frameworks and the tangible results of climate strategies and reporting. She urged the industry to replicate this effort for nature conservation.
She also pointed out the increasing importance of nature-related risks in the wake of the Global Biodiversity Framework and the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD). Kedzierski mentioned a World Bank report estimating a potential US$2.7tn annual decline in global GDP by 2030 due to the degradation of ecosystem services, such as pollination. Furthermore, the FCA’s own survey revealed that a significant 76% of consumers express a preference for environmentally protective investments.
The FCA is actively participating in collaborative efforts to integrate nature concerns into financial decision-making, as evidenced by their involvement with the Transition Plan Taskforce’s nature workstream. The recently introduced UK Financial Services and Markets Act 2023 mandates financial regulators to consider and contribute to the UK’s environmental targets, reflecting the gravity of environmental concerns in regulatory agendas.
In conclusion, Kedzierski called for the finance industry to learn from existing initiatives and foster collaboration, even where it doesn’t “feel natural or normal”. The finance sector’s expertise and influence are pivotal in supporting wider environmental objectives, demonstrating a collective responsibility beyond regulatory compulsion.
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