The best-known ‘Conference of the Parties’ is the one on climate. In 2015 it gave birth to the Paris Agreement and last year Glasgow hosted COP26. However, there is also another, lesser-known COP organised by the UN, which is dedicated to biodiversity. This COP deals with the ‘Convention on Biological Diversity’ created at the 1992 Rio Earth Summit and takes place every two years. A delayed COP15 on biodiversity will take place later this year in China.
Despite these two separate COP events, it is generally acknowledged that the climate crisis and biodiversity crisis are inextricably linked, and we need to talk about addressing them in tandem. In conjunction with addressing climate change, action is needed by humanity to halt biodiversity decline and begin its restoration. For example, planning, land use and agricultural systems need to be adapted to work with nature.
Last year, the high-profile Dasgupta Review told businesses and financial institutions that they must account for dependencies and impacts on nature in their activities; and this includes the measurement and disclosure, not only of climate-related financial risks, but nature-related financial risks too. Banks, the financial system, and in fact our whole economies are inherently linked to the natural environment and the health of our society. Their stability and success is dependent upon them. This was a key theme in the award-winning, 40-minute documentary created by WWF ‘Our Planet Too Big to Fail’.
The role that banks could play
Banks should be well-positioned to take the lead in tackling the climate and ecological crisis. Not just because they can be critical in divestment from any new fossil fuels, but also because they have the capacity and obligation to finance entrepreneurs and institutions that are committed to tackling major social and ecological issues.
Triodos Bank has stated an intention to be net-zero as early as possible, at the latest by 2035. In formulating this target, the bank adopted a holistic approach supporting our mission to create positive impact on people and planet. As Triodos Bank UK CEO Bevis Watts said at the time: “We have to look at the whole picture. It takes more than just cutting carbon. We can’t just reduce emissions, only to find out that we’ve used all our natural resources to get there. We can’t stop using fossil fuels, only to find out we’ve exploited people to get there. We need holistic solutions. An approach that works for all living species. Where renewable energy, massive investments in regenerating nature and a fully sustainable built environment go hand in hand.”
To this end, our ambition is that the greenhouse gas emissions of all Triodos Bank's loans and funds’ investments will be greatly reduced using a science-based targets approach. The remaining emissions will be balanced or ‘inset’ by investing considerably in nature projects that remove greenhouse gases from the air.
Investing in nature
Investing in nature will be key to this ambitious 2035 net-zero strategy. It will include forestry projects, but afforestation is not just about hitting carbon targets, but also promoting biodiversity – both of which are central to our mission of positive impact. In 2021, Triodos financed approximately 33,000 hectares of nature and conservation land, representing around 440m2 per customer, which we plan to increase in the coming years.
A crowdfunding partnership with Trees for Life was a landmark project for Triodos in the UK last year and illustrates the clear demand for rewilding projects, with £2m of investment raised in less than 48 hours. The finance is supporting the construction of a visitor centre at the charity’s Dundreggan estate in the Scottish Highlands which will educate people about forest regeneration and the natural and cultural heritage of the area.
The current woodland cover at Dundreggan is 26%, following substantial planting of over 335,000 native trees since 2008, and the charity wants to increase this to 41% over the next 10 years. There are plans for a further 1,500 acres of planting, which the visitor centre will play a part in helping to fund and support. We are committed to including many more such projects in our portfolio over the coming years.
Pilot projects
It is our belief that a major shift is needed to a much more nature-based economy and that we need to create the financial mechanisms to support projects that absorb carbon. It is vital that our financial system appreciates the true value of nature and we need to create investable business models connected to nature restoration.
There are many different ecosystems to consider. We are proud to have recently joined in a Wildfowl & Wetlands Trust initiative to create networks of healthy wetlands across the UK, that explicitly aims to fight the interlinked crises of biodiversity loss, climate change and human wellbeing. The Blue Recovery Leaders Group launched in March to bring together purpose-minded businesses and WWT to help make the goal of bigger, better wetlands a reality in the UK.
In the background, Triodos Bank UK began working specifically on nature-based investments six years ago and sponsored the UK’s first conference on the concept in 2018. In 2020, four pilot projects aiming to protect and restore valuable habitats that were sourced and evaluated by Triodos were selected to receive grant funding. The projects vary in scope and geography, but all connect economic outcomes to investment in environmental restoration in terms of carbon storage, air quality, flood management and human health, as well as enhancing biodiversity and wildlife habitats.
One example is to be found in the Wyre Natural Flood Management project in Lancashire. In partnership with The Rivers Trust, Triodos has been able to show success is possible in terms of generating investor interest and supporting a capital raising process. £1.5m has now been raised to invest in the Natural Flood Management via a Community Interest Company, established as an independent entity to raise financial investment to go alongside a grant from the Woodland Trust via the Northern Forests Grow Back Greener programme, as part of Defra’s Nature For Climate Fund.
The money raised in the form of a nine-year loan will be used to deliver over 1,000 highly targeted measures, including tree planting, creation of temporary water storage areas, leaky dams and a network of hedges that will significantly reduce flooding to local communities at risk. It will be repaid through the sale of ecosystem services to organisations that will seek to benefit from those interventions including flood risk reduction, carbon sequestration, increasing biodiversity and improving water quality. Local farmers and landowners will then be paid to host and maintain those NFM assets. Social Investment Tax Relief (SITR) was utilised to support the arrangement.
These projects are not about someone trying to make money out of other parties - the real objective is to restore our environment, reduce the risk of climate change, and to maintain and restore livelihoods.
If these pilot business models can work and be scalable then they could be gamechangers for the burgeoning ecosystem services investment sector. This is not about exploiting nature but seeing nature at the heart of a truly circular economy that is key to our own prosperity and wellbeing.
More support is needed to develop similar projects nationwide to address climate change, adapt to its effects and restore biodiversity. We hope this work will inspire others in the finance sector to play a role in connecting economic outcomes to investment in environmental restoration. This is going to be critical to meeting net zero goals, including those set at COP26 and COP15, and reversing nature’s decline.
Make your money a force for positive change
Alongside the active choices we make with our money daily, choosing a Triodos Current Account means that your money can continue supporting positive environmental, social and cultural change in the background.
It's interesting although speaking as a comitted environmentailst running a campaign to safeguard a rare 7 hectare habitat, I really wish you would offer accounts to community based environmental organisations. Much wildlife is under the care and management of communities in towns, cities and villages and people like us are in desperate need of banking support from environmentally motivated bank like Triodos, instead of which we have to go to banks that have highly questionable ESG standards.
Carbon offsetting in the context of net zero emissions targets has become widely accepted. Yet the science is crystal clear. Carbon offsetting is fundamentally flawed because nature-based carbon stores do not remove carbon irreversibly from the fast carbon cycle. There is no workable substitute for a comprehensive decarbonisation programme. Every effort should be made to avoid the need for offsetting.
No! No! No! A thousand times no! Superficially fine words with a highly sinister effect and agenda. At best you are naive. The 'natural capital/ecosystem services' approach is effectively privatising the global commons for private profit. By all means, donate your profits to tree-planting etc., but nature should not have to justify its existence by providing investment opportunities and working for the pathologically flawed financial services industry, it has its own intrinsic value. Offsetting, whether carbon or biodiversity, is wide open to abuse and it is extreme hubris to think we know enough about nature to know what is equivalent to what. This approach can also have horrific consequences for Indigenous peoples, who are, by and large, brilliant stewards of the biosphere, to which they recognise we belong. Read my blog article for a detailed critique of the 'natural capital/ecosystem services' approach: https://biowrite.wordpress.com/2018/05/24/kill-the-natural-capital-approach-before-it-kills-us/ See especially all the references/links at the bottom. Has your management drawn your board's attention to these arguments? If not, then I urge your board members to inform themselves urgently. In my opinion, you can no longer call yourself an ethical bank, and when I first realised you were dabbling in this area I withdrew all but a token amount of my money. Please, please, please reconsider. I beg you.
Obviously, my qualification as shown with my name associated with my main comment should have read PhD (Zoology/Ecotoxicology).
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Hi Robert, we have noted your criticism and previously read your 2018 blog post with interest. We of course share your concern about certain corporate interests on the natural capital agenda. Despite that, we feel strongly that it is worth recognising – as many NGOs working in conservation work do – that there is value to be found in looking at quite specific nature-based investment models, particularly where entities are established with public benefit enshrined within their objectives. Triodos Bank UK is only involved in projects located within the country and if you study what we have been doing, for example in the Wyre catchment, then you will understand that within the current economic paradigm and (we agree ‘flawed’) financial services industry in which we must operate, then these are models that could provide the investment in nature preservation and restoration that is so badly needed. In terms of the challenge of net zero and the scale of investment needed in restoration of the natural environment to effectively reverse climate change and biodiversity loss, we feel there is no time to lose in coming up with solutions and potential answers to big questions about how we finance this in an ethical way.
It has long been considered – by those who consider it at all – that economists have little knowledge of, or interest in, the environment. Satish Kumar’s view on this is well known and oft quoted. The economy - he says – is a wholly owned subsidiary of the environment – not the other way around. He advocates that environmental education should be included in all economic training. https://vimeo.com/307353873 Amongst economists then, Dieter Helm is perhaps the exception which proves the rule, for this Oxford Professor of Economic Policy specialises in the environment, climate change, biodiversity, water, energy and agriculture – and clearly knows a great deal about them. Green and Prosperous Land, [William Collins, 2019] provides what Helm calls a “blueprint for rescuing the British countryside” - and in the process improving the economy. He lays out clearly how and why there need be no split between money matters and environmental ones – in fact addressing one well will support the other. The dust cover blurb says it all. “The unpalatable truth about Britain’s current approach to agriculture, water catchments and our green spaces is damaging to both the environment and the economy. It is mired in decades of bureaucracy and the vested interest of lobbyists. Although the politics are complicated the solutions are not.” “We can stop wasting billions per year paying people to own land; wasting money cleaning up water instead of preventing pollution; wasting money creating hard flood defences when natural flood management can be cheaper; and wasting money cutting down trees.” “There is a choice: we can impoverish ourselves by continuing down the current path or we can halt the destruction and work to rescue and revitalise the nature we have left. We can – and should - have a greener and more prosperous future.” There is not room for what I think I need a much larger "box"