188 countries are party to the Convention on Biological Diversity, one of the highest levels of global consensus around any multilateral environment agreement. The parties have set themselves a 2010 goal to:
Achieve a significant reduction of the current rate of biodiversity loss at the global, regional and national level as a contribution to poverty alleviation and to the benefit of all life on earth.
Thirteen years after entering into force, the Convention seems to be getting serious about the role of the private sector in meeting that target. Whether its preventing habitat loss, promoting sustainable use of biodiversity by improving resource management, or using protected areas as effective sustainable management tools, the private sector’s participation poses huge opportunities, not just risks.
Before the next Conference of the Parties in March 2006, the IFC will introduce a new Performance Standard on Biodiversity for all its investment activities. We expect that this will be endorsed by the 34 financial institutions that use the Equator Principles. At the same time we will launch a new and comprehensive guide to Biodiversity for the private sector.
2010 is just around the corner and to meet global targets we need the speed of innovation and the spillover effects of financial markets responding to these values and incentives. Mainstream investment analysts are increasingly concerned about long term investing - they see value in the environment and social performance of assets. Leading investment houses are now struggling with incentives that bridge the quarterly focus of their analysts with the year on year or decade on decade view of sustainable resource bases.
Who Cares Wins: Connecting Financial Markets to a Changing World, a manifesto of more than 20 major financial institutions (including the IFC), goes beyond asking whether environmental and social performance is important, asking instead how and what can we measure to understand an asset’s risk reward profile. Look for the latest progress report online later this month.