When African financiers take on biodiversity conservation

AGAINSTAs elsewhere, it is difficult for most African states to create a framework for better biodiversity protection, for others this issue is very far down the list of problems they have faced in recent years. On the other hand, financial circles are just beginning to realize the impact of human activities on the environment and ecosystems. This includes several African banks and financial institutions, including FirstRand Ltd, Standard Chartered, Access Bank and Equity Group or the Sanlam insurance company, as well as Togo-based pan-African bank Ecobank. Together and under the leadership of the United Nations Economic Commission for Africa and the UK-funded development agency FSD Africails, they created the African Natural Capital Alliance. An initiative to invest in climate and nature to make biodiversity a financial priority.

It all started with one observation: while Africa is home to the world’s largest population of large mammals, the Congo Basin is the second largest rainforest and more than 60% of its gross domestic product depends on nature. India, according to the World Economic Forum, we now have to take into account the fact that the destruction of this biodiversity also represents a financial loss. The calculation is not easy, but financial institutions have taken it up for another dimension, the carbon emissions dimension, where standards and certifications have emerged to guarantee the authenticity of the targets announced by businesses to reduce greenhouse gas emissions.

And the need to integrate nature into financial decision-making is particularly acute in Africa, where biodiversity is rapidly declining. From 1970 to 2016, the population of mammals, fish, amphibians and reptiles on the continent declined by 65%, according to WWF. Result: biodiversity loss directly threatens financial stability.

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Huge challenges for Africa, where climate change is already taking its toll

Responsibly managing Africa’s natural capital, including its water, soil and forests, “creates fantastic opportunities and contributes to the growth and development of the continent,” commented Rachel Antwi, head of the ESG group at Ecobank. The challenge is twofold: on the one hand, the African Natural Capital Alliance wants to focus on shifting financial flows away from environmentally destructive activities towards more sustainable practices, and on the other hand, on the impact of standards on the global natural risk management framework. to reflect the African context.

The task promises to be difficult because Africa is already facing a climate crisis. As for the struggle for the conservation of biodiversity, it is not always popular on the continent. For example, in Gabon, a country that has made protecting its biodiversity a priority and advocates for “biodiversity credits” along the lines of carbon credits, people in remote areas living off what they grow and on hunting do not perceive these issues in the same way. . In this small central African state, forest elephants, a critically endangered species whose global population has declined by 86% in 30 years, have doubled in 10 years to some 95,000 individuals, some of which regularly devastate food crops. “Biodiversity loss and climate change are interdependent, as are solutions,” explains Madeleine Ronquest, environmental, social and climate risk manager at FirstRand Ltd.

There are opportunities to think about innovative finance.

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Africa’s voice must be heard in the global debate

According to McKinsey and Credit Suisse, the biodiversity sector continues to suffer from a financing gap of between $598 billion and $824 billion a year. Everyone agrees that more money needs to be allocated to protect biodiversity, but opinions differ on amounts and sources. The African Group, represented by Gabon, Brazil, India, Pakistan, Argentina and other Latin American countries, asked developed countries for “at least $100 billion a year as a first step, and then $700 billion a year by 2030 and beyond” to developing countries. . Developed countries are ready to offer more, but not so much. They advocate the mobilization of all resources – national, official development assistance, private funds.

“We are delighted to be a founding member of the African Natural Capital Alliance to bring our expertise and voice to this important global agenda for managing nature-related risks and opportunities,” commented DR James Mwangi, Group Managing Director and Chief Executive Officer of Equity Bank, in preparation COP15 Biodiversity in Kunming, China. Since the 2015 Paris Agreement, which calls for making “financial flows compatible” with a low-carbon trajectory, no similar commitment is required for biodiversity. COP15 aims to establish the same principle for nature.

“Equity Group’s strategy, as outlined in our Recovery and Resilience Plan for Africa, is to stimulate the industrialization of Africa based on natural resources. We understand that nature is a valuable asset that drives our economy, but also has a significant impact on our lives and livelihoods. For this reason, we must preserve this asset, as well as find ways to use our natural capital in a sustainable way for the social and economic prosperity of the people of Africa,” he added. James Mwangi. This pan-African initiative comes at a time when, globally, financial institutions are increasingly consulting with each other. The African Natural Capital Alliance is a member of the Task Force on Nature-Related Financial Disclosure (TNFD), echoing the experience of TCFD (Task Force on Carbon Financial Disclosure) on carbon emissions. It is due to publish its operating structure in 2023.

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