Responding to the urgent need for investor action on biodiversity and nature in the 21st century, this report presents key recommendations for financial market actors to respond to biosphere risks and tipping points. The issues in the report draw on expert insights as raised during a private cross-sectoral dialogue hosted by Preventable Surprises in February 2021, which included investment, banking, NGO, governmental and activist representatives from across the world.

Commencing from a critique of ‘win-win’ narratives (the protection of investors as opposed to nature, by focusing on ‘doing well by doing good’), and the failure of mainstream investment action to deliver timely responses to threats such as climate change and broader incursions on planetary boundaries, Jerome Tagger and Tom Murtha of ‘think-do’ tank Preventable Surprises provide a systematic overview of the necessary actions investors and ‘positive mavericks’ must engage in if existential risks are to be adequately addressed. 

Actions includes the need to urge effective local and global regulation that implements guardrails around key ecosystems; a call for business transformation that learns from the shortcomings of the Task-Force on Climate-related Financial Disclosures and Climate Action 100+; prioritising bold action upon the highest impact companies over the delay tactics of awaiting data and disclosure; and lastly, to design metrics able to facilitate systemic transformations that integrate factors related to ecological and social thresholds, providing specific examples of where this is underway.

The report also provides investors with a list of commitments and actions they should be asking for in their engagement activities, including: for companies to halt, reverse and regenerate natural systems; to commit to net zero loss of biodiversity by 2030 and align with national and global objectives for ecological protection and preservation (such as E.O. Wilson’s vision for 50% of the Earth’s land mass and water to be protected as conservation areas); and, mobilise and direct investment towards biosphere health and climate stability.

In the final section of the report, design principles for 21st century governance that supports these goals are presented. The need to organise actions around landscapes and ecosystems is discussed, as wel as innovating and learning through a ‘double-loop’ system – a system that ‘does things right’ and also ‘does the right things’ – as a means to avoid the pitfalls of collaborative decision-making, and to build urgency into the process so that investors can work at the pace required.

The report concludes with thoughts and recommendations on the Nature Action 100 and how it can improve on the Climate Action 100+ framework, quoting Lin Ostrom’s core design principles as a means through which collaboration is able to achieve productive, equitable and timely action.

1. New solutions, beyond current environmental, social, and governance (ESG) finance approaches, are needed to address the biodiversity crisis and overcome barriers to change. Deep market reforms will be required, but the urgency of the crisis makes intermediary solutions necessary.
2. Investors should focus on adequate levers, embrace the limits of their own interventions, and understand that ultimately their unchecked powers need to be curbed to address a systemic challenge of this magnitude.
3. Investors should recognise that win-win narratives - the promise of ‘doing well by doing good’ - or efforts to insulate portfolios from ESG-related risks often carry a cost, which is a failure to contribute to the preservation of the biosphere.
4. Investors should devote most of their energy on policy levers, globally and locally, to establish guardrails to stay within planetary boundaries. They should support goals to set aside 30% of nature by 2030, protect key ecosystems and ensure half the earth’s land mass and oceans become protected conservation areas by 2050.
5. Engagement with the private sector should focus on business transformation first and foremost. Current approaches focused on disclosure are too slow. Investors should require companies to stop and reverse negative impacts and then regenerate natural systems.
6. All data and disclosure should embrace context, moving away from a firm-centered approach (changes in a company’s “nature performance” year on year) to one that sets this performance in an economic, ecological, and social context.
7. Whether acting alone or in conjunction with others, investors should adopt 21st century governance principles. They should engage with scientists, stakeholders, and local communities. They should implement free prior and informed consent, co-creation, and gender parity.
8. Investors should organise around landscapes and ecosystems as they are doing in the Amazon rainforest.
9. Investors should adopt a culture of learning and innovation to make sure that the solutions they deploy are effective, and work at pace and scale in recognition of the urgency of biodiversity loss challenges, giving companies no more than two years to show meaningful course correction.