The issue of biodiversity is not yet taken seriously enough by financial companies in Germany. The results of the latest survey by PwC and WWF Germany “Nature and biodiversity conservation in the German financial sector – a stocktaking” show this: Three quarters of the banks, asset owners and asset managers surveyed rate the importance of biodiversity and ecosystem aspects in the German financial sector as “rather low” – among the participating banks, as many as 88 percent do so. The majority of respondents (33 percent) also consider the danger of physical risks from the loss of biodiversity to be low.
Nevertheless, three quarters of respondents identified the associated reduction in CO2 emissions and more than two thirds the dependence of global GDP on nature-based resources as the main drivers for addressing biodiversity issues. They predominantly see opportunities in improved risk resilience (39 percent) and in gaining competitive and reputational advantages (15 percent).
But still, the topic is not yet of strategic importance for financial institutions: Only a very small proportion already use biodiversity data for management purposes or for net zero transition plans and only half already have or are in the development phase of biodiversity targets, while just under the other half (46%) are not planning to do so.
"The financial sector has not yet sufficiently recognized the risks and opportunities of a nature-positive economy: This is shown by the results of our survey. Awareness of physical risks, but also of benefits that go beyond competitive opportunities and reputation, must be raised on the part of both institutions and customers."
Supply and demand are lagging behind current developments
There is also insufficient demand for the benefits of nature-positive business practices on the customer side: participants rate the demand for products with biodiversity criteria as “rather low” among both private customers (40 percent) and business customers (69 percent). At the very least, the figures suggest that supply and demand orientation is lagging behind the current challenges.
"Neglecting the opportunities and risks of biodiversity in the financial sector will become a knock-out criterion in the long term - not only for the preservation of our ecosystems, but also for economic stability. Now is the time to invest in the future and make return assumptions more long-term and resilient. Those who address biodiversity at an early stage will benefit from more stable returns and a stronger market position in the long term."
Increasing implementation pressure in the financial sector
Regulation and new standards for the conservation and promotion of biodiversity are placing increasing responsibility on financial companies: the Kunming-Montreal Global Biodiversity Framework (GBF) aims to halt the net loss of biodiversity from 2022 to 2030 and achieve a way of life and economy in harmony with nature. In addition, financial institutions and industrial companies are faced with comprehensive regulatory requirements from the EU to protect and restore biodiversity and ecosystems – including the Sustainable Finance Disclosure Regulation (SFDR), the EU Taxonomy Regulation, the Corporate Sustainability Reporting Directive (CSRD) and other EU laws that indirectly affect the financial sector. In October, the COP 16 meeting in Colombia will focus on reducing the financing gap for biodiversity. To this end, countries will be required to increase international nature-related funding to at least 20 billion euros per year by 2025.
73 percent
of respondents rate the importance of biodiversity as ‘rather low’
33 percent
consider the risk of biodiversity loss to be low
37 percent
of respondents have started developing biodiversity targets
For 75 percent
quantifying biodiversity and ecosystems is the biggest challenge
Challenges in the integration of biodiversity
With the development of regulation, the European supervisory authorities are making it clear that they expect financial institutions to integrate biodiversity risks into their risk management in addition to taking climate risks into account. However, implementation is failing due to various challenges – respondents see the quantification of biodiversity and ecosystems (75 percent), the lack of data infrastructure (69 percent) and the lack of knowledge and expertise (50 percent) as the biggest. This almost corresponds to the results of the PwC / WWF survey from 2022, which was published in the study „Von Net Zero zu Nature Positive“ – although there are now numerous initiatives to support companies in developing appropriate indicators or to provide the relevant tools.
These results suggest that the financial sector has not yet sufficiently engaged with the initiatives, standards and support provided.
"The conclusion for the companies: Do your homework - for a future-oriented management of biodiversity risks and to secure the basis of life for people and nature."
Source: Press release PwC Deutschland & WWF Deutschland
