On June 7, the Helsinki Principle 5 (HP5) workstream hosted a workshop to discuss the findings from the recently published Coalition report, An Overview of Nature-Related Risks and Potential Policy Actions for Ministries of Finance: Bending The Curve of Nature Loss.
One of the priorities for the Coalition is to improve Members’ understanding of climate- and nature-related risks, as well as opportunities that will arise with the transition to net-zero, nature-positive economies. Nature loss and climate change are interrelated and neither crisis can be successfully resolved unless both are tackled together. As the understanding of the impacts of climate change become clearer, concern about nature loss among Ministries of Finance (MoFs) is growing. Hence, following the publication of the 2021 Coalition report on climate-related risks, the Coalition deemed it crucial to produce a report on nature-related risks. This report was prepared by the HP5 workstream, however it covers considerations relevant to all Helsinki Principles.
In the workshop, one of the report’s authors and the HP5 Workstream Coordinator, Samantha Power, presented some of the key findings. She discussed the report’s focus on the economic and financial risks of nature loss, particularly those with fiscal implications. She presented a framework that maps the potential transmission channels of nature-related risks. Finally, she discussed a range of potential policy actions MoFs can take to bend the curve of nature loss. She explained that while the roles and responsibilities of MoFs differ across countries, they all control levers that can make a significant contribution to reducing nature loss and the resulting risks. She noted that at the same time, many of the policy recommendations in the report can be most effectively implemented through a coordinated approach with other relevant ministries and possibly with supervisor, regulator, or central bank counterparts.
Next, two Coalition Members provided feedback on the report and shared how they are managing nature-related risk in their countries. Serina Ng (Deputy Director, Global Issues and Governance at HM Treasury, UK and Lead of HP5) discussed the UK’s strategy to manage nature-related risk and ways the Coalition can continue to advance the nature agenda for the benefit of all its Members. Afterwards, Masyita Crystallin (Special Advisor to the Minister of Finance, Coalition Sherpa Co-chair, Indonesia) spoke about how Indonesia has developed Natural Capital Accounts and how this information is used in decision-making and planning, including for the MoF. She talked about the importance of understanding and managing nature-related risks in Indonesia.
Following these interventions, Erlan Le Calvar (Nature-related Risk Taskforce support, the Central Banks and Supervisors’ Network for Greening the Financial System (NGFS) Secretariat) spoke about how MoFs, supervisors, and central banks can coordinate to manage nature-related risks. He discussed NGFS work on this topic, including its most recent report, statement, and plans for next steps – including the development of nature loss scenarios. He discussed where NGFS sees a role for governments to act and where there is a role for central banks and supervisors to mitigate and manage these risks.
Next, Basile Van Havre (Co-chair Open Ended Working Group for post-2020 Global Biodiversity Framework, CBD, Ministry of Environment and Climate Change, Canada) spoke about the state of finance in the Convention on Biological Diversity (CBD) COP15 negotiations. He shared details related to draft text of the agreement on the alignment of public and private financial flows with the goals of the Global Biodiversity Framework. He also pointed to the important role for MoFs in ensuring an ambitious agreement and supporting effective implementation.
Finally, Sonya Likthman (Manager, Federated Hermes Limited and co-chair of the Public Policy Advocacy working group of the Finance for Biodiversity Pledge) spoke about financial sector action to manage nature-related risk. She gave an update on the work of the Finance for Biodiversity Pledge and their various working groups. She discussed the group’s engagement with the CBD process and its position paper on alignment of financial flows with the goals of the Global Biodiversity Framework.
Fiona Stewart (Coalition Secretary) moderated an engaging Q&A session. Finally, the Sherpa Co-chairs noted that the publication of this report is an important step to help Coalition Members better understand nature-related risks and possible fiscal implications, as well as to initiate a discussion about policy challenges and how to best address them.