When African finance takes on the biodiversity challenge


againstLike everywhere, most African states are struggling to put in place a framework to better protect biodiversity, for others the issue is low on the list of problems they have faced in recent years. On the other hand, financial circles are just beginning to become aware of the impact of human activities on the environment and ecosystems. This is the case of several African banks and financial institutions, including FirstRand Ltd, Standard Chartered, Access Bank and Equity Group or the insurer Sanlam as well as the pan-African bank Ecobank, based in Togo. Together, and led by the United Nations Economic Commission for Africa and the UK-funded development agency FSD Africails, they launched the African Alliance for Natural Capital. An initiative that aims to invest in the climate and nature to make biodiversity a priority financial issue.

It all started with an observation: while Africa is home to the world’s largest population of large mammals, as well as the Congo Basin, the second largest tropical forest and more than 60% of its gross domestic product depends on nature. Second only to Indonesia and India, according to the World Economic Forum, we must now 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 approached it for another measure, that of carbon emissions, where standards and certifications have emerged to ensure the authenticity of the objectives announced by companies to reduce their greenhouse gas emissions. .

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

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Immense challenges for Africa, where climate change is already hitting

Responsible stewardship of Africa’s natural capital, including water, land and forests, “creates fantastic opportunities and contributes to the growth and development of the continent,” said Rachael Antwi, ESG Group Director at Ecobank. The challenge is twofold: on the one hand, the African Alliance for Natural Capital wants to focus its efforts on transferring financial flows from activities that destroy nature towards more sustainable practices and, on the other hand, influence global risk management framework standards. of the nature. to reflect African contexts.

The task promises to be difficult, because Africa is already facing the climate crisis. As for the fight to preserve biodiversity, it is not always popular on the continent. In Gabon, for example, a country that has made protecting its biodiversity a priority and advocates “biodiversity credits” on the model of carbon credits, the inhabitants of remote areas who live from what they plant and from the hunting do not perceive these issues in the same way. In this small Central African state, forest elephants, a species in danger of extinction, whose population in the world has been reduced by 86% in 30 years, has doubled in 10 years, reaching some 95,000 individuals, including some that regularly devastate food crops. “Biodiversity loss and climate change are interdependent, as are the solutions,” explains Madeleine Ronquest, environmental, social and climate risk manager at FirstRand Ltd.

Ways of thinking about innovative financing are emerging.

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Making Africa’s voice heard in the global debate

According to McKinsey and Credit Suisse, the biodiversity conservation sector still suffers from a funding gap of $598 billion to $824 billion per year. Everyone agrees that more money needs to be put on the table to protect biodiversity, but opinions differ on the amounts and source. 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 initially, then $700 billion a year by 2030 and beyond” for developing countries. Developing. Developed countries are willing to put more on the table, but not as much. They advocate the mobilization of all resources: national, official development assistance, private funds.

“We are delighted to be one of the founding members of the African Natural Capital Alliance to bring our expertise and voice to this critical global agenda of managing nature-related risks and opportunities,” he commented. The Dr James Mwangi, Group Managing Director and CEO of Equity Bank, as he prepares COP15 on biodiversity in Kunming, China. After the 2015 Paris agreement, which called for making “financial flows compatible” with a low-carbon path, a similar commitment is not required for biodiversity. COP15 aims to establish the same principle for nature.

“Equity Group’s strategy, outlined in our Recovery and Resilience Plan for Africa, is to catalyze a natural resource-driven industrialization of Africa. We understand that nature is a valuable asset that drives our economies, but also has a significant impact on our lives and livelihoods. For this reason, we must safeguard this asset, but also find ways to use our natural capital sustainably for the socio-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. African Natural Capital Alliance is a member of the Task Force on Nature-Related Financial Disclosures (TNFD), repeating the experience of the TCFD (Task Force on Carbon-Related Financial Disclosures) for carbon emissions. It must publish its operating framework in 2023.

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