Event Overview
In panel one I moderated an insightful discussion on the climate and nature transition with leaders from the Taskforce for Nature-related Financial Disclosures (TNFD), Brambles plc, and Schroders plc.
In the second panel, representatives from AXA Investment Management, ClearBlue, NextEnergy and Elimini (Drax), guided by Capital Market's Ben O'Connell, debated the outlook for carbon markets and the overlaps with nature, and delved into related complexities and controversies.
In panel three Tom Blathwayt, RBC Europe ESG Director was joined by leaders from Gresham House, The Nature Conservancy, United Utilities and My-Linh Ngo from RBC BlueBay Asset Management. They discussed developments and challenges in nature markets, and explored options for investments to natural capital, across public Markets, private markets, and blended finance.
Takeaways From The COPs - Strong Private Sector Engagement; Recognition Of Climate-Nature Nexus; US Election Uncertainties
Recent geopolitical developments were a key topic of discussion throughout, with RBC’s event held following significant events in the form of COP16 (Biodiversity COP), COP29 (Climate COP), and the US election. There was a sense of encouragement around of key outcomes from the COPs, with strong engagement from the private sector at COP16, increased participation in initiatives like the Finance For Biodiversity and strong early adoption of the TNFD framework. Recognition of the climate-nature nexus came through at both COP16 and COP29 and is expected to continue as a key theme at COP30, which will be hosted by Brazil. However, the outcome of the recent US presidential election leaves a question mark around how progress will unfold for the sector. It was agreed that it will be important to watch how states and the private sector respond if the US does exit the Paris Agreement, noting that in lieu of federal action under Trump’s first presidency, we saw a step up in leadership from certain states and corporate leaders. Others noted that nature topics (e.g. clean air and water) may be more resilient under Trump 2.0 as they tend to be less politicized since the impacts can be felt locally and immediately.
Building A Common Language Around Nature
The uptake of The Taskforce on Nature-related Financial Disclosures (TNFD) adopters (with early TNFD adopters now standing at 502 as of COP16) was seen as encouraging, reflecting that nature loss is increasingly being recognized as a strategic risk management issue by corporates and investors. The importance of the role of the TNFD in setting a common language around nature and viewing these topics in a holistic way was also recognised, and the desire to move beyond disclosure to action was also expressed, with transition plans serving as a way to structure these discussions.
Carbon Markets & Nature Overlaps - Increasing Interest For Nature Co-Benefits
Increasing interest for the incorporation of nature co-benefits into carbon offset projects has been seen and there was optimism that with increased TNFD adoption and more acknowledgement of the impacts that corporates are having on nature, there may be more demand coming directly for nature credits.
Closing The Nature Finance Gap - Different Roles For Different Capital
Latest data from BNEF estimates that the nature financing gap has now widened to $942 billion and it was acknowledged that the private sector has a responsibility in helping to close this gap. Emerging investing opportunities related to nature and biodiversity across different asset classes were also discussed, including thematic equities (investing in companies that are providing solutions and facilitating better management of nature), innovative fixed income instruments, or nature and carbon credits. There are important roles for different types of capital, whether that's philanthropic capital (catalytic financing), private capital (additionality) or public markets (bringing scale). In private markets, we heard how new legislation like the UK Environment Act is catalyzing new markets to directly invest in nature. To scale, there will be a need to see more of this type of legislation globally. Voluntary corporate demand could be seen as the next phase in building scale (potentially piggybacking off of these new BNG compliance markets) and the tipping point will be corporates paying for nature because they view it as core to their business resilience.
