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Integrating nature into sovereign debt

Integrating nature into sovereign debt

Co-hosted by Finance for Biodiversity Foundation, UNDP BIOFIN and UNEP FI

Date and time – Sunday 27th October, 11:30 – 13:30
Venue – Finance and Biodiversity Pavilion, Blue Zone – Cali, Colombia
Topics – Policy & Regulations / Leadership & Good Practices
Format of event – Panel / Workshop
GBF targets – Goal D, Target 14, Target 15, Target 18, Target 19

Summary

The purpose of this event is to start a practical dialogue for financial institutions and their sovereign counterparts to mobilise private financial flows to countries to halt and reverse biodiversity loss. Including meaningful and operable nature considerations in the assessment of sovereign debt is at the heart of this approach. The panel will stress how integrating nature into sovereign debt can help bridge the current gap between the financial markets and sovereign issuing governments, particularly in emerging markets. The panel will present the views of complementary stakeholders: governments, central banks, public and private financial institutions, multilateral institutions.

Description

Sovereign debt currently represents an important share of global financial flows and constitutes a key portion of the assets owned by financial markets across all sectors, including investors, insurers, public and private banks. From an investor’s perspective, it is crucial to include nature considerations in the impact valuation and asset allocation of sovereign assets.

Financial institutions, including the signatories of the Finance for Biodiversity Pledge, the Principles for Responsible Banking and/or the Principles for Responsible Investment, hold sovereign financial assets and are committed to practices towards conserving nature that can be leveraged at the sovereign level, to ensure both systemic financial stability and long-term biodiversity protection. 

Presently, most existing frameworks, such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Science-Based Targets Network (SBTN), offer guidance primarily on corporate assets when assessing financial portfolios. There is a notable lack of guidance for assessing sovereign assets. Additionally, sovereigns lack guidance on integrating their national nature strategies into the narrative or technical clauses of their debt issuance. Aligning with the Kunming-Montreal Global Biodiversity Framework targets, in particular with Target 15, does however require clear and operable translations for financial markets. This issue is particularly pressing for developing countries that struggle to mobilize international funding, including biodiversity-rich countries such as Brazil, China, Colombia, Ecuador, the Philippines, India, Indonesia, Madagascar, Malaysia, Mexico, Papua New Guinea, Peru, the Democratic Republic of Congo, South Africa, or Venezuela.

National Biodiversity Strategies and Action Plans (NBSAPs), supported by National Biodiversity Finance Plans, shape the implementation of the Convention on Biological Diversity (CBD) at a national level. Financial markets are keen to incorporate these enabling policies into their investment considerations but currently lack the necessary understanding and guidance. The panel will offer views on how to bridge this gap. 

Programme & Speakers

Moderator
Nathalie Borgeaud, Sovereign Advisor, Finance for Biodiversity Foundation

Speakers
Lucian Peppelenbos, Robeco
Hélène Djouffelkit, AFD
Sebastian Briozzo, S&P
Marc Reinke, NGFS
Onno van Heuvel, UNDP

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