To anyone trying to understand the accelerating juggernaut of ‘Nature Positive’, and if it can genuinely help tackle biodiversity loss, a good first step to is to read Jem Bendell’s latest book, Breaking Together. In 2007, Bendell co-authored the report, Deeper Luxury, quality and style when the world matters, one of the first reports discussing how, “our desires for human creations are making luxuries out of nature’s creation”. At the time, the report’s findings were acknowledged to be a wakeup call for all the “professionals and aficionados of the luxury goods industries”.
Twenty years of experience in sustainable business and finance, working with international corporations, UN agencies and international NGOs, culminated in Bendell becoming a Professor of Sustainability Leadership. Maybe the best wakeup call and filter to view ‘Nature Positive’ initiatives is that in 2023 Bendell stepped away from a career he called, “the illustrious career of delusion that I had before my awakening and eventual move from first world professor to third world farmer”. The delusions he refers to include the myriad of phantom solutions created by the global elite to distract from the inherent unsustainability of an economic system built on never-ending growth.
Nature Positive is wheeled out as the latest initiative to get those who broke the biosphere – large corporations – to ‘fix’ it. Part of the ‘idea’ (deception may be a better word) is that private financial investment will make up for lack of government action! This would be a joke, if the situation wasn’t so tragic. As Bendell points out, given that the collapse of industrial civilisation is already underway, this is not the time for yet another Phantom Solution.
The financial sector is seeking out investment opportunities, arising from the conservation, restoration, and sustainable use of nature, to help with virtue signal while maintaining the status quo. Investors are also trying to avoid or limit biodiversity risk associated with investments. But, to talk about financial investment opportunities that make financial sense, it must be clearly acknowledged that there is an expectation of cash flows and financial return. As such, we can’t ignore that even the World Bank reported, “financing biodiversity projects is difficult because of their local nature, small scale, and lack of monetizable cashflows. Putting a price on something historically seen as a public good is challenging.”
For this very reason, it makes sense to focus on the area that creates 97% of the cash flows directly derived from nature – the extraction of biomass.
The seafood and the timber trade are the two largest industries in this realm, and, in the main, they are both unregulated and unmonitored. To direct investment into less destructive extraction practices and better management of renewable resources such as fish stocks and forests, we would need to have much better governance and information systems on the current and future status of these resources. All this is happening at a time when fishing vessels systematically ‘go dark’ and Global Fishing Watch research determined 75% of the world’s industrial fishing vessels are “dark” or not publicly tracked.
According to the Minderoo Foundation, half of global fisheries are essentially unmonitored and of the rest, half are overfished and 10% of the brink of collapse. This lack of transparency makes a mockery of any attempt to redirect investment to fisheries or operators with better fishing or sustainability practices. Risk management of biodiversity risks is not possible without proper data collection, monitoring and enforcement of fishing quota and practices. Even investments in Marine Parks (via say Bonds) can’t currently provide any guarantees because extraction from marine parks is allowed; for example, auditors in EU highlight only 1% of 3,000 supposedly ‘protected’ areas in the Mediterranean ban fishing.
The timber trade uses voluntary certification schemes to manage ‘sustainability’. One of the oldest and biggest forestry certification schemes is the FSC (Forest Stewardship Council) with over 230 million hectares under management. Yet when Mongabay (an investigative environmental news channel) tried to find well-designed scientific studies into the effectiveness of the scheme in 2017, they could only find 13 that fit the criteria and not a single study into the long-term impacts of certification. The lack of interest in the actual value of the scheme and its usefulness in limiting biodiversity risk shows that we currently lack the necessary transparency to better allocate financial investments.
Biomass extraction for the trade in CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) listed species, should in theory be the best, as CITES includes a trade permit and reporting system. But this system was designed in the 1960s and has never been updated for a global trade worth tens of billions of dollars. Most signatory countries still use paper permitting systems, developed in the 1970s, that do not integrate with customs. Trade data is aggregated just once a year and the quality of the data makes any analysis of sustainability impossible; some countries don’t submit data over multiple years. The data are full of discrepancies, imports and exports cannot be reconciled, and in addition there are massive discrepancies between CITES data and customs data.
In 2023, John Scanlon, CITES Secretary-General from 2010 to 2018, commented, “We have a paper permitting system which is a 50-year-old permitting system that’s open to fraudulent use and corruption, whereas in 2023 we should have a fully automated system”. Moving from a paper to an electronic CITES permit system was first discussed in 2002, yet over 160 CITES signatory countries still use the 1970s paper permit system. This includes most of Europe, which is significant because this region combined is the biggest profiteer from the commercial trade in wild species.
All these examples describe a global scale commercial trade, and after seafood, fashion and furniture are the key profiteers from the trade in wild species. The large businesses profiting from this trade are some of the most profitable listed companies in the world, with a history of providing great ROIs for investors. But even after Bendell’s 2007 report, these listed companies have not contributed anything to the costs of regulating the extraction for profit of even the most endangered species in the world. There is ample evidence of an all profit, no responsibility approach to the use of wild species in their supply chains. Investors have, unwittingly, been compliant in this.
Philanthropists are left to pick up some of the pieces, but as they have told me in many discussions, “Why should I as a philanthropist cover the costs of modernising a business process; this is a cost of doing business and companies making the profits should pay to modernise this system”. Very true, but what happens when they don’t and they aren’t held accountable, because their lack of interest is in line with the neoliberal free trade ideology, and all this is held together with a broad range of stakeholders often described as ‘useful idiots’.
And so, the 2019 IBPES Global Assessment Report into the global extinction crisis confirmed that direct exploitation for trade is the most important driver of decline and extinction risk for marine species and the second most important driver for terrestrial and freshwater species. Add to this the 2019 research published by the Research School of Management, Australian National University, which concluded that hubris and overconfidence caused by excellent financial performance is a major driver of irresponsible corporate behaviour, with companies making above-average profits more likely to breach their environmental or social obligations than run-of-the-mill firms.
To achieve the level of transparency and the quality of reporting required to better manage biodiversity risks and investments, appropriate information systems need to be created and maintained. As this has not happened to date, we need to accept that governments are not going to pay for it. This in turn means the businesses profiting from the extraction of biomass need to foot the bill. This ought to be the very first step to ‘nature positive’!
When it comes to channelling investment flows into nature and using finance to limit biodiversity risks, we need to get the basics right, first. Ideally this would be a move to the precautionary principle, using a reverse listing model. Given the scale of the trade and the rapid decline in wildlife populations, making unrestricted trade the default position is no longer viable. A reverse-listing (white/positive-listing) system, where the default is ‘no trade’, would appear a commonsense approach, but global NGOs, IGOs and governments haven’t accepted this (yet).
So, under the current system of free trade, an example of what could be done immediately, as the very first step in being Nature Positive, would be to put a levy on the commercial trade in CITES listed species. The CITES trade is overwhelmingly a luxury trade, which is conducted by listed companies. Listed companies who have both private and institutional investors. By tying the cost of a CITES import permit into the major import markets to the value of the shipment as declared to customs, at least US$200 million could be raised annually to better monitor and enforce CITES provisions.
Similarly, the cost of obtaining certification under the FSC etc. should include a levy to finance the level of consistent monitoring and reporting that would be needed to form the basis for investment managers to make decisions about private finance for nature.
As the Australian Environment Minister, Tanya Plibersek, has stated, “we know that markets are only as strong as the trust and integrity that underwrite them. Blind trust in business has been abused with greenwashing for too long. Quoting Ronald Reagan, in his work with Mikhail Gorbachev to dismantle the old Soviet Union nuclear stockpile, we should “trust, but verify”.
When it comes to knowing a company’s true commitment to sustainability, we must trust but verify. Demanding radical transparency in company supply chains can help. There is no group with a greater power to demand this than investors.
Lynn Johnson is a physicist by education and has worked as an executive coach and a strategy consultant for over 20 years. In her work she pushes for systemic change, not piecemeal solutions, this includes campaigning for modernising the legal trade in endangered species, to help tackle the illegal wildlife trade.
