Finance

Money, so they say, makes the world go round. Well, we believe that it can do much more than that… and make a positive difference to the future of people and nature.

From banks lending credit to insurers providing cover against risk, the global finance system powers the economic activities that affect our planet. Finance enables oil companies to drill in the Arctic, agribusinesses to clear tropical forests, or dams to be built across free-flowing rivers. But it’s also the key to making our homes more energy efficient, restoring landscapes, or helping small farmers to increase yields in a sustainable way.

By demonstrating the value of nature and the links between financial and environmental risks, we aim to redirect the flow of finance away from activities that harm our planet toward those that heal.

'Sustainable finance is the link between financial systems and ecosystems. Natural capital generates sustainable economic and environmental benefits that support healthy and resilient economies.'

Margaret Kuhlow
Finance Practice Leader
@WWFLeadFinance

Risks...

The environmental impacts or long-term sustainability of investment decisions have not, until recently, been widely considered by the world of finance. That has to change.

Environmental issues pose real risks to business. That could be water shortages undermining a client’s business plan, dwindling supplies of natural resources hiking up prices, or extreme weather linked to climate change leading to economic losses and insurance pay-outs.

Equally, as governments tighten environmental rules and consumers expect higher standards, finance institutions that don’t adapt will be left exposed. Being linked to deforestation can damage a company’s reputation, leading to losses for shareholders. Investments in fossil fuels could plummet in value if governments keep to their climate commitments.

Severe droughts might double in South-Asia over the coming years.

© WWF / Roger LeGUEN

...And Opportunities

Encouragingly, many investors and finance institutions are beginning to recognize the benefits of making investment decisions that help to tackle the loss of nature.

Some banks are already pushing their clients to adopt stronger sustainability standards, a growing number of investment funds are pulling out of fossil fuels, and there’s increasing interest in investments that deliver environmental and social returns alongside financial ones.

And this sustainable future for finance can still be profitable. The Paris Climate Agreement could open up opportunities worth nearly US$23 trillion by 2030 in sectors like renewable energy, energy efficiency and low-carbon technology. And achieving the UN Sustainable Development Goals could create at least US$12 trillion in market opportunities, ranging from reducing food waste to transforming urban public transport systems.

What We're Doing

We’re working with banks, insurers, regulators and others to ensure the financial system recognizes nature’s true value.

We’re demonstrating how risks like climate change, water scarcity and biodiversity loss affect investments – and how to respond. For example, we’re pressing financial institutions to align their portfolios with the goals of the Paris Climate Agreement – meaning they’d only invest in companies and projects that contribute to keeping the global temperature rise well below 2°C.

We’re also encouraging greater investment in sustainable development, and working with the finance sector to develop new ways of mobilizing resources for conserving and restoring nature. And by pushing finance institutions to demand and reward high environmental standards among their clients, we’re using their influence to drive sustainable practices through the rest of the economy.

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27 Oct 2020

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