Banks, insurers and pension funds must work together to prevent the extinction of animals and crops due to environmental pollution. Frank Elderson, director of supervision at the Nederlandsche Bank and candidate for a top position at European Central Bank (ECB) on behalf of the Netherlands.
Today, Elderson gave the Academy lecture of the Planning Bureau for the Environment. He warns against billions of losses in financial institutions if, for example, investments in the food sector are lost due to the disappearance of insects and crops.
“ Our climate and biodiversity are under great pressure and that leads to big risks that our financial system is not immune to,” said Elderson. The Dutch financial sector has a total of EUR 510 billion in loans and investments to companies that are at high or very high risk if certain ecosystems disappear due to, for example, the misuse of pesticides.
Three quarters of the food crops depend to a greater or lesser extent on pollination by birds and bees. If they go away, a large part of the food production is at risk, according to Elderson. Indirect consequences for the textile industry, for example, have not even been taken into account.
Elderson is also chairman of the organisation of 75 central banks that focuses on identifying the risks of climate change and biodiversity for financial institutions. Because of this work, he will almost certainly soon be appointed to the Executive Board of the ECB.
Elderson today called on banks, insurers and pension funds to make a similar deal as they did before in the climate agreement: “I challenge them to be the first in the world to make a biodiversity commitment and report on it annually.”
Rabobank Director of Sustainability Bas Rüter responded positively to the proposal, but pointed out that the degradation of biodiversity is much more difficult to identify than CO2 emissions. There are currently about eight different measurement methods without agreement on the correct one.
Elderson calls on financial institutions not to wait for this: “We can turn the tide yet, but we do not have the luxury to delay any longer. It is time to look around us and high time to abandon our destructive habits.”
Economy of the future
According to Elderson, governments should use the billions that are freed up for the recovery of the economy after the coronacrisis for greening. “There is a giga amount of money available to restore the economy, but the big danger is that we are rebuilding an economy that is increasingly damaging biodiversity. We need to build the economy of the future that is digital and sustainable, this is our chance to achieve that.”
Next year, Kunming will have a top of world leaders in China on combating the degradation of ecosystems and natural destruction. The aim is to conclude a convention in China on the protection of biodiversity worldwide, similar to the Paris International Climate Agreement.