#EUbiodiversity

Session 4: Biodiversity accounting for financial institutions, learn from the first movers

#EUbiodiversity

Common ground in biodiversity footprint methodologies for the financial sector

Joshua Berger, Environmental Economist at CDC Biodiversité

Roel Nozeman, Senior Advisor at ASN Bank

Common Ground in biodiversity footprint

methodologies

History of the partnership

Contacts through the EU B@B and initiative

on Platform for Biodiversity Accounting

Financials (PBAF) in the Netherlands

March 2018: launch of the informal working

group

Objective: establish a solid basis (common

ground) for a biodiversity footprinting

methodology for financials in 2018

Relevant for non-financial institutions (and

CDC Biodiversité works with about 20 non-FI

through the B4B+ Club, with an adapted

approach)

Why? The planetary boundaries

Why? The natural resource base & the SDG’s

Why? The sectors at risk due to biodiversity loss

Uses of biodiversity footprint assessments

1. CBD targets or national assessment

2. Portfolio / corporate assessment

3. Supply chain comparison

4. Product assessment

5. Project assessment

Uses of biodiversity footprint assessments

Requirements

Transparent & consensual

Understandable

Responsive to changes

Cover the most important pressures on biodiversity

Quantitative link between pressures and impacts

Complementary and compatible with local indicators

Relevance

Rigor

Consistency

Desired characteristics

Focused on biodiversity and

not just ecosystem services

(common and charismatic

species)

Cross-sectoral

Global

Covering the entire value

chain

Practicability

Methodological steps and inputs

Step 1 - Impacts in the value chain: scopes

Step 1 - Attribution to a portfolio or a holding

In line with the Greenhouse Gas Protocol’s approach

The attribution of the impacts must be consistent with the accounting choices of the entity assessed in terms of what it controls:

Financial control (>50%)

Operational control

Share of the debt and equity owned (pro rata)

Include scope 1, 2 and 3

Challenge of indirect investment and working capital

Step 4 - Investment policy options

To avoid, reduce and offset impacts:

Additional measures and safeguards are needed

Complementary indicators can provide guidance

For instance, for location-specific characteristics like

“Proximity of HCVA’s/protected areas” or “Presence of

endangered or threatened species”:

Company has a Biodiversity Management Plan in

place (e.g. area registered as a VCA)

Indicators: field ecological monitoring, Red List-

based indicator

Pic

ture

: David

Be

hre

ns

Converging for corporate & portfolio footprint assessments

and creating bridges beyond

Roel Nozeman, Senior Advisor Biodiversity - ASN Bank -

roel.nozeman@asnbank.nl

Joshua Berger, Global Biodiversity Score Project Manager –

CDC Biodiversité – joshua.berger@cdc-biodiversite.fr

#EUbiodiversity

Exploration of the biodiversity footprint of portfolios of corporate loans and listed equity

Robert-Alexandre Poujade, ESG analyst at BNP Paribas Asset Management

BIODIVERSITY ACCOUNTING FOR FINANCIAL INSTITUTIONS

EXPLORATION OF THE BIODIVERSITY FOOTPRINT OF PORTFOLIOS

ROBERT-ALEXANDRE POUJADEPARIS, NOVEMBER 29TH 2018

Biodiversity: pillar of our natural capital focus

18

What BNPP AM is engaging corporates on?

Assess impacts, risks and dependencies on natural capital, including topics such as water,

biodiversity, land use and soil depletion;

Identify impact, risks and dependencies on natural capital in corporates’ supply chain;

Set concrete, measurable and time-bound targets to track progress on natural capital indicators;

Start including the environmental externalities of business activities

What is natural capital?

The stock of renewable and non-renewable natural resources (e.g., plants, animals, air, water, soils,

minerals) that combine to yield a flow of benefits to people (Natural Capital Coalition 2016a)

19

Biodiversity: integrated in ESG analysis

WE HAVE ANALYSED IN THE PAST YEAR:

Consumer

Climate change,

forest, seafood,

plastic

MiningWater,

biodiversity and

Climate change

ChemicalsNatural capital

dependencies

and impacts

FinancialsNatural capital

dependencies

and impacts

Source: BNP Paribas Asset Management, August 2018.

Biodiversity: current engagements

20

Trademark, copyright, and other intellectual property rights are and remain the property of their respective owners.

FORESTS PROTECTION

Engagement in the cattle and soy value chain within the PRI-Ceres Investor Working Group

BNPP AM is a signatory of the Cerrado Manifesto

BNPP AM is member of the Technical Advisory Group of Zoological Society of London SPOTT Timber, Pulp and

Paper. SPOTT assesses 50 timber and pulp producers on the public disclosure of their policies, operations and

commitments to environmental, social and governance (ESG) best practice

OCEANS PROTECTION / PLASTIC POLLUTION

BNPP AM has endorsed the New Plastics Economy Global Commitment

BNPP AM is member of the PRI Plastic Investor Working Group

BIODIVERSITY PROTECTION

BNPP AM is member of the CDC Biodiversité B4B+ Club

that aims to create a biodiversity footprint tool for corporates

Exploration of the biodiversity footprint of portfolios

21

Preliminary results of the pilot with CDC Biodiversité

The portfolio assessed is Parvest Human Development, a sustainable and responsible

fund invested in companies helping to improve the quality of life for people all around the

world via responsible and sustainable activities focused on long-term growth.

The study includes 10 companies.*Retail trade, except of motor vehicles and motorcycles; repair of personal and household goods

Exploration of the biodiversity footprint of portfolios

22

Preliminary results per company: impacts range from about 1 to 5

Exploration of the biodiversity footprint of portfolios

23

Assessing the impact hotspots along companies’ value chain

Exploration of the biodiversity footprint of portfolios

24

Assessing the impact hotspots along companies’ value chain

Exploration of the biodiversity footprint of portfolios

14/12/2018TITLE OF PRESENTATION 25

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Retail 2 Hospitality 2 Hospitality 1 Retail 1 Retail & processing

Tier 1 impact per pressure

Climate change Spatial pressures and nitrogen depisotion (crops only)

Viewing the Tier 1 impact contribution by type of pressure (climate change or spatial)

26

Disclaimer

BNP Paribas Asset Management France, “the investment management company,” is a simplified joint stock company with its registered office at 1 boulevard Haussmann 75009 Paris,France, RCS Paris 319 378 832, registered with the “Autorité des marchés financiers” under number GP 96002.

This material is issued and has been prepared by the investment management company.

This material is produced for information purposes only and does not constitute:

1. an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or

2. investment advice.

This material makes reference to certain financial instruments authorised and regulated in their jurisdiction(s) of incorporation.

No action has been taken which would permit the public offering of the financial instrument(s) in any other jurisdiction, except as indicated in the most recent prospectus and the KeyInvestor Information Document (KIID) of the relevant financial instrument(s) where such action would be required, in particular, in the United States, to US persons (as such term isdefined in Regulation S of the United States Securities Act of 1933). Prior to any subscription in a country in which such financial instrument(s) is/are registered, investors should verifyany legal constraints or restrictions there may be in connection with the subscription, purchase, possession or sale of the financial instrument(s).

Investors considering subscribing to the financial instrument(s) should read carefully the most recent prospectus and Key Investor Information Document (KIID) and consult thefinancial instrument(s’) most recent financial reports. These documents are available on the website.

Opinions included in this material constitute the judgement of the investment management company at the time specified and may be subject to change without notice. The investmentmanagement company is not obliged to update or alter the information or opinions contained within this material. Investors should consult their own legal and tax advisors in respect oflegal, accounting, domicile and tax advice prior to investing in the financial instrument(s) in order to make an independent determination of the suitability and consequences of aninvestment therein, if permitted. Please note that different types of investments, if contained within this material, involve varying degrees of risk and there can be no assurance that anyspecific investment may either be suitable, appropriate or profitable for an investor’s investment portfolio.

Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its/their investment objectives. Returns may be affected by, amongst otherthings, investment strategies or objectives of the financial instrument(s) and material market and economic conditions, including interest rates, market terms and general marketconditions. The different strategies applied to financial instruments may have a significant effect on the results presented in this material. Past performance is not a guide to futureperformance and the value of the investments in financial instrument(s) may go down as well as up. Investors may not get back the amount they originally invested.

The performance data, as applicable, reflected in this material, do not take into account the commissions, costs incurred on the issue and redemption and taxes.

All information referred to in the present document is available on www.bnpparibas-am.com

BNP PARIBAS ASSET MANAGEMENT

14, rue Bergère

75009 Paris

bnpparibas-am.com

#EUbiodiversity

Sustainable finance, an emerging priorityThomas Verheye, Principal Advisor Green Finance & Investment at the European Commission – DG Environment

Sustainable Finance

An Emerging EU PriorityCurrent & Potential Future Roles for European Commission and Partners

Business & Biodiversity: Roadmaps to Positive Impact

Paris, 29 November 2018

Thomas Verheye

Principal Advisor DG ENV

European Commission

Sustainable FinanceAn "emerging" priority

• Sustainable Finance & Investment Today

• Sustainable Development Definition(s)

• Sustainable Development Volumes

• Sustainable Finance Drivers and Barriers

• Sustainable Finance Action Plan (Selected Financial Intermediaries)

• Other Sustainable Finance Actions

• Sustainable Finance & Investment Outlook

• Natural Capital Risks (and client preference for sustainability)

• Holistic Natural Capital (and Circular Economy) Investment Agenda

• Strategic Sustainable Finance Programme Options 2030

Sustainable Development Definition(s)Variants of the Triple Bottom Line ...

Sustainable Development Definition(s)Variants of the Triple Bottom Line (PPP, ESG,...)

You are Here(ENV,CLIMA)

Sustainable Finance Volumes TodayFinancial Markets

Sustainable Finance DriversRapidly Rising Natural Capital Risks

All

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ral

Assessm

entof N

atu

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Capital Ris

ks

2018

Wo

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Acco

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Kering,

Novart

is,

Philip

s,

Solv

ay,

PW

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E&

Y,

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G,

…

Moody’s

ESG

Heat

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Secto

ralAssessm

ent

of

Envir

onm

enta

lRis

ks

(air,

wate

r, land, and

bio

div

ers

ity)

2015,

2018

Sustainable Finance BarriersA complex policy landscape that poorly understood by investors

?+ / - *

Recent Sustainable Finance Action(s)Overview

• High-Level Expert Group on Sustainable Financeo Est.: 12/2016 (a.k.a. HLEG)

o Interim Report: 7/2017

o Final Report: 1/2018

• Action Plan on Financing Sustainable Growtho Est.: °3/2018 (a.k.a. Sustainable Finance Action Plan)

o 1st Implementing Package: 5/2018

o Expert Groups : 6/2018 – 6/2019

o Implementing Acts: 12/2019 – 12/2022

o > 2020: Sustainable Finance Platform

• Other actionso Working with IFIs and MS (EIB (Art 19), EBRD, EIR, OECD, G20, …)

o Working with sectors (water, waste, business and biodiversity, air quality, …)

o Working with countries, regions, cities (EIR, REGIO, …)

o Preparing the next MFF (LIFE, ESIF, InvestEU, tracking, sustainability proofing, …)

Helping ignorant investors understand the holistic green agenda (NC & CE)

Natural Capital Based Generally Accepted Environmental Accounting Standards

Identifying strategic actions and priorities to scale sustainable finance

o …

Current Sustainable Finance Action(s)COM Sustainable Finance Action Plan

Establish an EU classification system for sustainable

activities

1

Create standards and labels for green financial products2

Foster investment in sustainable projects

3

Incorporate sustainability in providing investment advice

4

Better integrate sustainability in ratings and market

research

6

Clarify institutional investors' and asset managers'

duties

7

Incorporate sustainability in prudential requirements8

Strengthen sustainability disclosure and (environmental)

accounting

9

Develop sustainability (low-carbon) benchmarks

5

Foster sustainable corporate governance and attenuate

short-termism in capital markets

10

1. Proposal for a Regulation Establishing an EU classification

system for sustainable investments (a.k.a. taxonomy) With Member States' Expert Group to ensure smooth exchange of information and Technical Expert

Group to advise COM on setting of (expires in 2020 when Sustainable Finance Platform tales over)

2. Investors' duties and disclosures Regulation to introduce consistency and clarity on how institutional investors, such as asset

managers, insurance companies, pension funds, or investment advisors should integrate ESG factors

in their investment decision-making process

3. Low-carbon benchmarksThe proposed regulation will create a new category of benchmarks (financial indices), comprising low-

carbon benchmarks and positive-carbon impact benchmarks, to provide investors with better

information on the carbon footprint of their investments

4. Suitability testEnsuring that investment firms and insurance distributors integrate sustainability preferences into

their "suitability tests" when offering advice to investors and that the products offered meet their

clients' needs

Current Sustainable Finance Action(s)COM Sustainable Finance Package May 2018

Current Sustainable Finance Action(s)Proposed EU classification system for sustainable investments (taxonomy)

Sustainable Finance OutlookEmerging Strategic Priorities

Sustainable Finance OutlookPromote holistic environmental risk assesmentAlong sound financial management principles

Reducing the

Natural CapitalFootprint

AirClimate, Air Pollution, Ozone, …

WaterPollution, Availability, Floods, …

LandDegredation, Fragmentation, …

BiodiversityLoss of habitats & species, …

2020-2030

Towards achieve the

"One Planet"Objectives (SDGs, Paris, EAP,…)

• Natural Capital Accounting Programmeo Corporate General Accepted Environmental Accounting and Report Standards (GEA2RS)

o Project Envinmental Accounting Guidelines (Sustainability Proofing)

o National Natural Capital Accounting (Beyond GDP), …

• Green Investment Needs, Analysis, and Outlook (GINA/O)o Investment needs relating to EU Environmental Acquis, SDGs

o Market appetite, gap, and barrier analysis, …

• Green Investment Promotion Programmeo Natural Capital and Circular Economy Investment Promotion Portfolio

o Natural Capital and Circular Economy Advisory Capability, …

• Green Investment Partnerships Programmeo Natural Capital Leadership and Learning Programme, …

• Othero Green Investment & Finance Training Programme (GIFT)

o Inclusive Green Investment Programme, …

Sustainable Finance OutlookPossible Priority Programmes 2030

Measuring & ManagingEnvironmental Impact & Dependencies

Sustainable Finance OutlookEnvironmental Accounting (cf also SFAP #9)

Sustainable Finance OutlookNC & CE Investment Promotion Portfolio

Thank you

Comments and Questions Anytime

Consolidate & Strenghten

Accelerate & Scale

Focus on the 95% not (yet) green

In Conclusion

#EUbiodiversity

Plenary discussion

• What are the methodologies available to assess the positive and negative impacts of investments and bank funding on biodiversity and the associated risks for financial institutions?

• How is the policy environment evolving regarding the integration of biodiversity into financial considerations?

• How can biodiversity footprint be used by financial institutions? How to look at no net loss targets?

#EUbiodiversity 29 November 2018 – Paris, France

Thank you!