Financiers can be Hong Kong’s superpower in biodiversity ambitions
Financiers are finally starting to recognise the significance of biodiversity and ecosystems, acknowledging nature’s profound importance to financial investments and economies. This relatively recent realisation is driven by the global surge in attention to environmental sustainability and climate change. Investors and bankers are learning that biodiversity and ecosystems are essential for both economic activity and people’s well-being.
For too long, we have taken nature for granted, ignoring its fundamental role in our lives. We have focused on the monetary aspect, emphasising the resources needed to acquire material possessions without duly considering their origins.
Biodiversity represents our planet’s natural capital and encompasses the stock of its invaluable resources. Ecosystems are the intricate interconnected systems that sustain life, providing vital services such as soil fertility, pollination, climate regulation, clean air and fresh water.
Numerous industries, including agriculture, fisheries, mining and energy, all depend on natural capital as the foundation of their businesses. Financiers are beginning to grasp the critical role of biodiversity and ecosystem services. Losing them would be catastrophic – people rely on them for survival.
Consequently, financiers, leading businesses, governments and even philanthropists are becoming interested in nature-based solutions to address climate change. Working with nature through protection, conservation and restoration, rather than against it, is evidently a more effective long-term strategy.
This paradigm shift requires a fresh perspective on managing natural capital, such as halting deforestation, restoring degraded areas through reforestation, reviving mangroves and establishing protected areas or seasonal restrictions to allow fish stocks to recover.
Financial professionals understand the concept of risk. They recognise the need to assess the potential impact of biodiversity damage or loss on businesses, investments and financial performance.
Integrating biodiversity risks into investment analysis and portfolio decision-making can reduce exposure to biodiversity-related risks, such as water scarcity for a drinks business, while also identifying new opportunities aligned with biodiversity conservation.
Financiers in Hong Kong are aware of the government’s plan to introduce a new Biodiversity Strategy and Action Plan (BSAP), to be updated with an eye to the COP15 UN Biodiversity Conference and the resulting Kunming-Montreal Global Biodiversity Framework. This framework acknowledges the urgent need to address biodiversity loss and sets global targets to be achieved by 2030 and beyond.
These targets will need to be localised by governments to enable the recovery of natural ecosystems over the next 20 years, with the aim of achieving the convention’s vision of “living in harmony with nature by 2050”.
Hong Kong’s authorities are naturally eager to engage with financiers and leading businesses in the creation of the city’s new biodiversity strategy. Still, the new-found interest of financial professionals and corporate leaders in nature conservation has been a surprise to government officials. Biodiversity and ecosystems used to be seen as topics of interest primarily for nature lovers and experts such as ecologists and arborists.
Indeed, businesses are already working with the local biodiversity community precisely because of their expertise, and together they have organised a non-government process to interact with the authorities on the Biodiversity Strategy and Action Plan. There is keen interest in how the government will foster innovation in biodiversity by enabling the collection, sharing and understanding of biodiversity data for nature-based solutions.
Investors are seeking out companies with innovative practices, such as property developers who integrate biodiversity into their projects. The backdrop to all of this is the effort of the public sector – the stronger the government’s plans, the more the private sector can add to them.
Sustainable agriculture as well as marine farming and aquaculture are also attracting investors’ attention. There is growing interest in local food production, such as in expanding local-regional oyster cultivation and branding it as a high-quality speciality from Hong Kong through rigorous science and certification.
Local nature-tech start-ups have attracted investments, such as from the Middle East to produce 3D-printed reef tiles. In addition, investors and business leaders are urging the government to invest in local nature conservation and recreational facilities to bolster Hong Kong’s international standing as a green finance and green tech centre.
This would include investments in country parks, marine parks and waters, and facilitating activities that connect people to nature, such as hiking, swimming, yachting, sailing, boating, kayaking, fishing and organising local and international competitions that embrace Hong Kong’s natural environment. For international investors to want to relocate to the city, they have to see strong conservation and nature-based recreation.
Strengthening the enforcement of laws against wildlife crimes in Hong Kong is also essential, given the city’s reputation as a trafficking hub for endangered species. The private sector, including banks, can help to trace the flows of money to fight the trafficking.
Additionally, it is an opportune time for the government and universities to invest in studies related to ecology and sustainability, to expand and strengthen the city’s talent pool in biodiversity. This will align with the city’s long-term growth areas blending data, finance and business – capabilities that will serve Hong Kong well in helping to raise green funding for Asia.
Hong Kong stands to reap numerous benefits by adopting such a comprehensive approach since it already has significant biodiversity expertise. Embracing biodiversity conservation and integrating it into various policies and sectors can lead to enhanced environmental sustainability, improved climate adaptation and strengthened economic resilience.
The collaboration between financiers, businesses, government, universities and ecology experts will encourage innovation. By facilitating collaborating on the Biodiversity Strategy and Action Plan, Hong Kong can position itself as a model for balancing economic growth with environmental stewardship.
Contributed by Prof. Christine Loh. The article was published on SCMP:
