A Nature-positive Economy
Karen Ellis, Chief Economist at WWF-UK, talks about the convergence of climate and nature and the emergence of industry sector transition pathways.
At COP26 in Glasgow, the then-Chancellor of the Exchequer Rishi Sunak announced plans for the UK to become the world’s first net zero-aligned financial centre.
Sunak applauded “historic” climate commitments from private companies, representing US$130 trillion in financial assets, saying they would help achieve the net zero transition – including a move away from coal, a shift to electric cars, and the planting of more trees.
“For the first time, the UK pledged to align the financial and private sectors with an environmental net zero goal,” Karen Ellis, Chief Economist at WWF-UK, told ESG Investor. “Since then, there’s been much work done on determining how to get there, including the private sector’s role in delivering on the commitment and the policy framework needed to support the transition.”
Also at COP26, Sunak proposed launching the Transition Plan Taskforce (TPT) to develop a ‘gold standard’ for private sector climate transition plans, which WWF-UK was asked to join. Both Ellis and WWF-UK CEO Tanya Steele are members of the TPT steering group.
As part of the taskforce, WWF-UK also led the Nature Working Group, which sets out how companies should think about nature when developing climate transition plans. “Including nature in transition plans is critical because we won’t achieve net zero without tackling nature loss,” Ellis argued.
The Nature Working Group’s second paper, published in April, promotes a shift towards holistic transition plans that should include both climate and nature goals. “More work is needed to get to the point where a holistic approach becomes possible, with well-defined targets and pathways to reach those targets,” Ellis added.
Specifically, she sees a clear definition of what constitutes ‘nature-positive’, as well as related performance metrics, as essential.
“We need to determine what is required to assess progress against agreed targets,” she added. “It’s not that there’s a shortage of data, but we haven’t yet established what the metrics should be.”
Several initiatives are already addressing this issue. For example, the Nature Positive Initiative, a coalition of 27 of the world’s largest nature conservation organisations, institutes, and business and finance organisations – including WWF – is developing metrics to measure overall progress towards the global goal of becoming nature-positive by 2030.
In addition, the Taskforce on Nature-related Financial Disclosures is in the process of defining what companies should think about and report on in terms of nature-related impacts and opportunities.
Sectoral pathways
Alongside the Green Finance Institute and UK Department for Environment, Food and Rural Affairs, WWF-UK is also working on nature-positive industry sector transition pathways.
Sectoral pathways to net zero emissions have already been established at both global and national levels, with each sector having been assigned specific science-based targets and deadlines to ensure they are on the correct trajectory. However, sectoral nature-positive targets have yet to be agreed.
“We are creating a concept and pilot approach to developing pathways for key sectors of the economy that impact nature, identifying what each [of them] needs to do to contribute to the goals set out in the Kunming-Montreal Global Biodiversity Framework (GBF),” Ellis explained.
She believes that identifying tangible targets will provide greater clarity for the private sector as to what a nature-positive pathway to transition looks like.
“Once the pathway is in place, companies can better incorporate nature into their transition plans,” she added. “It feeds back into integrating nature-positive transition plans into climate transition plans.”
As the new UK Labour government settles in, WWF-UK hopes it will also be prepared to jointly work on those sectoral nature-positive pathways.
“Ideally, this would be a government-commissioned framework that it is committed to supporting,” Ellis argued. “The government also needs to put in place the appropriate policies around the framework, so that it has credibility in the eyes of the private sector.”
The Labour Party has previously signalled a firm commitment to the country’s net zero transition, particularly around climate action. For example, its Green Prosperity Plan outlines how climate innovation and the shift to a net zero economy could be a source of economic growth – a viewpoint which Ellis shares.
“This is a massive opportunity for investment and growth in the industries of the future, as well as preparing the UK to weather the storm of climate change and the net zero transition,” she said. “But we need to see action as well, not just words, from the new government.”
As such, WWF-UK will be watching closely to see how quickly Labour delivers on its manifesto commitments. “We have the COPs [29 and 16] not many months away, which will be an indication of the government’s proactive intent and ambition,” Ellis added.
The COPs will also present an opportunity to set new ambitious proposals, and for the UK to show leadership on the world stage – a position that has waned in recent years.
Global rally
During London Climate Action Week (LCAW) in June, WWF-UK’s panel on the global roadmap for a nature-positive economy received much positive feedback, according to Ellis.
“This is an area with a dearth of clarity and a strong need for more discussion and thought leadership,” she said. “We decided to start the conversation at LCAW and then work with other players in the run-up to the COPs later this year, where we plan to launch the roadmap.”
Over time, WWF-UK is also hoping the strategy will be taken forward by multiple stakeholders.
“It is a huge agenda and we want everyone who has a role to play in creating a nature-positive world to be thinking about how they can best drive this forward, because we don’t have time to waste,” Ellis added.
While global 2030 goals for restoring nature loss have been set, the UK – and most likely other nations – currently isn’t on track to deliver on those – further building the case for urgent action.
The next international biodiversity meeting, COP16, will be held in Colombia at the end of October. This will be an important stage to get global buy-in around the nature-positive transition
“There is much discussion around scaling up finance for investment in nature itself, which is important, but that’s not the same as financing the nature-positive transition,” said Ellis. “We need to move away from nature-negative economic activities and products to more nature-friendly ways of doing business, including shifting production and consumption patterns.”
What’s needed for nature is a whole-economy shift – akin to the net zero transition, according to Ellis. She thinks that broader awareness around this would also help investment opportunities materialise.
“When we talk to businesses about nature-positive pathways, they get excited because it becomes more tangible for them,” she said. “It helps them think about potential investment opportunities in areas such as technology and business innovations – for example, new ways of producing food.”
At COP16, WWF-UK is also hoping to encourage countries to commit to the nature transition and work in lockstep to address governance issues outlined in its nature-positive economy roadmap.
“The roadmap discusses how to reform the global rules of the game, which governments will need to work together and with other players – such as multilateral development banks – to implement,” said Ellis. “That’s the discussion we would want to see happening at the COPs, particularly COP16.”
Next steps for the TPT
The TPT produced its final set of transition plan guidance and documents to help companies unlock finance for net zero transition in April.
The IFRS Foundation subsequently took over responsibility for the taskforce’s transition plan disclosure resources – a move Ellis says will help to globalise the standards and promote a common approach.
“It’s still very much a work in progress, as many countries have not yet made a commitment or mandated the standards, but the overall global direction of travel is established,” she added.
Those involved in the TPT process have been discussing how to capitalise on the work that’s been done on capacity building, and how to roll it out in other parts of the world – something Ellis describes as an “important next step”.
Another area of focus is the regulatory and policy framework around the implementation of TPT transition plans in the UK. As the framework isn’t yet mandated by law, this should be a priority for the new government.
“We need to ensure that regulators monitor the implementation of transition plans and enforce compliance, as well as put in place structures to assess and compare their quality,” Ellis continued. “Unless there are real incentives and support for companies to roll out ambitious transition plans, they may not be as effective as we’d hoped.”
Unlocking capital
Another work stream for WWF-UK is the promotion of a net zero investment plan, which would entail the UK government setting out policies and proposing financing mechanisms to unlock investment potential and help investors assess rates of return.
“Through collaboration with business and better mobilisation of private finance, and realistic dialogue about what can be achieved, we can go a lot further faster,” Ellis argued. “In recent years, much has been left to the market [in terms of doing] the necessary investment. But actually, more government support is needed to make the transition possible and profitable.”
Together with the net zero investment plan, the sectoral pathways should give the private sector confidence to invest more, Ellis hopes. These elements combined could also help the UK reach a tipping point in private investment for the green transition and sustainable growth.
“We are waiting with bated breath to see the new government deliver on some of its commitments and take ambitious action,” she said. “It’s a moment of excitement and hope.”
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