With the help of a new indicator directory and resources platform launched recently, financial institutions around the world can now measure the positive impact of their investments in biodiversity conservation, adaptation, mitigation, forest protection, and sustainable livelihoods.
The Land Use Finance Impact Hub and its Positive Impact Indicators Directory, which were launched today by the UN Environment Programme (UNEP) Climate Finance Unit and the UNEP-World Conservation Monitoring Centre (UNEP-WCMC), were created with and for impact funds and sustainably focused financial institutions, and aim to support the rollout of effective industry frameworks to track the environmental and social impacts of land-use investments.
To successfully address the triple planetary crisis of climate change, biodiversity loss, and pollution, leaders are urging the world to become not only net-zero but also nature positive, for the benefit of both people and the planet. With the economic imperative to not only minimize impact but also restore ecosystems, this represents a true paradigm shift.
Banks and investors are becoming aware of this critical need and are seeking guidance and practical solutions to help drive nature-friendly land-use investments. The new tool will enable the finance industry to implement policy efforts and encourage capital flows into nature-friendly assets and activities.
Strong impact-measurement frameworks are critical for increasing public and private investor confidence, attracting diverse sources of concessional finance, and mainstreaming private capital in biodiversity conservation, climate adaptation, mitigation, forest protection, and sustainable livelihoods. They are consistent with the newly adopted resolution at the 5th UN Environment Assembly, which calls for a global focus on nature-based solutions.
"The new Land Use Finance Impact Hub, which follows the beta-framework release of the Task Force on Nature-related Financial Disclosures (TNFD), provides an important resource for financial institutions to ensure they are properly considering their environmental and social impacts."
"The Positive Impact Indicators Directory is a valuable and unique starting point for institutes to track their positive impacts – and aligns with the TNFD call for greater disclosure on nature-related opportunity identification and disclosure," said Matt Jones, UNEP-Head WCMC's of Nature Economy.
The Positive Impact Indicators Directory is a standardized shortlist of key performance indicators intended to cover fundamental aspects of long-term land-use investment, such as the natural habitat area that is effectively protected over time. It aims to assist end-users, such as impact funds, asset managers, and debt managers, in identifying and measuring the positive environmental and social impacts of land-use investments.
The UN Member States involved in blended concessional financing will also find this useful in tracking their impacts. The Directory also enables users to see how the proposed indicators relate to global goals, such as the UN Sustainable Development Goals, the Rio Conventions, and the UN Decade on Ecosystem Restoration, allowing financial institutions to track their positive environmental and social impacts at a time when the financial sector is under increasing pressure to influence the change required to address planetary crises.
In the early days of sustainable land use finance, each fund had its own set of project-specific Key Performance Indicators, making it difficult to aggregate impact results at the fund level and for financiers to identify where they could best invest their capital to achieve the desired impacts," said Ivo Mulder, Head of UNEP's Climate Finance Unit. "By taking a common and standardized approach, the Land Use Finance Positive Impact Indicators Directory is a first step toward resolving this challenge." It improves the efficiency of capital allocation in nature-positive assets, including sustainable land-use assets."
While the Directory provides a unique, targeted shortlist of indicators for positive environmental and social impacts, it is only one component of the Land Use Finance Impact Hub.
The Hub will host a number of expert discussions, information briefs, and external resources to educate decision-makers about various environmental and social frameworks. In addition to the current set developed with and for impact funds, the team hopes to expand the Positive Impact Indicators Directory to include indicators relevant to banks.
The Climate Finance Unit of UNEP, UNEP-WCMC, aims to make the Impact Hub the go-to platform for users seeking guidance and tools to ensure funds are spent efficiently, potential risks are mitigated, and impacts are measured, monitored, and reported on.
