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What is the Partnership for Biodiversity Accounting Financials (PBAF)?

Authors
Antoine VallierBiodiversity footprint expert
Marie-Anne VincentVP Strategy & Regulatory
Category
Climate Essentials
Topics
FinanceRegulations
Published
04 May 2023

The Partnership for Biodiversity Accounting Financials (PBAF) is a collaborative initiative that aims to develop a standard for businesses to measure and report their impact on biodiversity. It is a sister initiative of the Partnership for Carbon Accounting Financials (PCAF) and was established in 2019 by founding partners ASN Bank (part of de Volksbank), ACTIAM, FMO, Robeco, Triodos Bank and Triple Jump.  

Here’s what you need to know about it. 

There's a general agreement that we need to align financial investments with global biodiversity goals. The Global Biodiversity Framework established at COP15 has set 10 targets to help achieve these goals, and four of them are directly related to financing. To address this issue, industry stakeholders created the PBAF, which helps financial institutions get the information they need to make informed investment decisions. Currently, around 50 financial institutions with over $12 trillion in assets globally use the PBAF standard.

COP15

The 15th Conference of the Parties (COP15) was an international meeting held under the United Nations Convention on Biological Diversity (CBD) that aimed to establish a new global framework for biodiversity. The conference provided an opportunity for governments, NGOs, scientists, and industry stakeholders to come together to discuss the urgent need to protect biodiversity, set ambitious targets, and develop strategies for achieving them. The outcomes of COP15 were critical in shaping the global response to biodiversity loss and determining the future of our planet.

What are the main goals of the PBAF Accounting and Reporting Standard?

On June 14th 2022, PBAF presented the new standard for financial institutions. PBAF's primary goal is to develop the ‘PBAF Standard’, thereby supporting the consistency of biodiversity data. 

The PBAF Standard provides a detailed overview of approaches to assess and disclose biodiversity impact and dependencies. It also provides dedicated methodological guidance for biodiversity footprinting and how it can be applied to the seven asset classes below. 

PBAF cooperates and aligns with:

  • the Taskforce on Nature Related Financial Disclosure (TNFD)
  • the Science Based Target Network (SBTN)
  • the Capitals Coalition (CC)
  • the Align initiative.

What is a biodiversity footprint? Is it similar to a carbon footprint?

A biodiversity footprint is a measure of the negative effects that human activities, such as agriculture, mining, urbanization, infrastructure development and economic activities, have on biodiversity and our natural resources. It is similar to a carbon footprint, but instead of measuring the amount of greenhouse gases emitted, it measures the degree of harm caused to the natural environment and its biological diversity. A biodiversity footprint can take into account a range of pressures, such as land use, water use, climate change, and pollution, and can be used to evaluate the environmental sustainability of human activities. Positive actions can also be accounted for such as ecosystems restoration in the context of carbon sequestration projects.

What are the PBAF Asset Classes? 

Any financial institution can use the PBAF and its associated biodiversity footprint methodological guidance. PBAF recognizes that different types of assets have different levels of dependency and impact on biodiversity. The standard for footprinting currently covers the following asset classes:

  1. sovereign bonds

  2. listed equity and corporate bonds,

  3. project finance, 

  4. mortgages, 

  5. investments in green energy

  6. motor vehicle loans

  7. indirect investments

How does the PBAF Standard work?

The PBAF Standard works by providing a framework for companies and financial institutions to assess and report on their impact on biodiversity. The standard is based on four steps: Scoping, Impact Assessment, Dependency Assessment, and Mitigation and Management.

Scoping

The first step is Scoping, which involves identifying the key biodiversity-related risks and opportunities that are relevant to the company or financial institution. This involves identifying the ecosystems and species that are most affected by the company's activities, and determining the significance of these impacts.

Impact Assessment

The second step is Impact Assessment, which involves quantifying the impact of the company's activities on biodiversity. This includes assessing the extent and magnitude of the impact, as well as the likelihood and duration of the impact.

Dependency Assessment

The third step is Dependency Assessment, which involves assessing the company's dependence on biodiversity and ecosystem services. This includes identifying the goods and services that the company relies on, and determining the significance of these dependencies.

Mitigation and Management

The final step is Mitigation and Management, which involves developing strategies to mitigate the negative impacts of the company's activities on biodiversity and ecosystem services. This includes identifying opportunities to reduce or eliminate the company's impacts on biodiversity, as well as developing strategies to enhance the company's positive contributions to biodiversity.

How does the concept of double materiality apply to PBAF? 

The PBAF standard recognizes that biodiversity can impact both the financial performance of companies and broader societal and environmental contexts. This approach considers the direct and indirect impacts of a company's operations on biodiversity, as well as the potential impacts of biodiversity loss on the company's financial performance – a concept known as ‘double materiality’.

What is the difference between the TNFD and the PBAF?

The Task Force on Nature-related Financial Disclosures (TNFD) is a global initiative aimed at improving the transparency and disclosure of the financial sector's risks and opportunities related to nature. The TNFD was launched in June 2020 by a group of financial institutions, governments, NGOs, and other stakeholders who recognized the urgent need to integrate nature considerations into financial decision-making. The TNFD is modelled on the successful Task Force on Climate-related Financial Disclosures (TCFD) and seeks to provide a similar framework for nature-related risks and opportunities. 

The ultimate goal of the TNFD is to help companies and financial institutions identify and manage these risks, as well as to mobilize finance for nature-positive outcomes. In contrast, the PBAF focuses specifically on the measurement and reporting of biodiversity impacts and dependencies.

TNFD and PBAF are two different initiatives, but they are aligned and PBAF fits within the TNFD’s Locate Evaluate Assess Prepare (LEAP) framework. PBAF focuses on the “Evaluate” steps covering impact and dependency assessment, and also provides guidance for the steps before and after (Locate and Assess)."

What is the difference between the Align and the PBAF?

The Align project will assist the European Commission’s efforts to support businesses and other stakeholders in developing standardised natural capital accounting practices, including a standardised approach to biodiversity measurement. PBAF will translate the Align recommendations to the financial sector and adjust where necessary, in close cooperation with the PBAF Partners. 

What are the benefits of joining the PBAF?

The PBAF standard provides many reasons for financial institutions and companies interested in the economic impact of biodiversity to adopt its principles. One key reason is that biodiversity has a direct impact on climate change. Biodiversity loss can reduce the ability of ecosystems to sequester carbon, leading to increased concentrations of CO2 in the atmosphere and exacerbating climate change. 

PBAF enables organizations to demonstrate their dedication to not just reducing their carbon footprint, but taking broader action to protect our climate.

While transitioning to more sustainable business models can be challenging, the PBAF standard offers a clear and practical framework for companies to incorporate biodiversity considerations into their operations, and to realize the economic benefits of doing so. Ultimately, adopting the PBAF standard is not only good for the environment, but also for the long-term success and resilience of businesses and financial institutions.

How can financial institutions join the PBAF?

Follow the steps below to start collaborating with other financial institutions on the assessment and disclosure of biodiversity impacts and dependencies.

  1. Understand more about the objectives, scopes and implementation plans of the PBAF by exploring the website. This will give you a good idea of how your financial institution can benefit from joining the partnership.

  2. Send a request for the ‘Introduction to PBAF’ leaflet. On this page you will be explained the general steps in joining PBAF.

  3. Decide if you want to join as a partner or a supporter. Partners cooperate and share knowledge and their experiences in the various working group. They actively contribute to the development of the PBAF Standard, decide on the plans of action of PBAF (like the selection of topics for Working Groups) and receive active support on biodiversity impact and dependency assessment (like training and support in case studies). Supporters help to bring the objective of PBAF to life and receive regular updates on new developments in the area of biodiversity impact and dependency assessment in the financial sector.

How Sweep can help

PBAF highlights the need for effective internal and external climate governance – one that focuses on more than just carbon management. It all starts with impactful collaboration. 

Climate change and biodiversity loss are two faces on the same coin and need to be tackled together. Sweep already incorporates climate frameworks such as PCAF, TCFD and SBTi, and will be able to mirror the biodiversity requirements of the new relevant frameworks (SBTN, TNFD and PBAF).

Contact us to find out more about how we can help. 

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