Over the past few weeks working on this project, I’ve found myself questioning something deeper than reporting standards or disclosure requirements. Why does finance respond quickly to climate metrics, but hesitate when it comes to nature? Through this project in the sustainable finance and stewardship policy sector, I am working with a government-supported initiative industry that aims to incorporate the “nature” factor into financial decision-making.
This industry plays an important role because it helps shape standards for how financial institutions around the world integrate nature-related issues into their business models, and more importantly, why they should do so. Our project focuses on conducting a market analysis to understand why financial institutions choose to apply nature-related principles, and under what conditions they are willing to go further with disclosures and stewardship commitments. As the project progresses, I have come to realize that this is not only a technical or regulatory question, but also a philosophical one, that is rooted in the core of business awareness of its duty and obligation to give back to what it has directly or indirectly taken from nature.
I learned through this project the core answer to the question in the first paragraph that to quantify climate is much easier to do, because it is calculated using known units, using CO2 equivalent. Unlike climate, nature requires a more complicated commitment, because it is even harder to defend what we are trying to save, especially in a world of finance where everything is expected to be quantifiable. The project asks us not only to seek the answer to “why,” but also to identify the distinctions within that “why” across developed and developing markets. If there are meaningful differences in why certain markets are more willing to implement nature-related integration into business practices, that insight would allow the company I am supporting to design a more suitable framework, the one that attracts broader participation. In the long term, this could help transition the flow of capital away from nature-negative outcomes and toward nature-positive outcomes for the planet and society.
As someone who previously worked as a sustainability strategy and reporting in a financial institution, I myself understand why it is difficult for financial institutions to prioritize this kind of principle. It goes back to the same reason mentioned above: it is hard to quantify and defend to the stakeholders. During our meetings, the eye-opening philosophical statement shared from the client was that real change, at its core, requires a shift in mindset about nature. This shift can empower behavioral change within companies and enable greater transparency, innovation, and collaboration, which in turn can create stronger and more lasting impact.
Like many other sustainability-related issues, the core “why” often comes down to a change of mindset. Businesses need to look beyond the negative impacts they are capable of creating, even if they are still operating legally, because many of these expectations are directives or in other terms of what I learned in my Business & Climate Change class, as “soft law” rather than binding “hard law”. My expectation from this project is not only to understand the reason “why,” but also to influence the implementation of “how” nature can be integrated into finance for a better future, and to be able to defend it in terms of long-term financial value. Overall, this experience feels like a walk-the-talk journey.