Australian banks and super funds could badly hurt the economy if they don’t embrace their role as “protectors of nature”.
That blunt warning has been issued by the Australian Conservation Foundation, which has released a report tracking how financial institutions are addressing nature-related risks in their portfolios.
The foundation's Risky Business report found the banks and funds were viewing climate impact as a “materially financial risk”, but were slow in implementing strategies that would stop their money from being used to add fuel to the fire.
The foundation's analyst Audrey van Herwaarden said the “unprecedented” rate of natural decline had direct negative impacts on the economy, along with society.
“Most consumers don’t want their savings and retirement funds being used to provide loans or invest in companies that are engaged in deforestation or some other adverse impact on nature, but that’s exactly what is happening,” she told AAP.
“Most of us don’t think of banks and super funds as important protectors of nature, but financial institutions can play a key role in protecting the environment because they finance industries that have the most impact on it.”
The report is underpinned by World Wildlife Fund forecasts that predict Australia’s economy will be hit by nature’s decline, with GDP losses of $20 billion per year by 2050 due to impacts such as loss of coastal infrastructure and agricultural land.
It questions the super industry’s appetite for change, given just 40 per cent of firms have performed nature-related assessments, a slight increase from 30 per cent two years earlier.
The foundation found 70 per cent of super firms thought the highest level of responsibility for nature-related issues was “no one”.
That contrasts with banks, of which 60 per cent thought responsibility should rest with the board.
“Super funds in particular are lagging, and need to elevate nature risk to board level, transparently disclose their impact and dependency on nature and set public expectations of companies they invest in,” Ms van Herwaarden said.
"The financial system is built on the assumption that a healthy natural world will keep giving as it has always given, but as the crisis worsens, financial institutions will become more vulnerable if they do not acknowledge their role in harming or protecting and restoring nature.”
