Research

For the financial sector to become nature-positive new techniques for identifying business models that safeguard, enhance and integrate biodiversity need to be developed. 

The two complementary overarching goals of ‘greening finance and financing green’ – stated by the World Bank – require implementation strategies that reflect the capacities of investors to influence biodiversity outcomes.

MISTRA Finance to Revive Biodiversity (FinBio) is a partnership between academic and financial actors to create a platform designed for real-world impact.

The financial system depends on and impacts nature through its relationship to companies and how they are able to act. Nature underpins the economy and the financial system as it provides resilience, resources and ecosystem services. The loss of nature and biodiversity is a threat to the economy and financial actors as risks of natural hazards, shocks and conflicts increase, while resilience is eroded.

The financial system depends on and impacts nature through its relationship to companies and how they are able to act. Nature underpins the economy and the financial system as it provides resilience, resources and ecosystem services. The loss of nature and biodiversity is a threat to the economy and financial actors as risks of natural hazards, shocks and conflicts increase, while resilience is eroded. Finance has the responsibility and opportunity to understand this dependency and impact, and to steer its activities to support regeneration and protection of nature and biodiversity. Mistra FinBio positions itself to bring light to these connections and to develop actionable tools to guide a green development for finance sector actors.

We work in four core themes:

 

In this theme we will test and analyze different ways of measuring and describing biodiversity and how it is connected to finance. We currently see an increased interest in corporate biodiversity monitoring and a wide range of methods are now available for assessing impact.

However, there is no single metric that captures biodiversity or how it relates to people. In order to understand how changes in biodiversity impact financial systems we need to understand how social-ecological interactions shape biodiversity and, in turn, how changes in biodiversity impact human wellbeing and economic activity with knock-on effects on the financial system.

In work package 1, lead by Fredrik Rönquist, we will explore the potential of environmental DNA (eDNA) techniques to track and map biodiversity change in ways that produce open source data to inform financial decisions. We will also evaluate current frameworks for assessing corporate biodiversity impact in terms of what parameters they capture, and their scientific basis, verifiability and transparency.

In work package 2, lead by Juan Carlos Rocha, we will assess how local changes in biodiversity can be used to assess systemic risk through changes in ecosystem services, risk of ecological surprises and disruptions in key earth system processes.

There is urgent need for transformative change that reverses loss of biodiversity and degradation of nature. The financial sector holds a key in generating and directing capital to support this change but faces a three-fold threat in doing so: a lack of reliable market architecture, insufficient payment mechanisms, and shortage of funding. For finance to successfully support nature-positive change there is also a need for suitable performance indicators and incentive structures.

In work package 3, led by Ben Caldecott, we will conceptualize and develop a scientifically informed flexible biodiversity market architecture and funding mechanisms.

Work package 4, led by Beatrice Crona, builds on WP1-3 and 5 to develop a portfolio of scientifically grounded diagnostic tools for complex decision settings.

In work package 5, led by Garry Peterson, we will use scenarios and other futures methods to examine what novel risks and opportunities emerge in the interface between finance and biodiversity now and in the future, and develop scenarios of alternative pathways forward for finance & biodiversity.

Theme 3: Governing biodiversity finance and identifying biodiversity-related risk:

Finance will need to play an important role in supporting biodiversity, but we need to understand the potentially negative side-effects of any interventions. At the same time, biodiversity loss in itself poses a significant but poorly understood threat to economies and the finance sector. These risks need to be investigated and understood in developing well-functioning governance systems for biodiversity finance.

In work package 6, led by Joakim Sandberg, we will examine how governance structures that shape biodiversity-finance links, outcomes and risks, and evaluate ethical risks associated with biodiversity finance.

In work package 7, led by Mark Sanctuary, we will develop a novel transdisciplinary method for stress-testing the Swedish economy in relation to biodiversity, and assess transition risks related to international trade agreements.

The ultimate goal of our program is to support real innovation in and transformation of financial markets, in relation to biodiversity. We seek to transform current practices by developing new and innovative instruments for capturing and addressing biodiversity. To ensure that the research outcomes are useful in practice we will be working with seven carefully selected impact partners from different part of the financial system.

Work package 8, led by Megan Meacham, provides a platform for co-creation with impact partners to translate scientific research and outcomes from the other work packages into testable tools. The insights and outcomes from piloting and prototyping will also feed back to our work packages to inform the continued development of scientific theories and methods.

To top