Promoting biodiversity awareness within financial institutions
A focus on pro-biodiversity business investment
The European Task Force on Banking, Business and Biodiversity has as a focus the encouragement of pro-biodiversity business investments in Eastern and Central Europe and the Caucasus; the Task Force is favourable to the principle of targeted support for these investments from the major European financial institutions. This is in line with the Kyiv resolution on Financing Biodiversity, which calls for the establishment of Biodiversity Financing Facilities through which the major European banks will work directly with local financial intermediaries to encourage the establishment of biodiversity-related business enterprises.
The business case for biodiversity investment was made (IUCN/WBCSD, 2004), a technical assistance structure to support biodiversity investment was proposed (EBRD, 2005), and the Terms of Reference for launching this structure were developed (ECNC, 2005). The immediate objective was to provide for capacity development in local enterprises and financial intermediaries, so that pro-biodiversity business investments took place. For this purpose a Biodiversity Technical Assistance Facility (BTAF) was created, geared to developing entrepreneurial potential in the targeted countries.
The importance of financial intermediaries at the national level
Part of the pump-priming exercise must also, however, be in terms of preparing the financial intermediaries to work with the international financial institutions (e.g. EIB, EBRD) and the larger banks which operate internationally (Deutsche Bank, Rabobank Nederland). The local financial intermediaries are best placed to play a proactive role in encouraging pro-biodiversity business ventures. They are the ones who can make targeted individual loans available on the basis of the global loans that the larger financial institutions can provide. They are the ones who will examine the feasibility of all investment proposals received, and who are able to obtain and process the personal details for assessing the creditworthiness of potential investors.
If local financial intermediaries are not prepared for seeking out and pushing forward pro-biodiversity business opportunities, or if they have an unreasonable appreciation of the nature of the risks involved, then their unwillingness to follow up on the availability of international financial support will effectively jeopardize any effort to stimulate pro-biodiversity business operations, even if this effort is made at a European level.
Filling the gap while the BTAF is being set up
Although one of the purposes of a Biodiversity Technical Assistance Facility (BTAF) is to provide such capacity building for local financial intermediaries, the interest of European banks to work with local financial intermediaries on promoting pro-biodiversity business is now maturing even before the establishment of the BTAF. The difficulty encountered turns out to be, however, the identification of local financial intermediaries in EECCA countries that are prepared to become involved. This difficulty discourages the establishment of a Biodiversity Financing Facility (BFF) by a bank.
An immediate need, therefore, is to begin to involve managers of financial establishments operating at the national level with the whole concept of pro-biodiversity business investment that has been developed by the European Task Force on Banking, Business and Biodiversity. This need became apparent during the meeting of the European Task Force on Banking, Business and Biodiversity, hosted by the European Bank for Reconstruction and Development on 3 November 2005 in London. Both the EBRD and EIB are beginning to work with local banks in eastern countries, and their experience has been that the managers of local financial institutions become truly interested in making an additional effort to adapt to the specific constraints of biodiversity-related investments; but there is an information effort to be made up front to gain their commitment.
A prototype capacity-building opportunity for EECCA bank managers
Thus, a priority in the Task Force is to bring these EECCA financial establishments into the EBRI (European Biodiversity Resource Initiative) framework, and this exercise in capacity building requires an awareness-raising and training component. For this reason ECNC organized a pilot seminar for managers of selected financial establishments in order to familiarize them with the BTAF programme. This seminar was held in Zagreb, with logistical support from UNDP and the financial support of the Swiss Government. Both the business case for biodiversity and BFF / BTAF operations were explained to an audience of 40 bankers and several representatives of government agencies and NGOs.
The primary outcome of the seminar was a common understanding of what pro-biodiversity business opportunities are all about as well as the European framework being developed (because of EBRI) to provide financial support for such a line of investment in the EECCA region. The secondary outcome was the development of a prototype seminar format for awareness raising that can be implemented on successive occasions by the Biodiversity Technical Assistance Facility once it is in operation.