The landmark “Nature Voices Pledge” is being launched by the African Natural Capital Alliance (ANCA), a collaborative membership organisation whose collective assets total US$390 billion.

Among its members are major financial institutions such as Standard Chartered, KCB, Equity Bank, Ecobank, Access Bank, DBSA, Zanaco, FirstRand, Investec, Sanlam, Old Mutual, CalBank, ICEA Lion and Fidelity Shield.

The Pledge commits the ANCA membership, which also includes governmental organisations such as the Ghana Ministry of Environment, Science, Technology and Innovation (MESTI) and civil society organisations including the African Wildlife Foundation, to support conservation and restoration efforts, integrate nature into their decision-making and promote sustainable financing solutions.

It comes amid growing evidence that the natural capital on which tens of millions of Africans depend is being lost due to factors including overexploitation, overpopulation, land-use changes and climate change. The value of the natural capital lost to Africa every year is estimated to be $195 billion according to the United Nations Environment Programme (UNEP).

The “Nature Voices Pledge” is to be announced at a Presidential Panel titled “Pioneering the Future of Nature in Africa” which is being hosted by the Africa Climate Summit 2023 on 5^th September 2023

The event, which is being supported by ANCA, brings together leaders from several African nations including the Presidents of Rwanda, Republic of Congo and Burundi, to engage in a high-level dialogue on the future of nature in Africa. It will provide a platform for African leaders to discuss key challenges, opportunities, and policy interventions aimed at promoting nature and biodiversity for sustainable development across the continent.

The ‘Nature Voices Pledge’ encapsulates the shared commitment of ANCA’s member institutions to prioritise nature-positive practices and integrate environmental considerations into their core operations.

It highlights three key principles that underline ANCA’s dedication to shaping a more sustainable and resilient Africa:

1. Acknowledging the Importance of Nature
2. Emphasizing the African Context
3. Assuming Responsibility

The Pledge also sets out a set of concrete actions ANCA members will take to achieve their nature-centred goals:

• Support Nature Conservation and Restoration
• Integrate Nature into Decision-Making
• Promote Sustainable Financing Solutions
• Strengthen Transparency and Reporting
• Support Alignment of Policies and Regulations
• Foster Collaboration and Knowledge Sharing

This historic commitment underscores the group’s urgency and conviction in driving transformative change toward a sustainable future for Africa.

Dorothy Maseke, Head of ANCA Secretariat and Lead of Nature Finance at FSD Africa, said: “We in Africa are privileged to live on a continent so rich in natural capital but we must also recognise that our economy and our well-being depends on using it sustainably. This landmark pledge signifies that the members of ANCA are determined to play our part by putting nature at the heart of decision-making, so we reflect its true value and drive investment into activities which conserve and enhance nature rather than destructive activities for short term gain.”

Kaddu Sebunya, CEO, African Wildlife Foundation, said: “As we stand on the cusp of the Africa Climate Summit, we come with a resounding message of hope, unity, and action. We support the Nature Voices Pledge and believe unity is essential to ensure the realisation of nature’s conservation in Africa for prosperity and future generations. At the African Wildlife Foundation we believe that biodiversity stands as a powerful ally in the face of our pressing climate challenges. We understand that acknowledging biodiversity’s pivotal role is the key to a harmonious future for both nature and humanity.”

A new report underlines the importance for financial institutions to unlock the potential benefits of investing in businesses that protect and grow nature.

Applying first-of-its-kind analysis to three private banks and the financial systems of Zambia, Egypt, Ghana, Mauritius, Kenya, and South Africa, the report shows that for the most exposed lending portfolios, for example, in Zambia and Ghana, nature-related risks in agriculture and extractives could almost double expected losses by 2030, wiping $millions off the value of their loan books.

These nature-related risks are comparable with climate-related risks seen in similar sectors.

The report shows that financial institutions could benefit by adjusting investment strategies towards nature-positive outcomes. For example, action to protect and grow nature and changes in consumer demand could likely create high-growth opportunities in agricultural commodities such as alternative proteins.

The report estimates that demand for crops relevant to alternative proteins cultivated in Africa, such as sugar cane and pulses, could be 15 to 36 percent higher by 2030.

The fast pace at which nature is degrading and the severe consequence of environmental tipping points make ambitious global consumer and policy action to address the nature crisis more likely.

In the scenario of ambitious policy action, nature-related impacts are material especially for the agriculture and extractives sectors and thus require immediate attention.

Equity portfolios could see changes in value between -2 percent and -5 percent for agriculture in most countries, and between +1 percent and -4 percent for extractives.

On current trends, Africa is moving closer to environmental tipping points such as the conversion of the Congo basin rainforest to savannah, disruption of the West African monsoon, dieback of coral reef in South Eastern Africa and the desertification of up to 45% of Africa’s land area. Such physical risks are complex and difficult to model but have the potential to make businesses unviable in sectors such as rain-fed agriculture, pharmaceutical research, and tourism.

An example is that water stress in the worst affected areas of Africa could lead to the prices of essential agricultural commodities increasing by between 15% and 30% by 2030.

Given the materiality of nature-related risks that the report demonstrates, African financial institutions are encouraged to engage with global standards for managing and disclosing nature-related financial risks, such as the Taskforce on Nature-related Financial Disclosures (TNFD).

The report represents the first application in a real-world setting of the LEAP Nature Risk Assessment Approach which was released for consultation by TNFD in March this year.

While it demonstrates that even at this stage in its development the framework can be used to generate actionable conclusions, financial institutions in Africa can feed into its development to reflect the particular challenges they face.

African regulators can also play a pivotal role by clearly communicating their plans regarding climate and nature risk management and a timeline for implementing recommendations on nature-related risk released by the Network for Greening the Financial System.

The report suggests that to effectively and holistically address environmental risks and opportunities, regulators and financial institutions could consider nature and climate-related risk together from the start as part of an integrated framework.

Mark Napier, CEO of FSD Africa:

“The impacts of shifting to a nature-positive society are material and already underway. There is significant upside to be captured but financial institutions must institute new approaches to portfolio management that get ahead of changing regulation, of consumer preferences, and of the huge economic damage threatened by tipping points in critical natural systems. Getting this right could tip the scales between growth and decline for portfolios across the continent.”

Robin Smale, Director at Vivid Economics by McKinsey:

“The nature crisis is just as urgent as the climate crisis, and demands swift action. By putting the TNFD beta framework into practice for the first time, our new research with FSD Africa demonstrates the exposure of the African financial sector to material opportunities and risks from nature loss. The critical understanding of the connections between nature, climate change and business can help financial institutions to build in resilience and capture opportunities presented by a net-zero and nature-positive future.”