The Finance for Biodiversity (FfB) Foundation has launched an updated version of its nature target-setting framework for asset managers and asset owners. 

Developed with FfB members, the guidance follows a beta version released in November, and seeks to help investors align financial flows with the Kunming-Montreal Global Biodiversity Framework to halt and reverse biodiversity loss by 2030.

The Finance for Biodiversity Pledge was launched in 2020 and boasts 177 signatories, including Amundi, Fidelity International, Legal & General Investment Management and Federated Hermes. Signatories commit to collaborate, engage, set targets and report on biodiversity before 2025.  

In 2021, the FfB Foundation was set up to “support a call to action and collaboration between financial institutions via working groups as a connecting body for contributing signatories and partner organisations”.  

Financial institutions that have signed the pledge can become members of the foundation if they want to be active in the working groups. There are currently 76 members. 

Among the updates to Wednesday’s document surround the types of nature targets for investors to set. 

Target reshuffle

The beta version outlined four types of targets: initiation, sector, engagement and portfolio coverage. 

The latest guidance proposes three types: initiation targets, optional monitoring targets and portfolio targets. 

The initiation targets would still see investors committing to assessing and disclosing their exposure to nature-related impacts, dependencies, risks and opportunities in line with the Taskforce on Nature-related Financial Disclosures recommendations.

It also recommends setting targets on governance. For example, an investor could commit to ensuring board or executive-level oversight of the management of nature-related factors by a certain year. 

Turning to the optional monitoring targets, these are designed to ensure investors monitor sector-relevant KPIs “across priority sectors and implement stewardship actions to address the identified key impact drivers on nature”. 

An example of a monitoring target would be the percentage of companies with a deforestation and conversion-free policy, while a stewardship action could see the investor determine the engagement universe of companies to target on nature. 

Finally, for the portfolio targets the Foundation suggests a two-pronged approach: setting portfolio sub-targets, as well as stewardship sub-targets. 

An example of a sub-portfolio target could be that by 2030 a percentage of firms from relevant sectors will have committed to implement a validated Science-Based Target for Nature.

A stewardship sub-target could see an investor commit to engaging with a certain number of companies per year on each of the relevant pressures on nature. 

“The portfolio and stewardship sub-targets are complementary and indissociable as the latter is the lever through which the investor will influence companies to reduce their pressures on nature thereby achieving the required reduction to meet KPI thresholds,” according to the document. 

Unified approach

Another key change since the beta version is the removal of beginner and advanced tracks, which had different timelines for achieving targets. 

Instead, the foundation now advocates for a unified approach to applying these targets over time.

“This adjustment ensures that all targets are set to be achieved by 2030, in alignment with the GBF’s mission to halt and reverse biodiversity loss. However, investors retain the flexibility to target shorter timeframes according to their specific goals,” it said. 

Currently the framework remains limited to listed equity and corporate bonds – additional asset classes, including sovereign debt, will be integrated into the guidance in future iterations. 

The foundation said it is also planning to create guidance on how to set positive impact targets. 

ENCORE update 

In related news, the ENCORE nature tool has had a major update.

Launched in 2018 to help financial institutions and companies understand how their activities rely on nature, ENCORE is a collaboration between Global Canopy, the UNEP Finance Initiative, and the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC).  

Previous updates included in 2019 when its functionality was extended to enable institutions to also assess their impacts on nature. 

One of the latest expansions is growing its previous list of 92 “production processes” to 271 “economic activities”.

These economic activities, ranging from livestock farming to the manufacture of chemicals and nuclear power production, “offer a more detailed breakdown on economic sectors”. 

It has also added information on key value chain links, covering two tiers of suppliers and two tiers of consumers for each economic activity, “enabling users to see their indirect nature-related impacts and dependencies”. 

“The release of an enhanced ENCORE methodological structure and knowledge base is more than just a procedural update,” said Neville Ash, director of UNEP-WCMC.

“The improvements come in response to pioneering users’ appetite to better understand how nature underpins their operations, and we encourage the business and financial community to use the tool to drive their decision-making towards a sustainable future – for economies, consumers and the planet.” 

The 21st replenishment of the International Development Association’s (IDA21) – the World Bank’s low-income lending arm – due to conclude in December, takes place amid a worsening debt crisis. Even if IDA21 lives up to calls from World Bank President Ajay Banga for record breaking funding, the unfolding debt crisis will likely limit IDA’s ability to provide highly concessional loans and grants to its low-income country (LIC) members.

When an IDA country faces debt difficulties, its loans can be converted to grants, though this support is capped according to unpublished country quotas. From 2020 to 2022, as LICs struggled with the exogenous fallout of the Covid-19 pandemic and their debt situations worsened, the ratio of grants- to- loans in IDA’s portfolio rose from one-fourth to one-third. IDA began converting loans of moderately debt distressed LICs to 50-year credits instead of its usual mix of credits and grants which, according to Clemence Landers and Hannah Brown from US-based think tank Center for Global Development (CGD), should restore grants to a manageable level.

However, according to Development Finance International, the current debt crisis is the ‘worst ever’, with many LICs now paying more on debt servicing than on health, education, social protection and climate combined, meaning this crisis could place significant strain on IDA’s funding model.

The strength (and weakness) of IDA’s funding model: market-based finance

Since its 18th replenishment (2017-19), IDA has issued market debt backed by its equity base, mostly comprised of its outstanding loans (see Observer Winter 2017). This approach has allowed IDA to grow its resources to $185 billion. In IDA20, $23.5 billion of donor contributions were leveraged into a $93 billion replenishment, $33.5 billion in borrowing and $36 billion in reflows via repaid debt from IDA members. As long as grants are less than contributions, IDA does not have to dip into its equity base – but if it does, it could cause a larger contraction in its loan portfolio because its equity is the basis on which it raises market finance.

According to CGD’s calculations, a moderate worsening of LIC debt dynamics would require at least $36 billion in grants over the IDA21 replenishment cycle, requiring an additional $12 billion in contributions compared to IDA20 to avoid dipping into IDA’s equity base. A significant worsening would require at least $45 billion in grants over the replenishment cycle, requiring an additional $22 billion, compared to IDA20. As donor contributions to IDA have fallen by 20 per cent in real terms over the last decade and, as CGD notes, many large donors have signalled that reaching even the level of their contributions for IDA20 may prove difficult, even the moderate debt crisis scenario could significantly affect IDA.

As debt repayments surge and capital flows turn net-negative, LICs have been forced to rely on IDA for affordable finance, while high-income countries have persistently failed to meet their 0.7 per cent GNP target for Official Development Assistance or agree on a new allocation of SDRs (see Observer Summer 2024).

Quality vs quantity

However, concerns about the size of the IDA21 replenishment should not obscure more fundamental questions of how effective IDA assistance has been: only 17 out of 81 IDA countries have graduated out of IDA eligibility since 1996 (see Observer Spring 2024).

IDA assistance remains linked to highly problematic policies that have a strong pro-liberalisation, deregulation and private sector bias. This has favoured profit extraction by international investors, been linked to the financialisation of Global South economies, and has failed to catalyse economic transformation (see Report, Financialisation, human rights and the Bretton Woods Institutions: An introduction for civil society organisations). This approach looks set to continue in IDA21, with the draft policy package released on 17 June containing numerous references to efforts to crowd in private finance into climate and development efforts.

“IDA is of critical importance for the 39 African states that rely on its financing. But just ensuring it can continue current levels of support is not enough,” noted Jane Nalunga of Ugandan civil society organisation SEATINI. “We need a better IDA, that actively supports their economic transformation, not just keeps them on life support, and to do this we need rich countries to increase their contributions to substantially reduce IDA’s reliance on market finance.”

She is, of course, referring to TikTok’s song of the summer, an anthem for women seeking rich men. “I’m looking for a man in finance / With a trust fund / 6’5 / Blue eyes,” the lyrics go.

Turns out, the song doesn’t exactly capture the prevailing mood in 2024.

NBC News reported from what’s arguably the nation’s prime hunting ground for the very man the song describes — Lower Manhattan’s financial district, the home of Goldman Sachs, the setting of HBO’s Industry, and of course, literal Wall Street.

At the watering holes around these mega banks, we spoke to about a dozen women who gave us the bottom line: they’re not necessarily looking for the finance guy. Though they wouldn’t mind someone who picks up the bill, and then some.

The catchy “Man in finance” tune fits the internet’s current relationship discourse like a tailored jacket. 

The song dredges up tensions about money and dating at a time when gender roles are constantly in flux, dating is expensive, women say they’re tired of compromising, and app fatigue is standing in the way of personal connection.  

‘Finance bros’ are boring, women say

“Man in finance” was first posted as a 19-second TikTok video in April by creator Megan Boni, a 27-year-old from New York. It’s since gotten over 50 million views, been remixed by DJ and producer David Guetta, and earned Boni a record deal.

But TikTok’s obsession with “Man in finance” has transcended the original video. Other creators have weighed in with tips on how to find this elusive finance, trust fund, 6’5, blue-eyed man. One graduate of Harvard Business School even made a video ranking the various finance jobs according to income, free time and likability. 

(Venture capital and private equity workers fall at the top of the list, she said, though they will likely mansplain constantly.) 

In some major cities, fringe single women have been seen taking to the streets, holding up cardboard signs with the song’s lyrics and beckoning men who match its description. 

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But despite the phenomenon that she created, Boni said that she, herself, isn’t actually looking for a man in finance. 

“I’m looking for someone with a dad-bod who understands my humor, lets me shine a little and balances me out,” she said. 

Financial District women concur. Surrounded every day by Wall Street bros, they say they can be summed up by a tailored suit, a backpack, an ego, and an air of hurriedness.

But their ultimate sin: men in finance are boring, young women said. 

“They’re like a warm glass of water, and I’d rather have something with a little more sparkle in it,” said Stella Mannell, 22. “They dress the same, you can always spot one… I’d rather have someone who’s fun and vibrant and exciting than someone who has a lot of money. I’d rather go on a date to McDonald’s than go to The Polo Bar with a super lame guy.”

Dothan Bar, 21, who works as an intern at an investment bank, said his co-workers are aware of social media’s collective stereotypes and the fascination with them — and they sometimes lean into the aesthetic to get girls. 

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“They take care of themselves very well,” he said. “It’s a job that shows a lot about your character and your ambition. … I know people who work 100-hour weeks in finance.”

He’s not a fan, he said, and he’s switching to tech after college.