Integrating Biodiversity And Social Inclusion Into G20 Sustainable Finance Taxonomies

In recent years, sustainable finance taxonomies have become a priority on many national and global policy agendas due to their great potential to direct finance flows to climate-friendly, environmentally sustainable, and inclusive economic activities. Taxonomies play an integral role in creating a common classification language that helps identify sustainable investments, foster greater standardisation, and enhance market transparency. Most of the 40 developing and adopted taxonomies around the world focus on climate change objectives, but only 12 of them consider nature loss. As over half of the world’s GDP – $44 trillion – is moderately or highly dependent on nature and its services associated with the loss of biodiversity, nature-related risks associated with the loss of biodiversity are identified as having significant macroeconomic implications; and failing to account for, mitigate, and adapt to these risks can affect financial stability. Similarly, social inequalities and existing vulnerabilities of marginalised groups are further exacerbated by climate change. However, only a few taxonomies have integrated social objectives so far, despite the multiple benefits of socially valuable investments that can improve livelihoods and community resilience. The G20 encompasses a unique mix ofdeveloped and emerging economies as well as biodiversity-rich producer and consumer countries. Therefore, the G20 countries should be at the forefront in developing comprehensive financing strategies aligned with nature- and socially positive outcomes. This policy brief, funded by the Post 2020 Biodiversity Framework – EU support project (a project funded by the EU and implemented by Expertise France) through the project “G20: Sustainable Finance for Nature and People”, analyses the current integration of biodiversity and social inclusion of land- and ocean-based activities in taxonomies and seeks to propose opportunities and recommendations on how to incorporate these aspects into the taxonomies of G20 countries and beyond.