Estelle Parker

This week’s dire State of the Environment report should raise alarm bells to the Australian business and finance sectors, as the nation moves into further debt to nature, with deteriorating indicators across most measures.

The health of Australia’s natural environment is becoming a material financial risk and proxy for the state of our economy, given the significant interdependencies between the two: from agricultural industries to resources, from tourism to property, right through to financing and insurance.

The 2021 State of the Environment report shows the past five years have seen an alarming rise in threatened species, land clearing, extreme weather events, and destruction of Indigenous heritage, and that environmental decline is damaging human health and wellbeing. 

“For too long, nature has been relegated and seen as something out there beyond our cities, a place we visit only on holidays, or space that is preserved in our national parks” said Estelle Parker, Executive Manager of Programs at the Responsible Investment Association Australasia (RIAA)

“30% of Australia’s GDP is dependent on biodiversity and ecosystem services. It’s time we reject this outdated view and understand nature as an important asset upon which our economy is built and depends, alongside human, financial and manufactured capital which are already valued.”

Less prominent but nonetheless optimistically, the report also highlights where investments have made a positive impact. Individuals, NGOs and businesses are increasingly purchasing and managing large areas of land for conservation and building in the protection of nature into their business practices.

“There is global momentum amongst investors to better understand, analyse and value assets on the basis of the management of nature-related risks. Nature is beginning to inform the investment sector view of value in the same manner that carbon is impacting value and investment markets,” said Estelle.

“With over $1 trillion of assets now managed in Australia with consideration of environmental, social and governance (ESG) factors including nature related risks, no Australian business leader should be surprised when investors start knocking at the boardroom door, seeking to understand how these companies are managing their own impact on nature and biodiversity.

“Tracking the state of our environment should not be a concern solely of environmentalists, but rather should occur alongside regular analysis of other headline economic data.

“The State of the Environment report is a poor report card on current progress. Investors want to see the new Government strengthen and improve the health indicators of this critical national asset, and that our response must seek to be informed and in close partnership with First Australians.”

“The State of Environment report also provides a map of priorities and points to opportunities for us to develop nature-positive investments, in partnership with First Nations peoples, farmers, conservation and environmental organisations, business and investors, with the support and leadership of our federal and state governments.

“As the convenor of the Taskforce on Nature-related Financial Disclosures’ (TNFD) official Consultation Group for Australia and New Zealand, RIAA looks forward to working with all stakeholders, and would welcome engagement by this government, to build investor capacity and ultimately, protect our natural capital. This Group is bringing together business, finance, public sector and civil society organisations to drive engagement in nature-related business and finance issues. We’d invite government support for development and prompt implementation of a robust TNFD framework.

“We welcome the Albanese government’s commitment to provide a full response to the Samuel Review to make sure our environmental laws work better. Long-term protection of our unique natural capital, plus quality environmental data and analysis, will support investors to create and unlock nature-positive opportunities,” Estelle said.

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