Building Bridges 2024: integrating nature into financial decision-making

Building Bridges 2024 – the fifth annual gathering in Geneva of climate-focussed policymakers, NGOs, and corporate, scientific and finance leaders – began with an urgent warning. Speaking at the marquee opening Summit, Professor Johan Rockström, Joint Director of the Potsdam Institute for Climate Action Research, said: “We are not just witnessing a climate crisis, we are now risking the stability of the planet’s life-support systems. 2023 has been the most expensive year in modern human history due to extreme weather events – droughts, floods, heatwaves, storms, and fires – costing over USD 200 billion globally¹.”

However, while the warning was stark, there was also good news. Kickstarting what was to become a key theme of the four-day conference, he noted that transitioning to a sustainable world presented an opportunity to create new economic value.

 “The direction of travel is clear,” he said. “This transition is not about sacrifice. It’s about creating a more secure, advanced and competitive society. Being a leader in areas like carbon neutrality, biodiversity, and water resource management will define market winners in the future.”

Building new bridges… and preserving existing ones

Denis Pittet, Lombard Odier Managing Partner, attending in his position as President of the Geneva Financial Centre, expanded on this point. “Taking sustainability into account in financial decisions can meet three objectives – financial performance, values alignment, and positive change,” he said. “Around USD 3.2 trillion a year in investment is needed to halve global warming.² Finance on that scale is impossible to achieve without mobilising private capital.”

Read also: Silencing the doubts: the unstoppable rise of sustainable investing

To accelerate this mobilisation, Nik Gowing, Summit host and Founder of Thinking The Unthinkable, explained that events like Building Bridges are essential for maintaining sustainable finance ambition and expanding connections across industries and sectors, building bridges between the finance world and areas where investment is most needed.

However, he said, building new bridges is not enough, it is also essential to maintain existing partnerships and make sure they are actively used to further the transition. Patrick Odier, Chair of Building Bridges, agreed, “Let us also focus on preserving the bridges we’ve already built, and ensure the highest level of ambition remains our guiding principle,” he said.

Around USD 3.2 trillion a year in investment is needed to halve global warming. Finance on that scale is impossible to achieve without mobilising private capital

Making the business case for circularity

In a conference panel devoted to promoting the growth of a circular economy, Felix Philipp, Head of Circular Economy Research at Lombard Odier Investment Managers, picked up on Professor Rockström’s theme of value creation.

“The transition will be challenging,” he said. “However, it also represents a tremendous opportunity for those who take the lead. For companies […] it opens the door to […] building competitive advantage and addressing rapidly shifting value pools. For investors, there’s a whole wealth of new investment opportunities materialising before our eyes – from new, high-performance materials to advanced supply chain management.”

Speaking at the same panel, Julia Binder, Professor of Sustainable Innovation and Business Transformation at IMD Business School, agreed, saying, “We’ve positioned the circular economy in the realm of sustainability – that’s wrong. We must identify the business case. The businesses that are successful in circularity see it as a means to profitability and growth. It needs to not be something we do for good, but to future-proof our business and tap into exciting new market spaces.”

The transition will be challenging. However, it also represents a tremendous opportunity for those who take the lead

Farming – from carbon source to carbon sink

This theme was further highlighted by Michael Urban, Lombard Odier Chief Sustainability Strategist, in the context of nature and restoring natural landscapes. In a keynote speech, he invited the audience to consider, “What if it could be more profitable to regenerate nature than to deplete it?”

The Forest, Land and Agriculture (FLAG) sector, he explained, is responsible for 90% of deforestation and one third of all man-made emissions.³ By switching from industrial monoculture farming to regenerative agriculture, this paradigm could be turned on its head, moving the sector from being a net emitter to a net carbon sink. 

However, he continued, the environmental benefits alone are not enough to drive long-term change. “It has to boil down to a compelling investment proposition. We have the firm conviction that there is a business case for this new way of producing agricultural products. We can significantly improve the P&L of a fully integrated consumer staples model, increase cash flows upstream, and also achieve better returns for corporates and their investors.”

Read also: Feeding the Future – food solutions for climate and biodiversity

What if it could be more profitable to regenerate nature than to deplete it?

Closing the ‘nature finance gap’

This focus on nature became another key topic of the conference. At a panel exploring how biodiversity concerns can be embedded into portfolios, delegates heard that USD 208 billion is invested in nature each year⁴, but that this must rise five-fold by 2030 if we are to close the nature finance gap and achieve the goals of the Global Biodiversity Framework⁵.

The good news, according to Jessica Smith, Nature Lead at the United Nations Environment Programme Finance Initiative, is that the corporate and finance spheres are increasingly grasping the nature nettle. While just a single member of the financial ecosystem attended COP14 in Egypt, she said, 5,000 attended the recent COP16 in Cali, Colombia.⁶

Echoing this sentiment, Lauren Ferstandig, Managing Director at NatureVest, The Nature Conservancy, said, “We’ve seen a groundswell of interest over the last three years in particular. We’re on a cresting wave of green impact investing.”

Regulate to accelerate

To turn this wave into a flood, many conference delegates highlighted the importance of financial regulation and corporate reporting requirements. Ebba Lepage, Head of Corporate Sustainability at Lombard Odier, explained that today’s reporting frameworks are still in their infancy. This presents difficulty, but for those willing to take the lead it also offers the chance to shape the regulatory future.

The EU’s Corporate Sustainability Reporting Directive (CSRD) – which requires listed and large companies to make a wide range of non-financial disclosures – has become the most significant new framework, she noted.

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Here, the collaborative approach exemplified by the Building Bridges Summit has been key. Lack of clarity in the CSRD, she explained, meant experts from banks that might ordinarily be viewed as rivals were working together to put the new regulations into action and push for further policy support. “Our view is that a lot of work needs to be done through discussion,” she said. “We’re part of the first generation figuring it all out.”

Read also: Supporting the transition towards a nature-based economy

The holistic approach – integrating a ‘just transition’

The conference also explored the need for a holistic approach to the sustainability transition. Just as nature has joined climate change as a central pillar of the transition, delegates heard, so, too, must social justice.

In the closing panel of the conference, Karen Hitschke, CEO of Building Bridges, said, “Climate, nature and the social question are all one. We need to integrate these things. From a purely pragmatic point of view, we need to invest in the Global South because many of the mineral resources for the transition, and the largest carbon sinks and sources of biodiversity, are in the Global South. If we don’t invest there, we won’t transition.”

Michael Urban repeated this call, explaining that a shift to regenerative agriculture would cut out many intermediaries and redistribute value to the farmers and producers themselves, many of whom are in the Global South. This, he said, would “unlock the socially-inclusive aspect of the nature-based business model.”

The transformation has started. Whatever happens now, it won’t be stopped

An unstoppable transition

With the re-election of President Donald Trump in the US, and recent EU elections marked by a so-called ‘green-lash’ against some sustainability policies, the conference debate was also marked by concerns over whether today’s volatile geopolitical environment could undermine sustainable investing.

As the conference came to a close, Felix Wertli, Switzerland’s Ambassador for the Environment and Head of International Affairs Division at the Swiss Federal Office for the Environment, sounded a positive note. Having returned from the stalled global plastics treaty negotiations in South Korea shortly before the conference, and with November’s COP29 still fresh in his mind, he noted that while recent international sustainability negotiations had made less progress than some observers had hoped, there had – crucially – been no backtracking from the landmark COP28 agreement to phase out fossil fuels.

With his finger firmly on the pulse of global policymaking, he looked ahead to what investors can expect from next year’s COP30 in Belém, Brazil. “Some countries have struggled to attract investment because of the economic environment,” he said. “I expect major achievements in that regard at COP30. We will see a decision on how we create an environment for investment. The transformation has started. Whatever happens now, it won’t be stopped.”