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Cambridge Institute for Sustainability Leadership

The Dasgupta Review 2021

2 February 2021 – The Dasgupta Review is an independent, global review on the Economics of Biodiversity commissioned by HM Treasury to explore the sustainability of our engagement with nature. Here the University of Cambridge Institute for Sustainability Leadership (CISL) responds to the review and captures an overview of its findings.

The aims of the report, led by University of Cambridge Professor Sir Partha Dasgupta and released today, were to assess the economic benefits of biodiversity globally, assess the economic costs and risks of biodiversity loss, and identify a range of actions that can enhance biodiversity and deliver economic prosperity.

Dr Nina Seega, CISL's Research Director for Sustainable Finance and part of the peer review team for the Dasgupta Review, said:

"The Dasgupta Review's focus on completely rewiring mainstream economic and financial models is key to moving the nature debate onto the agenda of governments, financial regulators and individual financial firms. It is especially pertinent to take the opportunity presented by the COVID-19 crisis to reflect on and align the underpinnings of our economic and financial system with a sustainable future.

"However, if we are to learn from the climate journey, we cannot rely on public policy and financial regulation alone to deliver change at the pace required. From the very start, a more structural involvement of private financial capital needs to be mobilised - alongside blended capital, supported by multilateral development institutions. This requires action from private financial institutions and global corporations that includes: embedding nature in their operational and business strategies; understanding, measuring and managing nature-related financial risks; calculating the impact of their activities on nature as well as directing capital towards nature-based solutions.

"The review provides us with a firm foundation for this work and enables us to move from commitment to nature restoration and protection to fully embedding nature in our economic and financial systems.”

The Review has been released ahead of the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity - an international biodiversity summit taking place in Kunming, China in 2021 and the 26th meeting of the Conference of the Parties on climate change, where nature and nature-based solutions to climate change are expected to play a prominent role.

CISL overview of The Economics of Biodiversity: The Dasgupta Review

The Dasgupta Review is a seminal overview of the economics of biodiversity. As such it lays out the argument for changing our lives as well as transforming our economic and financial systems to fully account for nature. At its core, the Review makes the argument that nature is not external to our activities but rather that we are embedded in nature. Arguably, our survival as a species depends on nature’s ability to provide for us and thus on protecting and restoring nature.

The Review proposes three overarching options to enable this transformation: aligning our demands on Nature with its supply (as well as increasing Nature’s supply from its current level), changing our measures of economic success and transforming our institutions and systems to build a sustainable path forward. The Review’s focus on completely rewiring mainstream economic and financial models is key.

At CISL we have long looked at rewiring the economy as a foundation for a sustainable future. In this regard, the call to move away from GDP towards measures that would include climate, nature and wellbeing of people will counteract the short-term orientation of GDP as well as the continued focus on economic growth without any regard to the depletion of our stocks of natural assets and their proximity to planetary boundaries. The one silver lining of the COVID-19 crisis is the wider societal re-opening of this conversation about the limits of GDP, as the one number that drives our economic and financial system and yet does not incorporate any wider environmental or social considerations. The Review further highlights that it does not reflect sustainable economic considerations either – in terms of managing our assets, and no longer neglecting our natural assets.

The focus on the financial system as one of the most important levers for facilitating change in the wider economy is crucial. Here the Review discusses the need for public and financial regulatory policy, for disclosure regulations and standards and the importance of blended finance. The Review highlights both public and private financial actors need to play a role in ensuring a significant reorientation of financial flows and better management of nature-related financial risks and uncertainty. However, the strength of the argument for changing the financial system places too much emphasis on government actors.

We desperately need public and financial regulatory policy in this area, but if we are to learn from the climate journey, we cannot rely on those instruments to deliver change at the pace required. Therefore, much more structural involvement of private financial capital - as well as blended capital, supported by the multilateral development banks - needs to be mobilised.

In this area, four connected approaches need more focus:

  • The business view which addresses the operational and strategic concerns of the business as it develops a biodiversity strategy.
  • The focus on explicit measurement of nature-related risks, where we can and should expect more from private financial institutions. We need to go beyond an implicit calculation of nature-related financial risks to an explicit one. Both the Banking Environment Initiative and the Investment Leaders Group have been working on a framework that would enable financial institutions to incorporate biodiversity loss and land degradation into mainstream financial risks frameworks (previous work on financial materiality of these risks can be found here) and will be publishing both the framework and use cases of its application in 2021.
  • Learning from pre-existing examples of leadership from financial institutions within the opportunities space of nature-related finance

The Economics of Biodiversity: The Dasgupta Review serves both as a fantastic foundation and a call for acceleration of work on fully embedding nature in our economic and financial systems. CISL has been working on this intersection in the areas of business strategy, impact, risks and opportunities and we look forward to continuing to drive research and action to support leadership in nature-based finance and economics.


Click here to read The Economics of Biodiversity: The Dasgupta Review.

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