
Banking on the HCV Approach
Can the HCV Approach boost the financial world’s drive for biodiversity conservation?
Can the HCV Approach boost the financial world’s drive for biodiversity conservation?
In general, financial institutions cannot boast with a great record of environmental protection, as recent reports point out that top financial institutions have been funding industries driving mass extinctions and biodiversity losses, or have been unable to track whether the activities they finance are harming the natural world. One of the reasons invoked is banks and other financial actors are not well equipped to understand and therefore reduce the impact of their lending portfolios on biodiversity.
Global food production, mining, infrastructure, forestry, tourism and relocating goods and people are among the top activities fuelling the global biodiversity crisis, and most often these are backed up by financial institutions. Unsustainable practices from land use change alone are leading to an estimated loss of ecosystem services between $4 and $20 trillion USD annually, according to Portfolio Earth, a new initiative born out of rising concerns that the financial sector is not taking the environment seriously and is providing capital to activities that are harmful to biodiversity.
But using the HCV Approach to identify which High Conservation Values (HCVs) may be ultimately affected by development driven by loans and investments could help these stakeholders reduce their environmental liabilities and help them to actively contribute to global sustainability goals. Although HCV protection is already part of financing commitments and policies, many banks and other financial institutions are still short of the capacity and knowledge to implement the Approach.
Why should finance use the HCV Approach?
Increasing momentum for environmental action is starting to put financial institutions under pressure unless they focus their practices on providing benefits for nature and people.
In November 2020, as part of the Finance in Common Summit, 450 public development banks pledged to shift their strategies, investment patterns, activities and operations to help achieve the Sustainable Development Goals (SDGs) and the Paris Agreement targets. At the same time, increasing media coverage of banks responsible for financing projects leading to biodiversity loss and climate change across all industries and sectors is also creating reputational risks for finance.
But legislation is also pushing for a change. In March 2021, the EU enforced its “Sustainability-related disclosures in the financial services sector” regulation (SDFR), which compels investors and asset managers selling financial products or services on the EU market to disclose the environmental impacts of their investment portfolios and loans. By the end of this year, the EU’s Taxonomy regulation will also establish what activities can and cannot be labeled as “green”, where “green” means contributing significantly to climate change mitigation and adaptation, while avoiding harm to biodiversity and ecosystems.
Who uses the Approach?
To date, there are at least 14 financial institutions – investment banks, insurance companies, pension funds, asset management bodies, foundations and trusts and public development banks - mentioning HCV commitments or provisions. Most of them are related to agribusiness, in particular to forestry and palm oil, as well as to cocoa, coffee, tea, cotton, pulp and paper, rubber, soy, and sugarcane. Some of them will invest only if the entity seeking funding will have Forest Stewardship Council (FSC) and Roundtable for Sustainable Palm Oil (RSPO) membership and/or certification.
A handful of financial institutions across South-East Asia have specifically committed to not finance deforestation, according to Jonas Aechtner from WWF Germany, present at the HCV Summit finance panel, who says that the implementation of commitments is key and that conducting HCV assessments can be a helpful tool to act on those commitments on the ground.
At the same time, more and more financial institutions are starting to name and shame companies breaching investment provisions for environmental and social issues across supply chains. Yet, he notes, the institutions should also disclose their processes for monitoring client compliance and progress on time-bound action plans as well as the steps taken in case of non-compliance or failure to make satisfactory progress towards achieving these plans.
How can the Approach help?
When it comes to commodities that have a voluntary sustainability certification scheme that embeds HCV provisions, then mainstreaming the HCV Approach across the financial sector is easier, according to the finance panel at the HCV Summit. But when other commodities lack certifications, or when certifying is not the standard and they bring a big impact on forest and non-forest ecosystems, then adopting the HCV Approach can reduce this impact. According to Ivo Mulder, head of UNEP’s Climate Finance Unit, embedding the HCV Approach into the mainstream sustainability standards for those other commodities with a high impact on forests would be a way to tackle those issues.
A common barrier is that commercial banks and other financial institutions see applying environmental and social safeguards as a cost. Focus is also on exclusion of investees who may bring risks to investor portfolios. However, as conclusions from COP26 point out, this decade is crucial to protect remaining natural areas and restore degraded ones and the financial sector must play a pivotal role in motivating poor performers to adopt more responsible practices. Hardwiring the HCV Approach into proper risk management, and not just for project finance, could further boost action on conservation within the sector, according to Mulder.
For Charlotte Opal, Executive Director at the Forest Conservation Fund, social and cultural HCVs can help support the business case of leaving nature in place within projects and can help financiers focus on the value of avoiding risk rather than on the monetisation of nature services.
Financial bodies who want to lead by example can engage with the HCV Network Secretariat to get support on how to apply the HCV Approach.
For more information on how the HCV Approach can benefit the finance sector, get in touch with Paulina.
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Femexpalma
In April 2022, FEMEXPALMA and the HCV Network signed a 5-year cooperation agreement to promote sustainable production of palm oil in Mexico. FEMEXPALMA is a Mexican independent entity that represents palm production at the national level and promotes the increase of productivity in a sustainable way.
With global markets becoming stricter, for Mexican producers to be able to export to key markets such as the European Union, they must meet strict requirements such as certification by the Roundtable on Sustainable Palm Oil (RSPO). To be certified by RSPO, the HCV Approach must be applied prior to the establishment of any new oil palm plantations. With this cooperation agreement, the HCV Network will support FEMEXPALMA’s members and allies to design better strategies to identify, manage and monitor High Conservation Values and support smallholders to achieve RSPO certification and implement good agricultural practices.


High Carbon Stock Approach
The High Carbon Stock Approach (HCSA) is an integrated conservation land use planning tool to distinguish forest areas in the humid tropics for conservation, while ensuring local peoples’ rights and livelihoods are respected.
In September 2020, HCV Network and the HCSA Steering Group signed a five-year Memorandum of Understanding (MoU) to strengthen their collaboration to conserve forests and uphold community rights in tropical forests. The HCS and HCV Approaches are cornerstones of corporate no deforestation and conservation commitments, and increasingly for actors working at different scales. The collaboration aims to further support effective implementation of these commitments through increased uptake of the HCV and HCS tools.
Through this MoU, HCSA and HCVRN are pursuing two main strategic goals:
- Strive to promote the application of the two approaches in tropical moist forest landscapes and explore further opportunities for collaboration.
- Ensure that, where the two approaches are applied together, this happens in a coordinated, robust, credible, and efficient manner, so that HCS forests and HCVs are conserved, and local peoples’ rights are respected.


World Benchmarking Alliance
From May 2022, the HCV Network is an ally at the World Benchmarking Alliance (WBA). WBA is building a diverse and inclusive movement of global actors committed to using benchmarks to incentivise, measure, and monitor corporate performance on the SDGs, and will assess and rank the performance of 2,000 of the world’s most influential companies against seven systems of transformation by 2023.
The scope of WBA’s circular transformation was expanded to cover nature and biodiversity as recognition of the need for greater understanding, transparency and accountability of business impact on our environment. The WBA Nature Benchmark was launched in April 2022, which will be used to rank keystone companies on their efforts to protect our environment and its biodiversity. As HCV Areas are recognised as key areas important for biodiversity, companies that publicly disclose their actions to identify and protect HCVs will contribute to the assessment of their performance against the benchmark.


Taskforce on Nature-related Financial Disclosures - TNFD
The Taskforce on Nature-related Financial Disclosures (TNFD) is a global, market-led initiative, established with the mission to develop and deliver a risk management and disclosure framework for organizations to report and act on evolving nature-related risks, with the aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.
In April 2022, the HCV Network joined the TNFD Forum. The TNFD Forum, composed of over 400 members, is a world-wide and multi-disciplinary consultative network of institutional supporters who share the vision and mission of the task force.
By participating in the Forum, the HCV Network contributes to the work and mission of the taskforce and help co-create the TNFD Framework which aims to provide recommendations and advice on nature-related risks and opportunities relevant to a wide range of market participants, including investors, analysts, corporate executives and boards, regulators, stock exchanges and accounting firms.


Aquaculture Stewardship Council
The Aquaculture Stewardship Council (ASC) is the world’s leading certification scheme for farmed seafood – known as aquaculture – and the ASC label only appears on food from farms that have been independently assessed and certified as being environmentally and socially responsible. In 2021, the HCV Network and ASC formalised their collaboration through a Memorandum of Understanding (MoU). The MoU represents the first step in a fruitful relationship aimed at conserving HCVs in aquaculture. Although, existing guidance on the use of the HCV Approach currently focuses mainly on forestry and agriculture, the HCV Approach is however generic, and in principle also applicable to aquatic production systems. Through this MoU, this is recognised by the Aquaculture Stewardship Council (ASC) in their ASC farm standard, in which the protection of HCV areas is mentioned in the context of expansion


Accountability Framework Initiative
The Accountability Framework initiative (AFi) is a collaborative effort to build and scale up ethical supply chains for agricultural and forestry products. Led by a diverse global coalition of environmental and human rights organizations, the AFi works to create a “new normal” where commodity production and trade are fully protective of natural ecosystems and human rights. To pursue this goal, the coalition supports companies and other stakeholders in setting strong supply chain goals, taking effective action, and tracking progress to create clear accountability and incentivize rapid improvement. In July 2022, the HCV Network joined AFi as a Supporting Partner. AFi Supporting Partners extend the reach and positive impact of the AFi by promoting use of the Accountability Framework by companies, industry groups, financial institutions, governments, and other sustainability initiatives, both globally and in commodity-producing countries.


Biodiversity Credit Alliance
The Biodiversity Credit Alliance (BCA) is a global multi-disciplinary advisory group formed in late 2022. Its mission is to bring clarity and guidance on the formulation of a credible and scalable biodiversity credit market under global biodiversity credit principles. Under these principles, the BCA seeks to mobilize financial flows towards biodiversity custodians while recognising local knowledge and contexts.
The HCVN joined the BCA Forum in August 2023 to learn more from the many organizations already coming together to find effective pathways to opening up credit-based approaches, and how to contribute our knowledge and experience of years of working in a practical way, often with global sustainability standards and their certified producers, to protect what matters most to nature and people.
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Nature Positive Forum

Get Involved
Our Mission as a network is to provide practical tools to conserve nature and benefit people, linking local actions with global sustainability targets.
We welcome the participation of organisations that share our vision and mission to protect and enhance High ConservationValues and the vital services they provide for people and nature. By collaborating with the Network, your organisation can contribute to safeguarding HCVs while gaining valuable insights and connections that support your sustainability goals.
We are seeking collaborative partners to help expand and enhance our work, as well as talented professionals who can join the growing Secretariat team, and for professionals who can contribute to the credible identification of High Conservation Values globally.
Join us in securing the world’s HCVs and shaping a sustainable future.