Investment firms are among businesses, NGOs and scientists that have welcomed the European Parliament’s passing of the Nature Restoration Law yesterday.
The law, which will be going ahead with some amendments, will enshrine some of the global biodiversity targets agreed at COP15 last year with the aim to restore 20% of the EU’s land and sea by 2030, 60% by 2040 and 90% of degraded ecosystems by 2050. It is a key part of the European Green Deal, a set of European laws to combat climate change.
It passed narrowly yesterday with 336 members of the European Parliament approving the bill, 300 voting against and 13 abstaining.
Last month, Philippe Zaouati, CEO of Mirova; Impax CEO Ian Simm; Michael Marks, head of investment stewardship and responsible investment integration at Legal & General Investment Management; and Andy Howard, global head of sustainable investment at Schroders, were among 50 companies that sent a letter to EU lawmakers urging them to pass the law.
Zaouati said he welcomed the outcome as a “positive signal in favour of nature conservation in Europe”.
“The balance between a globally harmonised objective and framework, and the possibility for each Member State to implement them with a degree of flexibility, is a healthy one, but we must remain attentive to the practical applications that could result from this flexibility.”
But he added: “The text adopted has been significantly weakened, and there is still time for the European authorities to raise their ambitions, in line with scientific data.
“It is urgent to adopt regulations that promote nature protection, restoration and the sustainable use of natural resources, with clear implementation roadmaps.”
One notable amendment is the deletion of an article addressing agricultural ecosystems, which can help facilitate carbon sequestration. Zaouati said the assessment of the law’s impact on food safety will also affect its implementation.
He said its success will depend on the revision of the directive on the sustainable use of pesticides, the proposal for a directive on soil health and the revision of the regulation on toxic substances, all of which are yet to be thrashed out.
“Businesses and financial institutions depend on nature, and have a vital role to play in nature conservation and restoration, and in the transition to a nature-positive economy. By mitigating climate change and improving our resilience to its effects, nature restoration can be a powerful ally for businesses, particularly those directly affected by biodiversity loss and climate risks through supply chain disruption or reduced access to essential ecosystem services,” he noted.
Tom Ludwig, head of agriculture at biodiversity data company NatureMetrics, agreed the law will have a positive impact on businesses.
“Interestingly, this vote has brought the EU in line with the direction that business is already moving towards – many investors and multinational companies already understand that, by protecting nature, we are ultimately securing the long-term protection of businesses,” he said.
“Organisations like the Taskforce for Nature-related Financial Disclosures have already started laying the groundwork for how businesses can become nature-positive in their operations, and today’s vote adds legislative oversight and drive to this mission, enabling business to work hand in hand with the EU to safeguard our natural heritage, protect biodiversity, and secure a sustainable future.
“Businesses know that we must protect our natural resources to build a sustainable future and the European Parliament joins this group today.”
Rebecca Chapman, head of environment at the Principles for Responsible Investment, also called the news an “important signal”.
“The EU Nature Restoration Law establishes a clear direction of travel and sets the groundwork for further advancement, particularly related to climate and biodiversity finance, which plays a central role at the heart of the issue,” she said.
“PRI supports a swift agreement between Council and Parliament to ratify the Law and will continue to work to ensure that the investor interests in nature and biodiversity are represented.”