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Biodiversity, economics and finance: Understanding macro-financial risks associated with biodiversity loss
Horizon Europe - Cluster 6 - Destination 1: Biodiversity and Ecosystem Services
Estimated EU contribution per project
Link to the call
Link to the submission
In line with the European Green Deal priorities and in particular with the EU biodiversity strategy for 2030 and the EU strategy for financing the transition to a sustainable economy, the successful proposal(s) will help unlock financial flows needed for reversing biodiversity loss, and contribute to mainstreaming biodiversity, ecosystem services and natural capital in the society and economy.
The erosion of natural capital combined with the collapse of ecosystems entails potentially far-reaching economic and financial implications, including risks for macroeconomic and financial stability of key institutions, countries and regions. The decline of ecosystem services poses physical risks for economic and financial actors that depend upon those services, while socioeconomic transformations could trigger transition risks. As more than half of the world's GDP relies on nature, it is estimated that the risks triggered by ecosystem degradation to human societies could be at least as high as those imposed by climate change. Furthermore, these risks are growing as biodiversity is declining at unprecedented rates in human history, which calls for improved understanding, assessment and risk management approaches by key economic actors such as corporates, governments, central banks and financial supervisors. However, a wide range of challenges, including the complexity of ecosystem processes, uncertainty about tipping points and valuation problems, make it very difficult.
Actions should improve the state-of-art knowledge on the relationships between biodiversity, economy and the financial system including better understanding of the nature and degree of risks associated to biodiversity loss, how these risks interact with each other and are likely to evolve over time.
In particular, actions are expected to:
- Expand the evidence base on the dependence of the EU economy and its financial sector on nature, including by producing relevant macroeconomic indicators, e.g., assessing the share of the EU GDP and employment that depends on nature and evaluate implications of biodiversity loss. As much as possible, research should also extend to country level analysis and/or prepare the ground for future more in-depth studies with increased geographical resolution.
- Develop scenarios tailored to financial risk assessment, including identification of assets under highest risk from being stranded and sectors that represent the highest risk exposure.
- Co-design principles for a more comprehensive and more robust environmental risk management in the financial sector, develop innovative methodologies and tools to support risk assessment that can better capture the specificities of nature and ecosystems.
- Explore tools to assess the alignment of corporates and financial institutions with major European and global biodiversity-related goals, including by leveraging of the EU Taxonomy on Sustainable Finance.
- Investigate how biodiversity loss interacts with climate change and other socio-environmental challenges in regard of macro-financial stability and how different risks can reinforce each other.
- Identify possible response options and issue recommendations for EU institutions and Member States, investors, companies and other financial market participants about macro-financial risks of biodiversity loss.
In their research, actions should investigate various possible risk categories including both physical and transition ones, their transmission channels and cascading effects through sectors and supply chains, as well as adaptive capacity of economic and financial agents/institutions, with particular focus on the EU, its Member States and Horizon Europe Associated Countries. The analysis should extend to worst-case scenarios and include low-probability but high-impact biodiversity-related tail risks.
Actions should build on and/or establish synergies with the relevant work by initiatives/projects/studies including, but not limited to, the World Economic Forum’s New Nature Economy Report Series, Network for Greening the Financial System, Taskforce on Nature-related Financial Disclosures, The Finance for Biodiversity (F4B) initiative Accounting for ecosystems and their services in the European Union (INCA) and EU Member States (MAIA) projects, Indebted to Nature report and the working paper ‘A “Silent Spring” for the Financial System? Exploring Biodiversity-Related Financial Risks in France’.
Actions are expected to involve and co-create with the end-users (financial institutions, non-financial corporations, governments etc.) to fully account for their respective views and needs. Actions should bring together from the start multiple types of scientific expertise in social sciences and humanities, in particular in economics and finance, as well as scientific expertise in biodiversity and natural capital.
Actions should envisage clustering activities with projects funded under this topic as well as with other relevant Horizon Europe and Horizon 2020 projects working on links between biodiversity and sustainable finance and economics of biodiversity. To this end proposals should foresee dedicated tasks and appropriate resources for coordination measures, joint activities, and joint deliverables.
Project results are expected to contribute to all of the following expected outcomes:
- New knowledge to accelerate the ecological transition and socioeconomic transformation towards nature-positive economy across EU, in a context of erosion of natural capital and degradation of ecosystems and their essential services;
- Enhanced understanding and quantification of the macroeconomic significance of biodiversity and implications of its loss at EU level as a basis for more coordinated and better organised responses by key economic actors and institutions, including key policy making processes (e.g., EU semester);
- Information, tools and metrics to better integrate biodiversity and its loss into mainstream macro-financial analytical frameworks, risk assessment and management methods as a basis for enhancing natural capital and NBS;
- Development of more comprehensive and more robust environmental risk management in the financial sector;
- Mobilisation of mainstream finance to slow down, and reverse biodiversity loss in the broader context of environmentally sustainable development by catalysing nature-positive investments contributing to the objectives of the European Green Deal;
- Evidence base to support the implementation of the EU strategy for financing the transition to a sustainable economy.
Regions / countries for funding
Moldova (Moldova), Albania (Shqipëria), Armenia (Հայաստան), Azerbaijan (Azərbaycan), Belarus (Беларусь), Bosnia and Herzegovina (Bosna i Hercegovina / Босна и Херцеговина), Faeroes (Føroyar / Færøerne), Georgia (საქართველო), Island (Ísland), Israel (ישראל / إِسْرَائِيل), Kosovo (Kosova/Kosovë / Косово), Montenegro (Црна Гора), Morocco (المغرب), New Zealand (Aotearoa), North Macedonia (Северна Македонија), Norway (Norge), Serbia (Srbija/Сpбија), Tunisia (تونس /Tūnis), Türkiye, Ukraine (Україна), United Kingdom
Education and training institution, International organization, Non-Profit Organisation (NPO) / Non-Governmental Organisation (NGO), Other, Private institution, incl. private company (private for profit), Public Body (national, regional and local; incl. EGTCs), Research Institution incl. University, Small and medium-sized enterprise (SME)
To be eligible for funding, applicants must be established in one of the following countries:
- the Member States of the European Union, including their outermost regions
- the Overseas Countries and Territories (OCTs) linked to the Member States
- third countries associated to Horizon Europe - see list of particpating countries
Only legal entities forming a consortium are eligible to participate in actions provided that the consortium includes, as beneficiaries, three legal entities independent from each other and each established in a different country as follows:
- at least one independent legal entity established in a Member State; and
- at least two other independent legal entities, each established in different Member States or Associated Countries.
Any legal entity, regardless of its place of establishment, including legal entities from non-associated third countries or international organisations (including international European research organisations) is eligible to participate (whether it is eligible for funding or not), provided that the conditions laid down in the Horizon Europe Regulation have been met, along with any other conditions laid down in the specific call topic.
A ‘legal entity’ means any natural or legal person created and recognised as such under national law, EU law or international law, which has legal personality and which may, acting in its own name, exercise rights and be subject to obligations, or an entity without legal personality.
- Affiliated entities — Affiliated entities (i.e. entities with a legal or capital link to a beneficiary which participate in the action with similar rights and obligations to the beneficiaries, but which do not sign the grant agreement and therefore do not become beneficiaries themselves) are allowed, if they are eligible for participation and funding.
- Associated partners — Associated partners (i.e. entities which participate in the action without signing the grant agreement, and without the right to charge costs or claim contributions) are allowed, subject to any conditions regarding associated partners set out in the specific call conditions.
- Entities without legal personality — Entities which do not have legal personality under their national law may exceptionally participate, provided that their representatives have the capacity to undertake legal obligations on their behalf, and offer guarantees to protect the EU’s financial interests equivalent to those offered by legal persons.
- EU bodies — Legal entities created under EU law including decentralised agencies may be part of the consortium, unless provided for otherwise in their basic act.
- Joint Research Centre (‘JRC’)— Where provided for in the specific call conditions, applicants may include in their proposals the possible contribution of the JRC but the JRC will not participate in the preparation and submission of the proposal. Applicants will indicate the contribution that the JRC could bring to the project based on the scope of the topic text. After the evaluation process, the JRC and the consortium selected for funding may come to an agreement on the specific terms of the participation of the JRC. If an agreement is found, the JRC may accede to the grant agreement as beneficiary requesting zero funding or participate as an associated partner, and would accede to the consortium as a member.
- Associations and interest groupings — Entities composed of members (e.g. European research infrastructure consortia (ERICs)) may participate as ‘sole beneficiaries’ or ‘beneficiaries without legal personality’. However, if the action is in practice implemented by the individual members, those members should also participate (either as beneficiaries or as affiliated entities, otherwise their costs will NOT be eligible.
Relevance for EU Macro-Region
EUSAIR - EU Strategy for the Adriatic and Ionian Region, EUSALP - EU Strategy for the Alpine Space, EUSBSR - EU Strategy for the Baltic Sea Region, EUSDR - EU Strategy for the Danube Region
UN Sustainable Development Goals (UN-SDGs)
All proposals must be submitted electronically via the Funders & Tenders Portal electronic submission system (accessible via the topic page in the Search Funding & Tenders section). Paper submissions are NOT possible.
Proposals must be complete and contain all parts and mandatory annexes and supporting documents, e.g. plan for the exploitation and dissemination of the results including communication activities, etc.
The application form will have two parts:
- Part A (to be filled in directly online) contains administrative information about the applicant organisations (future coordinator and beneficiaries and affiliated entities), the summarised budget for the proposal and call-specific questions;
- Part B (to be downloaded from the Portal submission system, completed and then assembled and re-uploaded as a PDF in the system) contains the technical description of the project.
Annexes and supporting documents will be directly available in the submission system and must be uploaded as PDF files (or other formats allowed by the system).
The limit for a full application (Part B) is 45 pages.