From buffer zones to digitalisation – advancing biodiversity in practice

Nature and biodiversity have gained increased attention across different sectors in recent years, as they rightfully deserve. Investing in clean transition and nature is one of Finnfund’s strategic focus areas regarding which we continue to strengthen our efforts to protect biodiversity and seek nature-positive investments. In 2024, Finnfund adopted a Nature and biodiversity statement that brings together the guiding principles and goals based on which Finnfund strives to strengthen the well-being and diversity of nature and mitigate possible nature and biodiversity risks and impacts in its investment activities.

In our work, biodiversity comes up regardless of the sector we are looking at ranging from forestry to digital infrastructure, agriculture, renewable energy – the list goes on. Looking back at my six years at Finnfund so far, I took some time to reflect on some key learnings and how our investments both protect and enhance biodiversity and ecosystem services through several direct and indirect measures.

Buffer zones are crucial to protecting bodies of water

One of the most critical habitats for some endangered and critically endangered species are rivers, streams, lakes and ponds. These bodies of water have a resilience to withstand pollution and maintain their natural state, but their resilience is limited, and sometimes significant pollution may go beyond their capacity to fully recover.

Finnfund requires the protection of these habitats in forestry, agroforestry, and agricultural investments by establishing adequate buffer zones around these bodies of water. Buffer zones create an appropriate distance between the investment operations and the impacted habitats. The required width of the buffer zones depends, for example, on the intensity and frequency of the polluting factor in the operations, as well as the habitat’s capacity to absorb pollution. Finnfund also requires and promotes the planting of native species to enrich buffer zones and prevent pollution from reaching water while increasing biodiversity values and restoring ecosystems.

Most of our forestry, agroforestry and agricultural investee companies have increased the quality of these buffer zones by enriching riparian forests along these rivers and streams, as well as by banning agrochemicals and fertilisers within a specified distance from these buffer areas and enhancing their soil management practices. Others have introduced an additional buffer area to the riparian forests to protect the habitats from fire events and drifting agrochemicals.

In addition to buffer zones, reducing water consumption in areas where water is scarce is also vital, and different measures have been implemented in this regard. For example, Finnfund’s agroforestry and agricultural projects in water-scarce areas have introduced an efficient drip irrigation system, which also monitors how much water different species need to thrive. Other projects have started to collect and store rainwater for the dry season, thereby significantly impacting the water quantity available in natural streams and rivers to maintain habitats and key ecosystem services.

Focus not only on what is used but also what is given back

Improving the quality of bodies of water impacted by our projects is also an important focus area in our biodiversity work. Most forestry, agroforestry and agricultural projects require agrochemicals and fertilisers to maintain operations and improve output. Nevertheless, Finnfund’s investee companies must implement adequate fertiliser management to utilise no more than what the soil and species require to thrive and avoid runoff into bodies of water. Furthermore, companies must implement plans to reduce their dependence on and use of agrochemicals, as well as introduce more environmentally friendly alternatives such as biological controls. Furthermore, our forestry companies follow the slope’s contour in planting to avoid soil loss which involves loss of fertilisers into the environment, and to avoid runoff of key nutrients and sediments.

Hazardous waste and hazardous materials management are also critical issues. Therefore, our investee companies must develop overarching plans to manage hazardous materials following international best practices and prevent and reduce pollution to a minimum. Strong management of these hazardous elements guarantees water and soil quality protection against significant sources of pollution, which in the long term protects and enhances the habitats where biodiversity can thrive, and ecosystem services can function adequately.

Companies in the forestry and agricultural sectors have the most significant quality and quantity of effluents, especially those with processing mills in rural areas, where the biodiversity levels tend to be higher. Therefore, our investee companies are required to manage hazardous materials correctly, and treat all their effluents following international best practices to prevent and minimize pollution reaching the environment. As concrete examples in remote areas, our companies have introduced septic tanks to treat domestic effluents from everyday activities, whilst others have introduced activated carbon technologies to treat more hazardous effluents from nurseries and other industrial processes.

Digitalisation and collaboration help to prevent deforestation

Preventing deforestation and forest degradation is one of the most impactful ways to protect nature, biodiversity and key ecosystem services. Our forestry and agricultural investee companies typically operate in remote locations with protected areas and nearby biodiversity-rich areas. Unfortunately, it is common to find illegal deforestation and illegal extraction of key species from these protected and conservation areas. Despite existing legislation, the governments of the countries where we usually operate lack adequate resources and capacity to enforce the laws. Fortunately, often the presence of our investee companies near protected and conservation areas adds an additional barrier against illegal deforestation and extraction of protected and endangered species. Their presence increases the area’s security, making it harder for illegal loggers and poachers to access these biodiversity-rich areas.

Information technology and digitalisation also play an important role in preventing deforestation. Most of our companies have introduced geographical information systems (GIS) to monitor their biological assets, managed areas, and conservation areas, which also enables them to monitor deforestation trends at the landscape level around and within their operations. Hence, they can support the local governments in enforcing laws against illegal deforestation and forest degradation by identifying areas where deforestation and biodiversity exploitation occur. Moreover, some companies have allied with local governments and other civil society organisations to deploy joint patrols to identify deforestation trends and areas where forest degradation is occurring, and function as early warning systems to officials enforcing biodiversity protection and conservation.

In addition to riparian forests that function as buffer zones to water bodies, our investees operating in the land-intensive sectors have set aside areas for protection and conservation. We empower them through biodiversity-focused capacity-building activities to promote a planned increment of these areas, including interconnected biological corridors. The outcome is richer habitats and restored ecosystem services with an increased species diversity and quality. These natural corridors are significant in the remote areas where we operate, where historical deforestation and forest degradation have created patches of habitats that lack connectivity and risk losing important functions, including endangered species and key ecosystem services.

As is clear, deforestation, forest degradation and biodiversity loss are complex and multilayered, and so are the actions required to tackle them. Furthermore, I would like to emphasise that enhancing biodiversity also entails continuous learning, and we at Finnfund also learn from our investee companies. We try to replicate best practices in other regions, adapting to different realities and geographical contexts. Going forward, biodiversity and ecosystem services must continue to be a growing area of focus and strengthening efforts together is fundamental.

“As is clear, deforestation, forest degradation and biodiversity loss are complex and multilayered, and so are the actions required to tackle them.”

Harold Gordillo Environmental and Social Adviser harold.gordillo@finnfund.fi