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Biodiversity “Momentum” Builds Among Investors

Institutions representing €20 trillion AUM call for increased collaboration to assess impact on biodiversity and address nature-related risks and opportunities.

More asset owners and managers aim to map their investments’ impact on biodiversity, collaborate to hold investee companies accountable and commit to ambitious action on nature loss via the Finance for Biodiversity (FfB) Foundation pledge.  

World Biodiversity Day (22 May) saw 15 asset managers and owners step up their commitment to reverse nature loss, bringing the total AUM of signatories to the FfB pledge to almost €20 trillion. 

Biodiversity should be an essential part of how we look at sustainability,” Mart Keuning, Advisor – Sustainable and Responsible Investment at Dutch pension fund ABP, told ESG Investor.  

“It’s about how economies and societies can be fundamentally sustainable, to preserve what is valuable and essential to the planet and every species that lives on it, and also to the climate.” 

The pledge calls for global leaders to commit to protecting and restoring biodiversity through their finance activities and investments. 

Keuning admitted that the effects of asset owners’ investments on biodiversity are still “difficult to map”, with more relevant data required to inform engagement activities with investee firms to effectively encourage companies to get started in addressing nature-related risks and opportunities. 

For this reason, increased cooperation with other asset owners and managers is important, he said, with all signatories to the FfB pledge committed to “larger movement to work together”. 

“The foundation also contains a lot of knowledge that can help investors, for example about how we can give the Kunming-Montreal Global Biodiversity Framework (GBF) a place to be part of the international efforts to preserve and strengthen biodiversity,” said Keuning. 

“We want to be accountable for our responsibility to carefully manage participants’ assets – including in the way that money affects the real world – this initiative is part of that.” 

Collaborative action on biodiversity 

By signing the FfB pledge, financial institutions commit to halt and reverse nature loss by 2030 by implementing five steps: collaborating and sharing knowledge, engaging with investee firms, assessing impact, setting targets and publicly reporting on all four by 2025.  

“We recognise that the restoration of nature and ecological integrity are vital prerequisites for long-term economic growth, financial stability and human well-being,” said Mike Eakins, Chief Investment Officer at UK-based insurer and pension provider Phoenix Group.  

“By signing the Finance for Biodiversity Pledge, Phoenix Group is committing to driving forward collaboration and helping to develop solutions for an economic and financial transformation; one which is wholly compatible with a thriving natural world.”   

The FfB pledge now has a total of 140 signatories from 23 countries with combined assets under management of €19.7 trillion (US$21.2 trillion).  

“Biodiversity is still gaining momentum after the adoption of the Kunming-Montréal Agreement last year. By signing the FfB pledge, financial institutions are working on implementing targets 14 and 15 of the GBF,” said Anita de Horde, Executive Director of the FfB Foundation.  

“We can see that our organisation is driven by those financial institutions leading the race to reverse nature loss.” 

Target 15 of the GBF requires businesses to assess and disclose on biodiversity dependencies, impacts and risks, and reduce negative impacts, indicating a new level of responsibility for companies and financial institutions alongside governments in addressing nature-related risks. 

Target 14 requires signatories to progressively align “all relevant public and private activities, fiscal and financial flows” with the GBF’s goals as part of a “full integration” of biodiversity into the normal course of government. 

The 15 new financial institutions that have signed the FfB pledge include Bpifrance, Climate Asset Management, Dasos Capital, Dorr Asset Management, Folium Capital, Folksam, KPA Pension, NatureRe Capital, ABP, Phoenix Group, Rivage Investment SAS, Sienna Private Credit, Swiss Life Asset Managers France, Team ABC Ventures and VBV-Vorsorgekasse.   

Martin Berg, CEO of Climate Asset Management, told ESG Investor that signing up to the FfB pledge demonstrated an understanding of the finance sector’s role in reversing biodiversity loss.  

“This aligns well with the theme of the UN’s designated World Biodiversity Day, as well as the GBF’s vision to create a world living in harmony with nature by 2050.” 

He added: “Our nature focused investment strategies target real assets which means we are able to influence and control the biodiversity improvements and social benefits each project provides to the local communities.” 

‘Build Back Biodiversity’ 

The UN proclaimed 22 May the International Day for Biological Diversity (IDB), or World Biodiversity Day, to increase understanding and awareness of biodiversity issues. This year’s theme, ‘From Agreement to Action: Build Back Biodiversity’, reflects the need to urgently implement the COP15 achievements.   

Biodiversity loss was ranked as the third most severe threat humanity will face in the next 10 years in the World Economic Forum’s Global Risks Report 2022. 

The FfB Foundation is the leading global investor organisation for biodiversity action. Members of the foundation aim to significantly accelerate biodiversity protection via collaborative action in the working groups covering the following themes: public policy advocacy, target setting, engagement with companies and impact assessment.  

An additional working group on positive impact is planned to be launched this year.   

The FfB Foundation is a founder of Nature Action 100 (NA100) and co-leads the initiative’s science council and technical advisory group, alongside think tank Planet Tracker.  

NA100 is a global investor engagement initiative focused on driving greater corporate ambition and action to reduce nature and biodiversity loss.  

Despite momentum building among investors to address biodiversity and nature loss, analysis by Planet Tracker found that sustainability funds at the largest asset managers, including BlackRock, Vanguard and State Street Global Advisors, continue to vote against biodiversity shareholder proposals

The report found that that almost two thirds (62%) of votes on biodiversity proposals were cast against or not voted on, showing investors are still failing to take biodiversity loss seriously, despite half the world’s GDP (US$44 trillion) being moderately or highly dependent on nature. 

“Following last year’s landmark Global Biodiversity Framework committing the private sector to ambitious nature targets, it’s disappointing to see financiers, particularly those who define themselves as sustainable, continuing to overlook biodiversity and not using their financial might to protect nature,” said John Willis, Director of Research at Planet Tracker.

“With asset managers favouring engagement over divestment as an approach in transforming corporate behaviour, funds must step up and support important biodiversity proposals, or provide justification for their voting decision.”

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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