New framework outlines targets for institutional investors to take decisive action on nature risks and impacts.
A new framework developed by the Finance for Biodiversity (FfB) Foundation aims to promote consistency among asset owners and managers in their approach to supporting the goals of the Kunming-Montreal Global Biodiversity Framework (GBF).
“This is a milestone initiative under the FfB Foundation,” said Anita de Horde, Executive Director at FfB Foundation. “As one of the five commitments of the FfB Pledge, setting targets holds significant importance.”
The ‘Nature Target Setting Framework for Asset Managers and Asset Owners’ seeks to provide guidance to investors in establishing targets and directing financial resources in line with the mission of the GBF, aiming to protect 30% of terrestrial and marine habitats by 2030.
Speaking at the launch event for the framework, Dr David Cooper, Acting Executive Secretary of the Secretariat of the UN Convention on Biological Diversity (UN CBD), said that to operationalise the 23 targets of the GBF requires “collective action across all sectors of society”.
“It’s crucial for investors and financial institutions to support this mission,” he told onlookers.
The framework outlines four key types of targets, including initiation, sectoral, engagement and portfolio coverage.
Initiation targets aim to analyse exposure to nature-related impacts, dependencies, risks, and opportunities, and embed these considerations in the governance, strategy, and capabilities of the organisation.
Sectoral, engagement and portfolio targets take action to reduce material drivers of biodiversity loss in priority sectors by setting engagement and stewardship targets and aggregating these at the portfolio level.
According to Cooper, a small percentage of companies significantly contribute to potential negative impacts.
“Asset managers and owners have the opportunity to concentrate engagement and investment policies on these influential companies, redirecting efforts toward activities restoring and protecting nature,” he said.
“The release of this framework on nature-related target setting is a significant step, offering practical direction for financial institutions to initiate transitions toward a nature-positive future.”
Asset managers and owners are advised to establish initiation targets by 2026 and sectoral, engagement, and portfolio targets by 2030 or earlier.
“We hope this framework will help our signatories and other investors to set nature targets,” added de Horde. “There is no time to waste in initiating setting targets on nature and taking decisive action on nature.”
Developed in collaboration with 44 FfB member organisations from a target setting working group, the framework seeks alignment with the GBF and other frameworks on climate and nature.
“With only six years until 2030 – the deadline for the GBF – action on nature is imperative,” said Dr Cooper, adding that the FfB Foundation’s framework aligns with the Taskforce on Nature-related Financial Disclosures (TNFD).
In September, the TNFD published its final recommendations for nature-related risk management and disclosure, serving as a tool to “operationalise” the achievement of Target 15 of the GBF.
Target 15 explicitly calls for governments to establish mechanisms for companies to disclose risks, dependencies, and impacts.
“We are building on existing net zero frameworks and aligning with nature-related initiatives to ensure investors can work towards integrated climate and nature transition plans,” said Lucian Peppelenbos, Executive Director – Climate and Biodiversity Strategist at Dutch asset manager Robeco and Co-chair of the FfB Foundation’s target setting working group.
“We are encouraging all asset owners, asset managers, and other financial institutions, also beyond the signatories of the [FfB] Pledge, to use this guide, to help advance it, and to join us in setting targets.”
To achieve the GBF goals and targets, investors and financial institutions must decrease funding for activities harming biodiversity while increasing investments protecting it, said Dr Cooper.
This shift can help bridge the estimated US$700 billion finance gap, he said, noting that private financial flows toward nature protection or restoration activities currently amount to approximately US$26 billion annually.
Additional asset classes
The framework focuses on listed equity and corporate bonds, but in future iterations, it will incorporate additional asset classes, including sovereign debt.
“This framework is a first beta version to guide investors in getting started with setting targets on nature,” said Charlotte Apps, Sustainable Investing Analyst at Fidelity International and Co-chair of the FfB target setting working group.
“Time is not on our side, so we can’t wait for perfect data or the development of science-based pathways on nature to set targets – we need to start and act now,” she added.
“This beta version of the target setting framework will be iterated, expanded, and updated accordingly to include additional asset classes and align with science-based pathways, as and when they emerge.”
Subsequent versions of the framework are set for publication in 2024, featuring specific KPIs for ten priority sectors and expanding coverage to include more asset classes and positive impact targets.
In collaboration with Science Based Targets Network (SBTN) and UN Environment Programme Finance Initiative (UNEP FI), the FfB Foundation underscored the importance of ongoing cooperation between various organisations, encouraging banks to refer to UNEP FI’s analogous guidance for establishing nature targets.
“The framework constitutes a meaningful step in the right direction to build a common understanding across asset managers and asset owners on how to approach the complex question of setting nature-related investment portfolio targets and to build biodiversity-related transition and alignment plans,” said Jean-François Coppenolle, Sustainable Investment Director at Abeille Assurances, part of Aéma Groupe,, and member of the FfB Foundation’s target setting subgroup.
The FfB Foundation was set up in March 2021 after the launch of the FfB Pledge in the previous year, which currently has 153 signatories across 24 countries with a collective US$22.6 trillion in AUM. The organisation aims to support a call to action and collaboration between financial institutions via working groups as a connecting body for contributing signatories and partner organisations. Setting targets is one of the five commitments outlined in the FfB Pledge.