Biodiversity-focused investor collaboration aims to leverage CA100+ experience to engage with “systemically-important” companies.
Nature Action 100 (NA100), a soon-to-be-launched investor-led initiative, will deploy “robust dialogue” and other techniques honed by Climate Action 100+ (CA100+) to scale engagement with companies and policymakers aimed at reversing biodiversity loss.
The initiative, which is supported by the Finance for Biodiversity Foundation, confirms that asset owners and managers are now looking to identify and manage biodiversity risks in their portfolios as assiduously as climate risk.
NA100 will prioritise corporate engagement, ensuring “systemically-important” companies are taking appropriate and time-conscious actions to address their biodiversity impacts and risks, but will also seek to engage with policymakers.
According to Harry Ashman, Vice President, Responsible Investment for EMEA at BMO Global Asset Management, NA100 is in the process of finalising its governance structure and approach to corporate engagement, as well as selecting partner organisations.
“The corporate engagement approach will be similar to CA100+, with companies engaged on a set of investor expectations that cover governance, strategy and disclosure. The launching investors have a wealth of experience in these initiatives and have consulted the organisations that run them,” he said.
CA100+ typically selects two member organisations to lead engagement with individual corporates with a view to encouraging them to develop processes and practices aligned with its core aims of reducing corporate greenhouse gas (GHG) emissions.
NA100, which is expected to launch this summer, is still working out its exact approach to corporate engagement, but it will aim to “achieve progress through robust dialogue with companies leading to demonstrable positive outcomes,” said Ashman.
“However, we envisage a similar set of escalation tools being available to investors as with other ESG issues, to be applied and supported at investors’ own discretion,” he said.
Engagement will be supported by a technical advisory group, which will help NA100 members to identify priority engagements and “ensure that actions are guided by the latest science”, according to Finance for Biodiversity.
Aligning financial flows
Ahead of the UN Biodiversity Conference (COP15), NA100 will aim to “stimulate action from the financial sector” and support the formulation and execution of the Global Biodiversity Framework, which will frame targets for countries, companies and investors over the next decade.
“Just as financial flows must align with the goals of the Paris Agreement to stand a chance of achieving its goals, investors, banks, policymakers and companies must align financing with the goal of reversing nature loss. This process could start with a successful outcome from COP15,” said Ashman, adding that the private sector also depended on policymakers and regulators to set rules to improve biodiversity-related data quality in order to improve investment decision-making.
Bess Joffe, Head of Responsible Investment at Church Commissioners for England, also emphasised the importance of information flows. “Further data disclosure, pressed for and gathered through this robust engagement process, is the starting place – it is difficult for companies to gather all the relevant data and we look forward to supporting them as they undertake this crucial yet challenging task,” she said.
The leading investor group includes AXA Investment Managers, BMO Global Asset Management (EMEA), BNP Paribas Asset Management, Church Commissioners for England, Domini Impact Investments, Federated Hermes, Karner Blue Capital, Robeco, Storebrand Asset Management and Vancity Investment Management. The group is actively seeking further investor participation.
As well as leveraging the experience of CA100+, the founder organisations of NA100 are liaising with a range of other biodiversity and finance platforms, such as the Science Based Targets for Nature (SBTN) and the Task Force on Nature-related Financial Disclosures (TNFD).
“NA100 intends to support the uptake and implementation of frameworks like these, not to duplicate them, just as Climate Action 100+ is an excellent vehicle for pushing Task Force on Climate-Related Financial Disclosures (TCFD) and Science Based Targets forward,” said Ashman.
Launched last year to enable consistent and accurate science-led reporting, TNFD’s recently released beta reporting framework includes guidance on measuring and disclosing location-based biodiversity impacts and risks.
Progress through engagement
CA100+, made up of 700 global investors representing a total US$68 trillion in assets under management, engages with many of world’s largest carbon-intensive corporates to help them identify pathways to net GHG emissions.
Last month, CA100+ released its second round of net zero benchmark assessments, commenting that “more action” was urgently needed to focus companies on achieving net zero emissions, despite some progress against key indicators.
The initiative said that while 69% of companies had set commitments to reach net zero by 2050, the “vast majority” had not disclosed 1.5°C-aligned medium-term targets.
CA100+ has faced criticism for not having a bigger impact on carbon-intensive firms. Founder of Majority Action Eli Kasargod-Staub recently said that asset managers’ proxy voting policies needed to insist on positive action from investee companies, arguing that past efforts to hold the boards of carbon-emitting companies to account had been thwarted by asset manager voting behaviour.
Simon Rawson, Director of Corporate Engagement at UK-based NGO ShareAction, said investors needed to act collectively to address the material risks arising from business models driving nature loss and biodiversity destruction.
“Collaborative engagement, when done with sufficient ambition and rigour, can achieve things that are far greater than the sum of its parts. But this requires robust engagement, with objective, science-based targets, credible escalation strategies, and transparency. If investors aren’t prepared to sufficiently challenge companies, or if there are free-riders in the coalition, it risks obscuring the extent of the crisis.”
Maria Lettini, Executive Director of FAIRR, an investor initiative which focuses primarily of risks in animal agriculture, said that investors needed to appreciate the connectivity between climate and nature-related risks to effectively monitor risks and drive change.
“Biodiversity is a multi-faceted challenge that must be addressed holistically rather than via the distinct silos of areas such as climate, land conversion and pollution, to avoid unintended consequences. Achieving a nature net-zero, and eventually a nature-positive scenario will require sector-specific technical metrics and corporate commitments to reporting against established KPI frameworks,” she said.
“Yet, 2030 is just around the corner so it is critical that investors look beyond benchmarking companies’ targets. Supply chain tracking and control will be needed for agricultural commodities to contribute to nature-positive goals.
Measures of success
When asked about how the success of the initiative’s success would be measured, Ashman explained that positive nature impact was comparatively more difficult to measure than climate action due to its multifaceted and “inherently local” characteristics.
“However,” he said. “We will be guided by structures like the GBF and SBTN, and hope to measure progress from companies and governments towards the overall goal. Success will not come overnight, but the investor community must throw its weight behind this issue now to avoid ecosystem collapse in the future.”