Data voted the biggest hurdle for investors trying to address biodiversity

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Data is the biggest barrier to making investments that support biodiversity, with 70% of 222 surveyed investors putting it above being unable to value natural capital and lacking internal expertise, a new study by RI and Credit Suisse has found.

Unearthing Investor Action on Biodiversity, conducted in collaboration with The Nature Conservancy, the Zoological Society of London and the International Union for the Conservation of Nature, takes an in-depth look at how, and to what extent, investors are addressing biodiversity – a topic that has shot up the financial agenda over the last 18 months. 

Findings were based on feedback from 327 asset owners and managers from 35 countries. Some investors did not answer all questions in the survey. 

Of the 327 investors, 257 said they were very concerned about biodiversity loss, and 174 said they are currently addressing the topic in their portfolio to some extent – mostly by seeking to reduce the negative impacts of investments through shareholder engagement and exclusions.

‘With biodiversity expected to be one of the most important topics in the investment world by 2030, we need to start making the case for natural and conservation capital as an investable asset today’ – Marisa Drew, Credit Suisse

However, “the awareness and concern about the issue are not reflected in investor strategies and policies,” the report said, with more than 90% of the 250 investors that responded saying they did not have measurable biodiversity-linked targets. Two-thirds are considering introducing them, though. 

Some 72% of 270 respondents said they have not assessed their investments' impact on biodiversity at all. 

“An important first step for investors looking to tackle biodiversity is to assess and analyse their investments’ impact on nature and wildlife, as well as their portfolio risks related to biodiversity loss,” explained the report. However, this kind of analysis relies on data. 

Last year, French investors AXA Investment Management, BNP Paribas Asset Management, Mirova and Sycomore kicked-off a project with environmental advisors I Care & Consult and data house Iceberg Data Lab to develop better biodiversity metrics for investors. Elsewhere, ASN Bank is spearheading a Dutch initiative with Actiam, FMO, Robeco and Triodos Bank called the Partnership for Biodiversity Accounting Financials, which aims to develop a common accounting measure for the positive biodiversity impacts of their investments.

Last year also saw the launch of the Taskforce on Nature-related Financial Disclosures (TNFD), whose working group includes financial institutions such as Storebrand, NatWest, Citi, Credit Suisse, Manulife Investment Management, Pimco, Sumitomo Mitsui Trust Asset Management and Yes Bank. Along with government representatives from the UK, France, Switzerland and Peru, corporates like EY, KPMG and BP, and bodies including the OECD and the World Bank, the group will develop global reporting standards on natural capital. 

Meanwhile, the high profile EU taxonomy, which defines sustainable business activities, is being broadened from climate change mitigation and adaptation to other environmental objectives including biodiversity. 

“Diversity is the opposite of investors’ desire for standardisation and comparability of things,” noted Piet Klop, Senior Advisor for Responsible Investment at Dutch pension giant PGGM, when responding to the survey. “Biodiversity is challenging because it really is the anti-commodity.”

But, while there is no agreed standard for biodiversity disclosure and assessment, survey respondents did flag tools, metrics and products they are currently using, including:

• CDP’s forest scoring methodology

• Company-specific assessments of natural capital impacts

• The Integrated Biodiversity Assessment Tool

• Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE)

• TRASE, Global Canopy’s supply chain transparency initiative, and

• SPOTT, the ZSL Sustainability Policy Transparency Toolkit

“The TNFD will hopefully see a more common framework evolve, but we shouldn’t wait around for some perfect framework to be released to the world,” said Oliver Withers, Head of Conservation Finance and Enterprise at ZSL. “There is enough to work with now that can really make a difference in the short term and the data space will evolve over time to become more efficient.”

Marisa Drew, Chief Sustainability Officer & Global Head of Sustainability Strategy, Advisory and Finance at Credit Suisse, in the report’s foreword: “With biodiversity expected to be one of the most important topics in the investment world by 2030, we need to start making the case for natural and conservation capital as an investable asset today.”

This week Morgan Stanley Research also released a report, Incorporating Biodiversity Into An Investment Framework, which highlights 108 “solution stocks” for investors looking at biodiversity.