The Principles for Responsible Investment’s upcoming nature stewardship initiative will target corporates over their political activities and will likely expand to engagement with policymakers, according to an update.
In January, Responsible Investor reported that the investor network was planning to launch an initiative that would involve PRI signatories using “engagement and other stewardship tools” to positively influence companies across a range of sectors to address forest loss, land degradation and other environmental issues.
At the time, RI reported the initiative would also involve co-ordination of investors focusing on public policy engagement on nature.
And this week, the PRI announced it has opened recruitment for a signatory advisory committee. Comprising 15 signatories with strong experience in stewardship and addressing nature-related issues, the committee will provide strategic advice about the initiative to the PRI.
Announcing the update, the PRI indicated that the initiative will initially focus on investors engaging companies on responsible corporate political engagement.
Paul Chandler, director of stewardship at the PRI, explained to RI: “Our plan is to focus on corporate political influence. This includes any way in which the policymaking process might be captured, eg, lobbying or donations. We’re trying to avoid negative action and turn it around to have a positive impact on nature.”
As a first step, the initiative will focus on corporate influence regarding any policy areas that have an impact on forest loss and land degradation.
According to the PRI’s website, the issue was selected because of its significant contribution to the climate and biodiversity crises. The network also flagged internal expertise in the area, developed during past programmes on deforestation and sustainable commodities, and strong investor demand for PRI to convene a stewardship initiative on the topic.
A phasing-in of further drivers of biodiversity loss will be scoped in 2023, for example to address drivers of biodiversity loss in other realms such as oceans.
On the rationale to focus on corporate political influence, Chandler said that over the past few months the PRI has been working out from a system level what the drivers of threats to biodiversity are. “This has resulted in a realisation that policy and the policy process – the way it creates a level playing field – is going to be a really critical lever to try and make progress on this issue.”
The need to scrutinise companies in this area was highlighted in recent research by InfluenceMap. In October, the think-tank reported that industry associations representing key sectors and some of the largest companies in the world had been lobbying to “delay, dilute and roll back” critically needed policy aimed at preventing and reversing biodiversity loss in the EU and US.
The PRI has been working in the climate lobbying space since 2015. In particular, it supported the development of a global standard on corporate climate lobbying, an initiative that was led by the Church of England Pensions Board, AP7 and BNP Paribas.
And in a January 2022 report, it pledged to broaden the guidance and engagement it had co-ordinated on climate lobbying to other ESG issues.
Supply chain focus
Returning to the nature initiative, according to the PRI’s website, companies’ own operations and supply chains may also be the subject of engagement activities “where such a focus is necessary to achieve the initiative’s goal of contributing to halting and reversing biodiversity loss”.
The choice of corporates to be engaged through the initiative will be worked out once the signatory advisory and technical advisory committees are in place, the PRI added.
The technical advisory committee will be a group of 10 PRI stakeholders, such as NGOs, with deep expertise on nature. This group will provide technical and scientific advice related to nature to the PRI.
PRI staff are also currently developing a prioritisation framework that will inform the company selection exercise.
Asked whether the initiative will focus on particular jurisdictions, Chandler said the PRI had “a fairly open book” at the moment.
“An obvious question is do we focus on supply-side (like Brazil or Indonesia) or demand-side (like the EU, UK or US) countries,” he said. “We could be looking at both.”
He added that the engagement will likely expand to direct policy engagement at some point in the future.
The PRI’s plans come as financial institutions have been stepping up on nature-focused engagements over the past year.
Most notably, the long-awaited Nature Action 100 was officially formed at COP15. Billed as the biodiversity equivalent to Climate Action 100+, the initiative aims to drive greater corporate ambition and action on tackling nature loss.
According to the PRI’s update, its nature initiative will not duplicate efforts but look to complement existing work by other initiatives through information-sharing and collaboration agreements, where mutually beneficial for all parties.
Chandler told RI that the PRI has already had good communication with Ceres and IIGCC, which co-lead the secretariat and corporate engagement workstream, as well as with the Investor Policy Dialogue on Deforestation, which works to co-ordinate public policy dialogues on halting deforestation.
Once the PRI has recruited the signatory advisory committee, Chandler said it will look to make up the technical advisory committee and an investor working group. The latter will consist of investors responsible for carrying out day-to-day engagement activities with focus companies and other stakeholders.
The initiative will be a key focus for the PRI’s head of stewardship, a new role that is expected to be filled in June. A broader plan for the project will then be produced in Q3 or Q4.