More asset owners are embracing nature and biodiversity in sustainability strategies
Around 65% of asset owners incorporate nature and biodiversity into their sustainability strategies, while a further 20% plan to do so, according to a recent report published by Pensions for Purpose.
Commissioned by First Sentier MUFG Sustainable Investment Institute, the report – Integrating nature & biodiversity into investment – an asset owner perspective – investigates asset owners’ approaches to reporting on nature frameworks and data collection challenges, highlighting the need for the financial sector to confront biodiversity risks.
Asset owners are becoming “increasingly aware” of the risks of biodiversity loss in supply chain vulnerabilities and ecosystem fragility, the report concludes, while also revealing an increasing emphasis on nature-based solutions as a vital component for carbon sequestration and climate resilience.
Yet many “are still in the early stages of assessing risks and opportunities”, with most schemes still to report formally on nature, often starting with broader sustainability reports before adopting frameworks such as the Taskforce on Nature-related Financial Disclosures.
The report also presents best practice steps for pension schemes to gradually integrate nature into their strategies, emphasising education, board-level buy-in and increasing existing ESG efforts.
Karen Shackleton, chair and founder of Pensions for Purpose, said: “The report serves as a wake-up call for the investment industry to be proactive in addressing biodiversity loss. With the TNFD framework gaining momentum, asset owners must leverage existing climate efforts and structures to build comprehensive strategies for biodiversity.”
Bruna Bauer, research manager at Pensions for Purpose, added: “Financial materiality, rather than regulatory pressure, has emerged as the primary reason for asset owners to act. Biodiversity loss poses tangible risks to investments, including supply chain vulnerabilities and ecosystem fragility, prompting schemes to move proactively to protect their portfolios.
“Asset owner respondents have realised ignoring nature-related risks is not just a sustainability issue but has financial consequences too, leading to the integration of nature into sustainable strategies before more regulation mandates it.”
‘Urgent need’ for Nature Transition Plans
Pensions for Purpose’s study comes as a similar report published by WWF – Catalysing Change: The Urgent Need for Nature Transition Plans – suggested nature loss and climate change are interlinked, and Nature Transition Plans (NTPs) must address this link to align with global environmental goals, such as the Kunming-Montreal Global Biodiversity Framework (GBF).
Also read: Rebalance Earth’s Gardner: ‘When ecosystems fail, economies falter’
In a webinar last month, speakers including Antoine Pugliese, head of sustainable finance at WWF, and Nicolas Poolen, nature positive finance specialist at WWF, stressed the importance of investment firms considering NTPs in their strategies to contribute to “critical’” nature-positive goals.
“NTPs and climate transition plans should be seen as equals, neither as important as one another,” Poolen argued, adding that the industry should combine nature transition plans with climate transition plans.
“NTPs should complement, rather than compete with, existing climate transition plans.”