Investment Institute
Environmental

Back to our roots: How responsible investors can help tackle the biodiversity crisis

  • 22 May 2022 (7 min read)

  • Climate and biodiversity are intertwined – two systemic risk factors that drive each other 
  • Despite limitations on availability and consistency, there is still sufficient data for investors to act
  •  All industries are vulnerable to the risks of biodiversity loss, and all are part of the challenge. We believe solutions are now emerging which offer investors the ability to be part of the solution.

Human life and nature depend on a complex system of interactions between the environment and living organisms. It is utterly fundamental to our existence and deeply sensitive to our interventions – and yet we can sometimes lose sight of how reliant our economies are on biodiversity’s careful preservation.

The oceans, forests, agricultural land and climate, as well as the plants and animals they support, are examples of the ‘natural capital’ at the heart of this – and they are under threat. We believe investors can and should address biodiversity risks in their portfolios, in pursuit of genuinely sustainable economies.

Our goal should be to identify how each economic activity can damage biodiversity, and to find solutions which can mitigate these negative impacts. Ultimately, we have the opportunity to build new ‘nature-positive’ economic models.

This is a challenging ambition. It is often said that you cannot manage what you cannot measure and in biodiversity research, data and reliable analytical tools have been difficult to come by. But this is changing. We believe solutions are now emerging which offer investors the ability to start integrating biodiversity into core portfolio decision-making.

The momentum will amplify this year as the pandemic-delayed United Nations Conference of the Parties on biodiversity (COP15) takes place in China. We have already seen the initial publication of the Taskforce on Nature-related Financial Disclosures’ (TNFD) Beta framework, regarding biodiversity-related financial disclosure, and we will also see developments from the Science-based Targets Network (SBTN) on biodiversity target-setting by corporates in the near future.

In addition, one of the key investor-led organisations in the marketplace – the Finance for Biodiversity (FfB) foundation – plans to issue guidance on approaches by financial institutions in 2022. Biodiversity loss is a systemic risk, tied inextricably to climate change and yet sometimes overlooked in the push for net zero emissions. We think the moment has arrived for investors to understand how they can be part of the solution, to assess how biodiversity risks might affect their investments, and to ensure they are not left behind.

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    Disclaimer

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk , including the loss of capital. The value of investments .and the income from them can fluctuate and investors may not get back the amount originally invested.

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