Climate change has sparked numerous collaborations among investors seeking common frameworks, metrics and attention, and similar efforts for biodiversity are now taking shape.
Some, like the Natural Capital Investment Alliance, are focusing on mobilizing investments in nature-based ecoinvestment opportunities. BNP Paribas has partnered with CDP Global in London, a non-profit organization that runs an environmental impact disclosure system, to develop common biodiversity corporate reporting metrics. “For companies, the first step is to recognize that biodiversity is important; the next step is to integrate biodiversity into their strategy,” Mr. Poujade said.
Other collaborations address specific biodiversity challenges, like the Investors Policy Dialogue on Deforestation, a group formed by the Church of England and 30 financial institutions with a combined $8.7 trillion in assets under management to tackle agricultural commodity-driven deforestation through engagement with public agencies and industry associations in selected countries.
Biodiversity and its interconnectedness with climate change also got a boost at the United Nations climate change conference last November. “COP26 in Glasgow was the first time biodiversity had been treated as a parallel issue. It is increasingly clear that without reversing the destruction of nature and making massive efforts to restore lost forests, wetlands and peatlands, there is little chance of averting high impact climate change,” said Eugenie Mathieu, London-based senior ESG analyst and earth pillar lead at Aviva Investors, with £262 billion in assets.
Investors are now hoping for further progress at the U.N. Biodiversity Conference’s 15th meeting, known as COP15 — the biodiversity version of COP26 — to be held in Kunming, China, in late April. Representatives of countries that have ratified a treaty for the conservation of biological diversity, whose governing body is the Conference of the Parties, will meet to review goals and work on adopting a global biodiversity framework to highlight the urgent policy actions needed globally to stabilize biodiversity loss by 2030 and create improvements by 2050.
COP 15 on biodiversity “is the big event that we are all waiting for because we expect it will set some targets,” said Mr. Poujade of BNP Paribas. Like COP26 did for climate change, “we still need a comprehensive agreement on a global framework.”
Even then, understanding and managing biodiversity from an investment perspective will take a lot of work. Unlike climate change, “there is no single metric available, comparable to greenhouse gas emissions, which provides all the information needed, so it can be difficult to assess a company’s impact on the natural environment and make comparisons across multiple companies. It would not be realistic to compare a bank with a beverage company using a similar set of metrics, for example,” said Ms. Mathieu with Aviva Investors. Instead, investors need to consider risks on a sector-by-sector basis and collect data from a variety of sources, she said.</…….