Investors must prioritise biodiversity and natural capital risk, says asset manager
Nature damage could pose a ‘more significant risk’ to GDP than climate change, says Jupiter sustainable investment head.
Asset owners continue to fall short when accounting for natural capital and biodiversity risks in investment portfolios, an expert told delegates at the UK Pensions and Lifetime Savings Association’s (PLSA) recent conference.
Speaking at the PLSA’s investment conference in Edinburgh in May, head of sustainable investing at UK asset manager Jupiter Asset Management, Abbie Llewellyn-Waters, warned that excluding biodiversity considerations, and considerations of the goods and services provided to people by the natural environment, from net-zero commitments, could pose a significant risk to the economy and investors.
“Natural capital and biodiversity is a much more significant risk in the context of GDP outlook, as natural capital accounts for 50% of all GDP outlook,” she said.
“I encourage you to think about biodiversity as readily as you have climate change over recent years,” she added.
The World Economic Forum (WEF) estimates up to $44trn of economic value generation globally, equal to half of global GDP, is moderately to highly dependent on nature and the services it provides.
According to PLSA data, 74% of UK pension schemes have a net-zero plan in place, or will do in the next two years. While progress can be attributed in some areas, investors still ignore the ability of biodiversity to remove carbon from the atmosphere within their policies.
I encourage you to think about biodiversity as readily as you have climate change over recent years.
Biodiversity Framework
Part two of the UN Biodiversity Conference (COP 15) will be held in Kunming China in October where the much anticipated Post-2020 Biodiversity Framework is expected to be adopted.
Strengthening and maintaining biodiversity can reduce carbon emissions and help sequester and store carbon.
The first draft of the framework details measures to reduce biodiversity threats by 2030. According to the document, 30% of global land areas and sea areas must be conserved through effectively managing ecosystems.
The Nature Action 100 initiative (NA100) – the nature-driven version of investor group Climate Action 100’s (CA100) – is due to launch this summer, an update revealed in April.
The engagement-led investor group will work with companies and policymakers integral to reversing nature loss by 2030.
The initiative is being launched by a group of 10 investors, including AXA Investment Managers, BMO Global Asset Management (EMEA) and Federated Hermes.
