Report Gives Investors Practical Steps to Strengthen Nature Conservation Portfolios
This week, responsible investment charity
ShareAction and the UN Environment Program World
Conservation Monitoring Center (UNEP-WCMC),
launched a new
report
setting out how investors should strengthen their approach to protect some of
the world’s most important biodiversity-rich areas. The guidance highlights the
critical role investors must play to help halt and reverse biodiversity loss
through their investment policies, capital allocation and portfolio stewardship
processes.
Since COP15
in 2022, we’ve seen an explosion of corporate and government strategies aimed at
progressing toward the Summit’s goal of halting and reversing global nature
loss by 2030.
Companies
and
cities
are looking to science-based targets for
nature,
initiatives such as the Nature Positive
Initiative
and Business for
Nature,
and investor tools such as WWF’s Biodiversity Risk
Filter for
guidance; and mechanisms including biodiversity credit
markets
and the Taskforce on Nature
Markets
have emerged to help accurately price and value nature in global markets.
But over the last few years, ShareAction has monitored the responsible
investment policies and performance of the world’s largest asset managers —
assessing the ambition and transparency of their approaches to responsible
investment and safeguarding against key social and environmental risks —
including policies to protect vital biodiversity.
ShareAction’s latest benchmarking reports have shown significant room for
improvement in the way asset managers and insurers protect against risk towards
protected areas as well as their own financial returns. 64 asset managers and 50
insurers assessed by ShareAction lack clear evidence of policies to manage risks
associated to protected areas. The report’s guidance builds on that of wider
biodiversity strategies, including the Taskforce on Nature-related Financial
Disclosures and the Global Reporting
Initiative.
“We know investors are not doing enough to adapt their investment policies to
tackle the destruction of important ecosystems in protected areas,” said
Alexandra Pinzon, Head of
Biodiversity at ShareAction. “To address the global extinction crisis and
unprecedented decline of nature, investors must recognize the vital role of
protected areas as a tool for biodiversity conservation and strengthen their
investment policies and engagement with companies accordingly.
“We need to see investors use the huge power they wield to reduce their
nature-related risks and impacts, especially on internationally recognized areas
of importance for biodiversity conservation. This would also be beneficial for
investors, as the regulatory shifts required to deliver the ambitions of the
[COP15] Global Biodiversity Framework result in more
stringent biodiversity protections and the expansion of protected areas — which
could lead to stranded assets, reputational damage and other financial
consequences.”
ShareAction’s new report focuses on specific approaches needed when investing in
or near areas that have been designated as protected by governments — such as
the Central Amazon Conservation
Complex
and the UK’s River Dee —
due to their rich biodiversity. It describes practical steps investors should
take to incorporate protected areas into their environmental and social
risk-management processes, establish clear expectations for investee companies
and follow robust escalation strategies where expectations have not been met.
Key recommendations for investors include:
-
Assess and mitigate biodiversity impacts across portfolios but recognize the
additional importance of protected areas. Investors should also assess if
any assets or sites within their portfolios intersect with, or are adjacent
to, protected areas. -
Set ambitious targets to ensure that all assets within protected areas are
only engaged in activities that align with the management plan or
designation of the respective protected area. -
Define expectations for companies to assess, disclose and manage their
direct and indirect area of influence — which could extend well outside
their physical footprint. -
Ensure that investee companies have assessed whether assets intersect with
lands managed by Indigenous Peoples or local communities and have adequately
followed Free, Prior and Informed Consent
processes. -
Have a robust escalation strategy that covers biodiversity engagement
priorities. Escalation policies should also consider the possibility of
divestment if biodiversity risks are not addressed.
“Asset managers and asset owners can drive positive impacts for nature through
their investment decisions,” said UNEP-WCMC Director Neville
Ash. “For example, when
they engage with companies and exercise their voting rights, they can be
influential in ensuring that businesses respect and help manage protected area
networks. I therefore welcome this guidance, which clearly lays out the steps
investors should take to reduce their risk associated with protected areas and
drive positive change. As we move towards
COP16, this is a valuable step toward
the whole-of-society action that the Kunming-Montreal Global Biodiversity
Framework calls for.”
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