Why should it matter to investors?
Biodiversity is the web of life that underpins the health of the planet and has a direct impact on our health and livelihoods.1 More than half of global economic output, about USD$44 trillion of economic value generation, is moderately or highly dependent on nature.2 Biodiversity enables nature to be productive, resilient and adaptable. Just as we diversify our investment portfolios to reduce risk, nature needs diversity to be resilient and minimise disruption to the ecosystem that we rely so heavily on.3
Disruptions to the ecosystem such as destruction of habitats, overexploitation of natural resources and pollution will disrupt the balance of nature, impacting food security and goods and supply chains.
It is estimated up to 70,000 plant species are harvested for traditional and modern medicines globally, and about 100 million metric tonnes of aquatic life are taken from the wild each year.4 When that supply stops, our livelihoods will be profoundly affected.
In additional to that, biodiversity conservation is critical to addressing climate change. With the current pace of biodiversity loss, our fight against climate change will not succeed. Both issues are mutually dependent as nature and biodiversity cannot be considered in isolation from climate change.
What is First Sentier Investors doing?
In 2021, First Sentier Investors signed the Finance for Biodiversity Pledge, which provides a framework for financial institutions to address nature-related risks, by applying a more systematic assessment of how nature may impact a company’s performance, and how a company impacts nature. The work of individual investment teams and our RI team continues to focus on key issues and company-specific risks.
For further information on the respective team’s progress on Nature and biodiversity, read our Responsible Investment Report 2021.
Reporting on progress
We have much more to learn and implement on this topic as we work towards fulfilling our commitments under the Finance for Biodiversity Pledge by 2024. Below we outline some of the steps taken since signing the pledge and are intending to take moving forward. A key forum for making progress on this issue in 2022 will be through our internal Biodiversity Investor Working Group.
Whilst there is currently a lack of guidance and frameworks for identifying and addressing nature-related risks and opportunities, this is improving. We look forward to additional guidance from the post-2020 global biodiversity framework, the Taskforce on Nature-related Financial Disclosures, and the Science Based Targets Network, to help inform our approach.
- World Economic Forum: https://www.weforum.org/press/2020/01/half-of-world-s-gdp-moderately-or-highly-dependent-on-nature-says-new-report/
- The Economics of Biodiversity: The Dasgupta Review: https://www.gov.uk/government/publications/final-report-the-economics-of-biodiversity-the-dasgupta-review