Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.
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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.
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Nature and biodiversity toolkit
Investors Can Access Nature Now (ICANN)
The unprecedented threats to nature and biodiversity, fundamental to our global economy and the fight against climate change is prompting investors to assess and disclose nature-related risks. To help investors start assessing nature, we have developed a guide that outlines a due diligence approach and resources, focusing on freshwater and forests.
Microplastics policy advocacy update
We believe in our collective responsibility to consider degradation of the natural environment as an investment risk in our decision-making processes, and further proactively collaborate with our industry to encourage the adoption of measures that reduce and mitigate this threat to human and environmental health.
Microfibres have been finding their way into our beaches, rivers and deep ocean, in the air we breathe and the food we eat for decades. Research by the First Sentier MUFG Sustainable Investment Institute (SII) outlines the sources and distribution of microfibre pollution, reasons for its urgent address and steps to prevent it.
Over the last 18 months, studies have shown the effectiveness of filters on washing machines in capturing microfibres before polluting our aquatic ecosystems1.
As outlined in our Responsible Investment Report 2020, FSI is leading, in collaboration with the UK’s Marine Conservation Society, a programme to engage with the manufacturers of domestic and commercial washing machines to fit filtration technology to their products, as a standard feature. In addition to engaging with companies, we have engaged with a number of regulators as part of this initiative. There has been considerable progress, as shown in the advocacy update below.
Table 2. Policy advocacy on microfibres
| United Kingdom | On Wednesday 2 November, the Microplastic Filters (Washing Machines) Bill had a second reading in the UK Parliament, requiring manufacturers to fit microplastic-catching filters to new domestic and commercial washing machines. In support of the Bill, we engaged with the then UK Secretary of State for the Environment and various other senior ministers from across Government in collaboration with the UK Marine Conservation Society and UK Womens Institute who have long been campaigning this issue. We believe the UK Government could take a global leadership position and prioritise this recommendation on microplastics, specifically to mandate the installation of microfibre filters in new washing machines by 2025. |
| Australia | Following a visit to our Sydney office by the Australian Minister for the Environment expressing an interest in the issue, we met with CEO Tony Chappel and the team at the New South Wales Environment Protection Agency. The Agency was very aware of the risks of microplastic pollution and were interested in the engagement work that we had been undertaking. It is due to hold a consultation early in 2023 on priorities, agreeing to include the issue of microfibre filters in that process. |
| European Union | As of January 2025, all new washing machines sold in France will have to include a filter to stop synthetic cloth fibres from polluting waterways. We are now engaging with policymakers to gauge the potential or ongoing discussions for the French Law to be adopted across the EU. |
1. Washing Machine Filters Reduce Microfiber Emissions: Evidence From a Community-Scale Pilot in Parry Sound, Ontario, https://www.frontiersin.org/articles/10.3389/fmars.2021.777865/full
Table 3. Progress made under the Finance for Biodiversity Pledge
| Commitment | Progress made to date |
|---|---|
| Collaboration and knowledge sharing |
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| Engaging with companies |
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| Assessing impact |
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| Setting targets |
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| Reporting publicly |
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We aim to develop a firm-level approach to key nature-related topics and sector guidelines. This will be accompanied by monitoring, progress reporting, and our assessment of various nature-related commitments made by investee companies.
We will continue to develop our work on scoping assessments using the Taskforce on Nature-related Financial Disclosures (TNFD). This is a new risk management and disclosure framework that aims to enable organisations to report and act on evolving nature-related risks. Along with this work, we aim to equip our funds with the resources to report on nature-related disclosure criteria, such as the ‘biodiversity sensitive area’ or ‘emissions to water’ indicators in the Principal Adverse Impacts of the EU SFDR.
Challenges
Quality data continues to be a major challenge.
In the absence of solid company-level data on nature, our assessment relies on external data providers that are specialised in specific topics of nature such as water and deforestation. However, physical risk and company-level location data are not robust or comprehensive enough to connect company responses and practices with their exposures.
For example, we would encounter significant data challenges in mapping high-forest risk commodities such as beef, and their sourcing locations, for each company to assess how our investee companies’ supply chain is contributing to deforestation. We are, however, beginning to see more transparency from some of the leaders.
Engaging with companies on issues such as biodiversity, climate change and human rights cannot be done in isolation. We need to assess companies holistically, and in some cases, there can be trade-offs between these, for example mining copper in primary forests where indigenous communities are present, to support the rapid manufacturing of electric vehicles or solar panels. We need to better understand this nexus and set up a more holistic engagement framework, which will be a future focus.
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