When it comes to the ‘E’ in ‘ESG’ (Environmental, Social and Governance), impact on biodiversity is often overlooked compared to climate action. A ShareAction report on asset managers’ approach to biodiversity has highlighted the main reasons why biodiversity is excluded and what can be done to move the finance sector towards a net positive impact on the natural world.
In 2020, various initiatives arose to push the finance sector towards a more positive impact on biodiversity: European investors calling for impact measures; the Taskforce on Nature-related Financial Disclosures was announced; and the Finance for Biodiversity Pledge was launched.
Meanwhile, our partner ShareAction was interviewing various stakeholders for a report assessing where the finance sector currently stands on biodiversity and learning what tools the financial system needs to increase action.
Image: llee_wu CC BY-ND 2.0
Unlike climate change, they found that few investors at the time of the study planned to establish commitments around reducing biodiversity loss, indeed none of the 75 largest asset managers had a dedicated policy on biodiversity and only 11 per cent of asset managers have policies requiring portfolio companies to mitigate harmful impacts on biodiversity. Then looking at the minority within a minority (companies that not only look at environment, but specifically biodiversity), deforestation-related policies are at the forefront, leaving freshwater, overfishing, and ocean health overlooked.