AP2, Storebrand and Aviva are among 13 investors namechecked this week for their work on nature, as two new frameworks launch to promote disclosures and targets.
The Principles for Responsible Investment (PRI) has published a document containing reflections and case studies from financial institutions attempting to integrate nature into their decisions.
It highlights efforts by Swedish pension fund AP2 to apply recommendations from the Taskforce on Nature-related Financial Disclosures (TNFD) to its portfolio.
The SEK500bn asset owner analysed its dependencies and impacts on nature, and used those findings to decide on priority areas, develop scenario analysis and assess its deforestation risk across equity and corporate credit portfolios.
“The analysis showed that 21% of portfolio assets were invested in sectors identified by TNFD as having high nature-related dependencies and impacts, helping focus resources on the most material areas,” noted the report.
“The fund has established biodiversity goals, including a commitment to contribute to a net positive development for nature by 2030 and a portfolio that does not contribute to deforestation. AP2 is also developing monitoring targets for engaged companies and broader portfolio-level targets for higher-risk sectors as data quality and methodologies improve.”
Elsewhere, Aviva has trained its board on nature-related issues and undertaken policy advocacy on the topic.
According to the PRI, Aviva reflected that “the integration of nature progresses faster when responsibility is clearly allocated, senior leaders are engaged, and nature is treated as an investment and wider business issue, not only as a specialist sustainability topic”.
Schroders has estimated the positive and negative natural capital-based externalities of 15,000 listed companies, and expressed them in monetary terms relative to revenues.
“The model combines information on business activities, geographic context, environmental pressures and mitigation efforts to produce a consistent and scalable measure of corporate impacts on nature,” observed the report.
“This helps integrate nature considerations into portfolio analysis, stewardship prioritisation and investment decision-making.”
In a separate report published today, the PRI analysed the high-level approaches of more than 800 institutional investors on biodiversity and nature, concluding that 500 had publicly committed to address nature-related issues, 400 undertook shareholder engagement on the subject, and 160 advocated for policy change.
Updated frameworks
This week also saw updates to several key nature-related frameworks, including a major revision of the Science Based Targets for Nature (SBTN), announced on Monday.
In a statement issued alongside the announcement, SBTN said, in response to feedback from companies, its latest standard provides “a clearer, more practical route to credible action” by being less prescriptive.
“Greater practicality does not mean lowering the bar,” it added. “The place-based approach is strengthened, and independent validation and transparent disclosure remain central to SBTN’s approach.”
On Tuesday, an alliance of nature-related organisations including TNFD and SBTN launched a set of indicators to help companies and investors measure changes in nature. “For financial institutions, the framework provides a common, science-based way to understand and track how investments depend on and affect nature,” said a spokesperson for the group, known as the Nature Positive Initiative.
Regarding portfolio level data, limited visibility into supply chains and their geographic footprint remains a challenge to quality of data and still makes broader assessments difficult, in our view
TNFD has updated its recommendations and assessment guidance for the first time since their publication in September 2023, adding new guidance on environmental crime, invasive alien species and measuring the state of nature.
The updated LEAP approach – which guides organisations through identifying their interface with nature, assessing dependencies and impacts, evaluating risks and opportunities, and preparing disclosures – also provides further guidance on portfolio assessments for financial institutions, nature-related transition planning and landscape and seascape approaches.
The revisions reflect market feedback and are intended to support more consistent assessments of nature-related dependencies, impacts, risks and opportunities.
Åsa Mossberg, AP2’s head of sustainability, welcomed recent efforts to improve the frameworks and information that enable investors to address nature. “We see promising new tools such as Global Canopy’s DEFT Pathways, which can be valuable as engagement support,” she told IPE, referring to a project to help reduce deforestation linked to investments.
“Regarding portfolio level data, limited visibility into supply chains and their geographic footprint remains a challenge to quality of data and still makes broader assessments difficult, in our view,” she added.
“We plan to continue to work with natural scientists to strengthen our analysis and to better understand our impacts and dependencies on nature.”
Leaders from government, business and civil society will gather in Armenia next week for COP17, where they will undertake the first official review of progress towards the implementation of the Kunming-Montreal Global Biodiversity Framework.
