It’s been a bumper week for developments in nature-related finance, with announcements from Storebrand Asset Management, Candriam, Norges Bank Investment Management (NBIM) and the Church of England Pensions Board (CEPB).
Storebrand AM published a report on Thursday that maps company operations against location-specific data, such as water stress and forest loss, to identify potential financial and operational risks.
The paper, titled Integrating nature data into investment decisions, was conducted in partnership with nature data specialist GIST Impact.
“As investors, we can use this data to move beyond broad policies and pinpoint exactly where value is at risk, and where we need to drive meaningful change at a company level,” explained Emine Isciel, Storebrand AM’s head of climate and environment.
“Nature-related risks, whether from ecosystem degradation, water stress or litigation, have direct implications for companies, affecting valuations, operational stability, and long-term resilience,” she continued.
The report included a comparison of the nature-related performance of the 100 largest Nordic companies with their global peers.
Using firms selected by investor network Nature Action 100 as the basis for the comparison, it found that Nordic firms had a 42% lower impact on nature, on average.
Storebrand AM said the findings would help it better understand how its portfolios interact with nature, and would enable more informed and targeted engagement with key companies.
“For instance, encouraging water reuse and efficient wastewater management in manufacturing hubs, or supporting Indigenous-led conservation efforts in ecologically sensitive zones,” said Isciel.
NBIM’s infra pledge
Elsewhere, NBIM revealed on Wednesday that it was ramping up its focus on nature as part of its latest climate strategy.
As well as including nature-related topics in its scenario analysis efforts and stewardship programmes, the asset manager for the Norwegian sovereign wealth fund committed to achieve ‘no net loss of nature’ for all its new investments into infrastructure.
“This means we’re going to try to minimise our nature impacts through a thorough due diligence, and by working with our partners to implement leading environmental solutions in real estate,” explained Eivind Fliflet, the head of NBIM’s environmental team, during a press conference.
He said addressing nature was “becoming standard industry practice among our peers and many other investors”, and that ‘no net loss of nature’ was a way to make infrastructure assets more resilient, and reduce financial risks – including by decreasing community opposition to new projects.
Cost of reparations
Also on Wednesday, responsible investment house Candriam published a paper titled Assessing the ecological debt: A key lever for biodiversity risks integration.
The research outlines a methodology for calculating how much it would cost portfolio companies if they were made to restore the biodiversity they destroy each year.
In the textile sector, for example, it estimates that costs for a single year would amount to around 2% of annual revenues, on average, and up to 4% for companies with the greatest exposure.
For some, the paper suggests this could represent up to a 46% reduction in net income.
Writing on LinkedIn, Candriam’s biodiversity analyst Elouan Heurard said the research “reminds us that compensation or restoration is far from a cheap path to achieving ‘no net biodiversity loss’” – and that avoidance and reduction efforts were more sensible priorities for investors and companies.
“This work represents an important milestone toward integrating biodiversity considerations into investment analysis and engagement practices,” continued Heurard, who co-authored the paper.
“It contributes to developing quantitative biodiversity targets and nature-related transition pathways within financial portfolios, a necessary evolution for responsible investment in the coming decade.”
Current disclosures are unhelpful, say academics
Meanwhile, researchers at the University of Zurich have concluded that the current disclosures being made by companies around nature “are not sufficiently decision-useful for stakeholders and lack legal enforceability”.
Using AI, four academics – Ario Saeid Vaghefi, Tushar Manekar, Tobias Schimanski and Markus Leippold – assessed reports published by companies covered by Nature Action 100 and found a lack of quantitative metrics and targets, despite many being aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures.
Shareholder votes
And finally, the CEPB announced on Tuesday that it will vote in favour of two biodiversity-related shareholder resolutions at the upcoming annual meetings of Australian retailers.
The Sustainable Investment Exchange has filed proposals at Coles Group and Woolworths Group, calling for strengthened seafood sourcing policies and due diligence processes, specifically in relation to salmon farming practices in Macquarie Harbour, Tasmania.
Sara Taaffe, an environmental analyst for CEPB, said it was supporting the requests because “biodiversity is essential for stabilising ecosystems that sustain us – nutritionally and economically”.
“These [proposed] actions help safeguard biodiversity, support the growth of sustainable fisheries and fishing communities, and protect long-term shareholder value,” she added.
The vote at Woolworths will take place on 30 October, followed by Coles on 11 November.
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