Investors urged to strengthen biodiversity policies ahead of COP16

Investors should take practical steps to strengthen their biodiversity policies, especially when making investments near protected areas, according to a new report.

The report, published by ShareAction and the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) ahead of COP16 next month, lays out the practical actions investors can take to ensure the protection of biodiversity-rich areas.

Recommendations include identifying assets and sites located in or near protected areas and setting “ambitious targets” to ensure such assets are only engaged in activities aligned with these areas’ designation.

Beyond that, investors should also assess and mitigate biodiversity impacts across their portfolios, define expectations for companies to assess, disclose and manage their direct and indirect area of influence, even beyond their physical footprint, and ensuring that investee companies follow Free, Prior and Informed Consent (FPIC) processes on lands managed by Indigenous Peoples or local communities.

Finally, the report encourages investors to set up “a robust escalation strategy” including a divestment policy if portfolio companies do not address their biodiversity impacts.

Investors “not doing enough” on biodiversity

Alexandra Pinzon, Head of Biodiversity at responsible investment charity ShareAction, said: “We know investors are not doing enough to adapt their investment policies to tackle the destruction of important ecosystems in protected areas.

“To address the global extinction crisis and unprecedented decline of nature, investors must recognise the vital role of protected areas as a tool for biodiversity conservation and strengthen their investment policies and engagement with companies accordingly.

“We need to see investors use the huge power they wield to reduce their nature-related risks and impacts, especially on internationally-recognised areas of importance for biodiversity conservation. This would also be beneficial for investors, as the regulatory shifts required to deliver the ambitions of the Global Biodiversity Framework result in more stringent biodiversity protections and the expansion of protected areas, which could lead to stranded assets, reputational damage and other financial consequences.”

ShareActions benchmarks the responsible investment approaches of financial institutions, and says that 64 of the 77 asset managers and 50 of 65 insurers assessed lack clear evidence of policies to manage risks associated to protected areas.

ADM Capital’s first TNFD report highlights data gaps

Some investors have shown a growing focus on nature-related risks: Fidelity International, for example, recently created a nature roadmap aligned with the Task force on Nature-Related Financial Disclosures (TNFD). But robust data is still difficult to find in this nascent area of sustainability reporting.

In its inaugural TNFD report published last week, ADM Capital noted: “While borrowers agree to working with ADM Capital on nature-related improvements and safeguards, and many have their own self-imposed environmental standards and goals, ultimately we have imperfect visibility into the data and outputs around these.”

Calls for action grow around COP16

Earlier this year, the Business for Nature Coalition urged governments to adopt stronger nature and biodiversity policies at COP16, also called the UN Biodiversity COP.

The coalition, which includes companies like Danone, dsm-firmenich, H&M Group, Holcim, IKEA, Mahindra Group, Natura &Co, Nestlé, ofi, Sainsbury’s, Salesforce, Unilever and Volvo, warned that “voluntary action alone won’t be enough”, and encouraged other companies to join the call for greater regulation.

COP16 is taking place from October 21 to November 1 in Cali, Colombia.