Engagement on nature and biodiversity: The imperative for investors

More than half of the world’s GDP, amounting to an estimated US$58trn, is moderately or highly dependent on nature and the ecosystem it provides. Investors’ ownership and investment decisions – and economic activity broadly – can profoundly impact biodiversity, resulting in changes to the capacity of the natural world to support ecosystem services that underpin our economy as a whole.  

Impacts can be positive or negative, with estimates suggesting that at least US$7trn invested annually in economic activities have a direct negative impact on nature, whilst the benefits of investing in nature could generate up to $10 trillion annually.  Institutional investors and other stakeholders - including policymakers - have the power to profoundly influence this trajectory.  

What investors can do to mitigate biodiversity loss

The move to address nature loss by 2030 requires a far more comprehensive, social, environmental and economic transition than we have seen so far with climate. To achieve that we need to think in a much longer-term time horizon. We also need to think more broadly - including systems and landscapes - and to collaborate across sectors, institutions and thematic issues. 

These are some of the issues we were pleased to discuss with PRI signatories and other investors at nature forums recently in Oceania, including PRI workshops in Melbourne, Sydney and Auckland.  

There was a fantastic level of engagement across these forums, with strong interest in how nature-related risks, such as biodiversity loss and ecosystem degradation, are crucial considerations for long-term investors. It was also a privilege to speak at the RIAA Conference Aotearoa New Zealand 2024 (Paul) and the Global Nature Positive Summit 2024 in Sydney (Ben).  

We are the youngest siblings to our environment and to nature – we are spoilt – and we need to do better.

Mavis Mullins, Chair, Nga Whenua Rahui, New Zealand Department of Conservation 

Asset owners and managers engaged around the levers available to investors to align capital with mitigating nature and biodiversity loss. Many also shared how they are actively addressing the systemic risks associated with nature loss and the associated tipping points.  

Active ownership is a critical lever at investors’ disposal which has the power to influence how corporates allocate capital, and it is well accepted that stewardship is essential to delivering strong returns to clients and beneficiaries.  

Spring, our stewardship initiative for nature

PRI’s Spring aims to leverage the power of investor stewardship by tackling the material financial risks of biodiversity loss by 2030. 204 investors, collectively representing US$15 trillion in assets under management, publicly support the initiative, of which 66 will be actively involved in the engagements with 40 focus companies. The initiative remains open, and interested investors are encouraged to sign up on our webpage.   

Spring is a great example of collaboration across the market in action. We need to move forwards together and collaboration is key. This is true across the economy and society, including collaboration between organisations (banks, investors, insurers, corporates), within government and policy and between thematic issues such as climate, nature and human rights. We can’t and shouldn’t separate human life from our ecosystems.   

The power of collaboration

Collaboration is also key between peoples, including local and First Nations communities in Oceania and other geographies. First Nation communities have a deep connection with the environment and need to be at the table as decision makers. There is also much we can and should learn from these communities, including a focus on long-term time horizons – which are critical for the preservation of nature and biodiversity.  

There is a clear business and investor case for our economies and markets to be equitable, net-zero and nature positive. These ambitions are inextricably linked, and better and more easily delivered together than apart. 

For further information contact Duncan Smith, Head of Communications, APAC, PRI.