Biodiversity dominating the ESG agenda in 2022
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- Biodiversity is interwoven with social and environmental well-being and inclusive growth
- In a survey of 47 global asset managers, 50% said that environmental factors play either a major role, or even a key determining factor, in their investment decision-making
Biodiversity, the most complex and intricate feature of life on earth, is rapidly capturing the attention of the asset management industry as a focus area for responsible investing and ESG.
This is according to David Levinson, Head of Responsible Investment (RI) at Nedgroup Investments, speaking at the annual Nedgroup Investments Responsible Investment Summit, who says shareholders and asset managers are increasingly acknowledging that the way that we behave as individuals and investors can materially influence the trajectory of some of the biodiversity damage that is underway globally.
“Biodiversity is not a silo. Biodiversity is interwoven with social and environmental well-being and inclusive growth. While it wasn’t instinctively on our radar when we started our Responsible Investment journey, the more we looked at the topic the more we realised how intrinsically it is interwoven into the full spectrum of responsible investing,” he says.
Levinson explains that biodiversity is simply defined as the biological variety and variability of life on earth. From a business and financial perspective, he points to Nedbank’s mantra that Growth is meaningless if today’s profits create tomorrow’s environmental losses.
“It’s important to understand that by supporting biodiversity through our business and investment objectives, we are not discouraging economic growth. Rather, we are looking to support the type of growth that ensures social equity and does not negatively affect the planet and the plants and animals that we share it with,” he says.
The most recent Nedgroup Investments Responsible Investment Report highlighted, among other things, the growing awareness amongst asset managers of the investment risks and opportunities associated with biodiversity. In a survey of 47 global asset managers, 50% said that environmental factors play either a major role, or even a key determining factor, in their investment decision-making. This is a notable increase from the 15% of surveyed managers who had this response in the 2019 survey.
When asked managers to drill down into specific risk areas they are concerned about, asset managers identified deforestation, global food production and agriculture, and global fish supplies as major themes. It was these themes that drove the agenda for our RI Summit with speakers from Credit Suisse, Sappi, Sea Harvest, The Black Mambas Anti-Poaching Unit and Protect the West Coast.
“While many of these conversations are uncomfortable and challenging for investors and asset managers to have, the willingness of people to engage with them is an extremely encouraging sign for the development of industry-wide RI practices,” says Levinson.
Levinson says the RI landscape is a constantly evolving one that requires a deep level of self-reflection and actualisation, from ourselves and participating asset managers. “It is incredibly encouraging to see that 96% of participants in our survey have recognised there is room for improvement, and thus have plans in place to develop and advance their approach and implementation of ESG factors.