An introduction to responsible investment: Biodiversity for asset owners

Biodiversity for asset owners introductory guide  PRI

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Mar 26, 2024 - 14:30
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An introduction to responsible investment: Biodiversity for asset owners

An introduction to responsible investment: Biodiversity for asset owners

Overview

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  • This starter guide introduces the topic of biodiversity to asset owners, focusing on drivers of biodiversity loss while recognising the relevance to the broader concept of nature.

  • It explains the importance and relevance of biodiversity in the context of the investment process and outlines how asset owners might incorporate the issue into responsible investment policies, investment processes and stewardship practices.

  • The guide is split into two parts:

Selected further reading is provided throughout the document. For more information on topics raised in this guide, or on biodiversity and nature more broadly, please get in touch.

Part 1: The relevance of biodiversity

What is biodiversity and why is it important?

Biodiversity is the “variability among living organisms from all sources”,1  while nature refers to the “natural world, with an emphasis on its living components”.2   Biodiversity enables ecosystems to be productive, resilient and adaptable to change, which in turn enables ecosystem services such as the provision of food and raw materials, air and water filtration, pollination, carbon storage and climate regulation.

Nature or biodiversity?

This guide focuses on biodiversity and the actions asset owners can take to address the five drivers of biodiversity loss.3  However, the guidance provided acknowledges how natural systems contribute to the maintenance of biodiversity and can therefore be applied to the broader concept of nature for investors seeking to adopt a more holistic approach to nature-related risks and opportunities.

An estimated US$58trn of economic value generation – more than half of the world’s total GDP – is moderately or highly dependent on nature and the ecosystem services it provides.4  Economic activities have an impact on biodiversity by changing its state positively or negatively, which can in turn result in changes to the capacity of the natural world to support ecosystem services. Further estimates suggest that US$7trn is invested annually in economic activities with a direct negative impact on nature.5

Planetary boundaries and climate change

Climate change and biodiversity loss are intrinsically linked; they are crucial to understanding the interplay between planetary boundaries and to minimising the risk of irreversible environmental damage, with six of the nine planetary boundaries crossed as of 2023.6  With climate change categorised as one of the five drivers of biodiversity loss,7   investors can begin identifying synergies within their climate strategies relating to biodiversity risks or opportunities. For example, pursuing circularity within net zero transition technologies can minimise the nature-related impacts of materials extraction and disposal,8  while innovations in regenerative agriculture can mitigate emissions associated with land conversion and promote soil health and resilience.SDGs, Targets, and Indicators

Part 1: The relevance of biodiversity

  • SDG 15: Life on Land
    • Target 15.5: Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity, and protect and prevent the extinction of threatened species.
      • Indicator 15.5.1: Red List Index
      • Indicator 15.5.2: Red List Index trends

Biodiversity is in decline

  • SDG 15: Life on Land
    • Target 15.1: By 2020, ensure the conservation, restoration, and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains, and drylands, in line with obligations under international agreements.
      • Indicator 15.1.1: Forest area as a proportion of total land area
      • Indicator 15.1.2: Proportion of important sites for terrestrial and freshwater biodiversity that are covered by protected areas, by ecosystem type
    • Target 15.5: Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity, and protect and prevent the extinction of threatened species.
      • Indicator 15.5.1: Red List Index
      • Indicator 15.5.2: Red List Index trends

Why does it matter to investors?

  • SDG 13: Climate Action
    • Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning.
      • Indicator 13.3.1: Number of countries that have integrated mitigation, adaptation, impact reduction, and early warning into primary, secondary, and tertiary curricula
  • SDG 15: Life on Land
    • Target 15.9: By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies, and accounts.
      • Indicator 15.9.1: Progress towards national targets established in accordance with Aichi Biodiversity Target 2 of the Strategic Plan for Biodiversity 2011-2020

SDGs, Targets and Indicators

SDGs Targets Indicators
SDG 15: Life on Land Target 15.1: By 2020, ensure the conservation, restoration, and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains, and drylands, in line with obligations under international agreements. Indicator 15.1.1: Forest area as a proportion of total land area
SDG 15: Life on Land Target 15.5: Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity, and protect and prevent the extinction of threatened species. Indicator 15.5.1: Red List Index
Target 15.5: Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity, and protect and prevent the extinction of threatened species. Indicator 15.5.2: Red List Index trends
SDG 13: Climate Action Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning. Indicator 13.3.1: Number of countries that have integrated mitigation, adaptation, impact reduction, and early warning into primary, secondary, and tertiary curricula
SDG 15: Life on Land Target 15.9: By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies, and accounts. Indicator 15.9.1: Progress towards national targets established in accordance with Aichi Biodiversity Target 2 of the Strategic Plan for Biodiversity 2011-2020

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: unpri.org

 

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