Biodiversity | ~ 5 min read
When a biodiversity plan comes together
On this year’s Biodiversity Day, stakeholders are encouraged to be “part of the plan” in recognition of the collaborative effort required for this critical issue. For us, this means putting the topic at the heart of our engagement strategy and highlighting some specific challenges.
The biodiversity-focused COP 15, in late 2022, elevated the protection of nature as an urgent global challenge. The conference concluded with adoption of a Global Biodiversity Framework (GBF) aimed at addressing biodiversity loss by 2030 and restoring ecosystems by 2050.
We’re putting this issue front and centre in our engagement efforts. Engaging with companies on biodiversity is critical, but also complex. To address this, we developed a biodiversity engagement framework1 focused on industry sectors that have the highest impacts and dependencies on biodiverse ecosystems.
We engage with companies across these sectors with clear expectations guided by sector-specific key performance indicators. Since 2022, we have completed over 30 biodiversity-dedicated engagements and over 100 broader engagements where we discussed biodiversity topics.
Confronting challenges
While the rapid decline of biodiversity is not a new topic, its broader integration into strategic decision-making is still evolving. From our detailed engagement dialogues we have identified six key challenges:
- Firms are reluctant to align with the GBF due to immature data and methodologies.
- Board expertise is under-developed to tackle this issue.
- Progress on climate change and its interconnectivity with biodiversity can provide lessons on governance and strategies for biodiversity actions.
- High-quality and expansive location-based data on impact and dependency is urgently needed.
- Pioneering companies across different sectors are conducting biodiversity assessments using different methodologies, with first-stage results expected at the end of 2024 at the earliest.
- The risks of investing in biodiversity need to be balanced by the opportunities it presents.
Collaboration is critical
The scale of both biodiversity adaptation and mitigating biodiversity loss requires a collective response combining industry peers, local stakeholders and market-wide initiatives to find solutions. The fast-evolving Nature Action 100 (NA100) aims to move the needle, by raising awareness and crowdsourcing ideas for solutions. We actively support NA100 to extend our biodiversity engagement and stewardship reach.
The recently released NA100 Company Benchmark provides a useful framework for biodiversity analysis and engagement. Based on NA100’s “Investor Expectations for Companies”, the benchmark has six core indicators underpinned by 17 sub-indicators and 50 metrics. It adopts a value chain approach, incorporating indigenous rights, climate change and nature-aligned lobbying while integrating established reporting and disclosure frameworks.2
While this benchmark’s sector-agnostic approach supports comparability, investors still need to consider sector-specific issues and performance criteria. These complexities are why we have built a proprietary biodiversity engagement framework, intensified internal collaboration with our research and data analytics functions, and published our first Biodiversity Policy Statement.
1 Source: The rules of engagement to protect biodiversity | AllianzGI
2 These frameworks are the Corporate Sustainability Reporting Directive, Science Based Targets Network and the Taskforce for Nature-related Financial Disclosures.
