.png)
A new report has outlined a crucial roadmap for investors seeking to reduce biodiversity-related risks and impacts through strategic investment decisions just before the upcoming COP16 Biodiversity Summit.
Released by ShareAction and the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC), the report highlights actionable steps investors can take to incorporate biodiversity protection into their environmental and social risk frameworks. This includes managing capital allocation and portfolio stewardship with a sharper focus on safeguarding nature.
The guidance also introduces a framework for financial institutions to set clear biodiversity-related expectations for their investment companies. It details escalation strategies for instances when these expectations aren't met, ensuring greater accountability.
The report, targeted specifically at investments near high-biodiversity regions designated as protected by governments, aims to encourage financial institutions to take a more active role in preserving vital ecosystems.
Alexandra Pinzon, head of biodiversity at ShareAction, emphasized that investors are still "falling short" in aligning their policies with the need to prevent the destruction of these critical 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," she said. "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."
The report's release comes just weeks before the COP16 Biodiversity Summit in Cali, Colombia, where governments will gather to discuss strategies for achieving the 23 targets set by the Montreal-Kunming Global Biodiversity Framework. These ambitious goals, aimed at halting and reversing nature loss by 2030, include protecting 30% of land, waters, and seas, encouraging businesses to monitor and disclose nature-related risks, and mobilizing $200 billion annually for biodiversity investment.
Alexandra Pinzon noted that the guidance would benefit investors significantly as new regulations to advance these biodiversity targets begin to take effect globally.
"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," she said.
The report's key recommendations advise investors to thoroughly assess and mitigate biodiversity impacts across their portfolios, with a particular emphasis on the significance of protected areas.
The report encourages investors to set bold targets, ensuring that all assets within protected regions engage only in activities aligned with established management plans. It also outlines the need for clear expectations from companies to assess, disclose, and manage their direct and indirect influence on biodiversity.
Financial institutions are further urged to ensure that their portfolio companies assess whether any assets overlap with Indigenous or local community lands and to comply with the Free, Prior, and Informed Consent (FPIC) process in such cases.
Additionally, the report emphasizes the importance of having a robust escalation strategy to address biodiversity-related issues, including the potential for divestment from companies that fail to address biodiversity risks.
Neville Ash, director of UNEP-WCMC, called the guidance a "valuable step forward" toward achieving the "whole-of-society action" envisioned by the Kunming-Montreal Global Biodiversity Framework.
"Asset managers and asset owners can drive positive impacts for nature through their investment decisions," he said. "For example, when they engage with companies and exercise their voting rights, they can be influential in ensuring that businesses respect and help manage protected area networks. I therefore welcome this guidance, which clearly lays out the steps investors should take to reduce their risk associated with protected areas and drive positive change."
Comments