Biodiversity is a “megatrend” that will reshape human behaviour, company trajectories, and industry value chains, according to asset manager Robeco.

Alongside climate change and human rights, the trend of biodiversity is “shaping the world”, the Netherlands-headquartered firm said in a 133-page sustainable investing report.

Investment solutions “will grow” in financing the transition to a nature-positive world, Robeco predicted. The World Economic Forum estimated in 2020 that investments in nature could create $10 trillion of growth by 2030 across food, infrastructure, and energy.

Discussions are “intensifying around expanding nature-based credit markets, but with the need to ensure that such markets are credible and can provide real-world benefits”, Robeco said.

“Much can be learned from the debacle over carbon credits markets, which vary from being useful to useless.”

As nature engagement speeds up it is “likely to merge with climate to form an integrated approach”, with climate-nature assessments already underway from the Intergovernmental Panel on Climate Change and the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, Robeco said.

The report noted that data on biodiversity is “patchy and not always comparable” despite the hundreds of providers, with some sources developed to inform policymakers or scientists and not fit for investment purposes.

“Fortunately, our understanding of how to construct and incorporate appropriate nature-based metrics into financial analysis will mature, and we expect to see sector pathways develop based on the drivers of biodiversity loss.”

Nevertheless, there are enough tools and metrics to start assessing biodiversity issues, the investor said.

Using the Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE) tool, Robeco discovered that one-third of its assets under management are in sectors with “high or very high” impacts on the drivers of biodiversity loss.

In addition, one-quarter of assets are in sectors that have a “high or very high” dependency on ecosystems services such as agricultural and forest products, utilities, food, and apparel.

Nature-related developments will “move fast” spurred on by the final agreement of biodiversity conference COP15 last December and forthcoming releases from the Taskforce for Nature-Related Financial Disclosures (TNFD), Robeco said.

By Thomas Cox – t.cox@carbon-pulse.com

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