Some 13% of approximately 1,000 banks covered by ISS ESG’s data service are linked to biodiversity controversies, according to an executive at the company.
These banks have been “doing bad things” linked to biodiversity, said Roberto Lampl, executive director and sector head of industrials, financials and real estate.
In addition, “very few” banks have disclosed information on biodiversity-related issues like deforestation and pollution, Lampl said during a panel at the Reuters Impact conference in London.
ISS ESG uses artificial intelligence to process news articles from more than 4,000 publications on over 100 ESG themes to detect reports of malpractice.
However, “many” banks have become engaged in biodiversity-related frameworks from organisations such as the Taskforce on Nature-related Financial Disclosures (TNFD) in work that should help them improve their disclosures, Lampl said.
“This is where I think asset owners, pension funds, and asset managers [have] important roles. As an asset owner, you have a seat at the table. You should definitely execute your ability to vote and demand changes to protect the stakeholders.”
“There’s a humongous amount of liability at risk. And that’s something most banks aren’t measuring.”
The cost of reparations for natural disasters will be far greater than the investment required for boosting nature-related initiatives, he said. ISS offers tools related to biodiversity including its Biodiversity Impact Assessment Tool, SDG Solutions Assessment, SDG Impact Rating, ESG Corporate Rating, Norm-Based Research, and Thematic Engagement Solution.
Mark Wade, head of sustainability research and stewardship at Allianz Global Investor, said the asset manager engages on biodiversity-related issues though the data “isn’t particularly advanced”.
“We try and identify the sectors where there are high impacts and dependencies and then think about how that can filter through to the company side.”
“The conversations we’re having now in biodiversity, versus two years ago, are much more advanced. It’s allowed us to think about much more systematic engagement.”
For example, Allianz GI has been asking an unnamed Scandinavian company it owned, for which water is a high materiality, to align with the TNFD’s recommendations, Wade said.
“All we can do at the moment is to really try to create transparency around materiality,” he said.
Allianzi GI has begun a series of “in-depth thematic engagements on biodiversity” with five companies in sectors including paper and forest products, construction, and chemicals, according to a stewardship report published in May.
The Munich-headquartered company managed €520 billion in assets as of the end of June.
By Thomas Cox – t.cox@carbon-pulse.com
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