The relevance of biodiversity was rated as “moderate” by the average financial institution board in the Netherlands, the Dutch Association of Investors for Sustainable Development (VBDO) said in a study.
Almost half of the 60 financial institutions surveyed rated biodiversity’s relevance as three out of five, on a scale where five was the most relevant, VBDO said.
“For most boards, biodiversity seems to be of moderate importance and not a priority,” VBDO said. “Boards generally take little ownership on biodiversity.”
Eight financial institutions (13%) rated biodiversity as “not relevant”, while nine rated it as “very relevant”. Some 43 pension funds and 17 insurers responded to the association’s survey.
“The importance of commitment from the board cannot be underestimated. This commitment begins with immersing yourself in the topic,” the organisation said.
“However, awareness alone is not enough. Internal discussions should ideally lead to internal alignment on the subject of biodiversity and the ambition of the investor. These can then result in goals being set for asset managers.”
Source: VBDO
“The few boards that are serious about biodiversity stressed the importance of knowledge within the organisation, alignment between the board and the management team, and the active involvement of the board in the process of developing strategies on biodiversity and evaluating effectiveness,” VBDO said.
Some respondents were trying to increase board awareness through study sessions on biodiversity.
DEPENDENCIES UNMAPPED
Some 73% of the Dutch financial respondents do not yet map out their dependencies on biodiversity, with many saying they do not yet have the tools or data to do so, the organisation said. Some have joined the Partnership for Biodiversity Accounting Standards (PBAF), which aims to enable the financial sector to assess its dependencies on nature.
Two in three respondents (60%) said they perform nature-related risk assessments, with most covering physical and transition risks as opposed to system risks.
Physical risks were mainly carried out when investors believed an asset had a high dependency on specific ecosystem services, VBDO said. For example, mortgage investments might be assessed for flood risk.
Transition risks related to biodiversity were assessed due to reputational pressures, the need to identify investees most vulnerable to these risks, and a push for sector-specific information, the association said.
Almost two thirds (65%) of respondents were committed to one of six well-known nature standards, the report found. These included:
- Post-2020 Global Biodiversity Framework
- The biodiversity objective of the EU Taxonomy
- The Finance for Biodiversity Pledge
- Science Based Targets initiative (SBTi)’s finance framework
- Information Commissioner’s Office’s accountability framework
- Nature Action 100
By Thomas Cox – t.cox@carbon-pulse.com
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