The Responsible Investment Association Australasia (RIAA) has launched a Nature Investor Toolkit, a guidance framework that also sheds light on opportunities related to nature markets.

The toolkit aims to guide investors with a framework through nature-related risks and opportunities in areas including stewardship, policy, and communication.

“What opportunities might there be for investors sage enough to grasp first mover advantage and put themselves at the forefront of a global shift towards nature positive business?” said Guy Williams, executive director of toolkit contributor Pollination.

“If you are an investor, you are already investing in nature. All global GDP depends, either directly or through supply chains, on nature: clean air and water, productive land, and thriving flora and fauna,” Williams said in a blog post.

The toolkit categorised nature-related investment opportunities into three areas: nature-aligned investments, pure-play nature-positive investments, and transition opportunities.

Investments in unit-based nature markets are an emerging investment class, the toolkit said. These markets, underpinned by scientifically measurable metrics related to ecosystem services, are seen as a potential avenue for investors to align with biodiversity and environmental goals.

“This includes nature-based solutions for carbon sequestration, as well as biodiversity credit markets, in which biodiversity credits, generated from activities/outcomes that have a positive impact on species or ecosystems, are traded.”

Investors can enter these markets by investing in nature market-focussed investment funds, equity investments in project developers, providing project finance, or acquiring real assets to be used in the project, it said.

Australia’s Nature Repair Act 2023 established the beginning of the first government-backed national voluntary biodiversity credit market. The country is due to release its first methodology in Jan. 2025, officially kicking off the market, following delays.

“Other countries are expected to follow, potentially creating a more robust and expansive global market for biodiversity credits,” the toolkit said.

However, it warned that the complexity and regulatory uncertainties surrounding nature markets necessitate careful consideration by investors.

“Investments in this emerging asset category should be approached with sufficient understanding and care. It is important to emphasise that biodiversity credits cannot replace the action that is needed by all stakeholders to reduce harm to nature and ensure the sustainable use of biodiversity.”

Companies should prioritise addressing biodiversity impacts in their business models and supply chains, it said.

This week, three Australian companies announced their reef credits method had been approved by the market’s overseer.

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

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