BNP Paribas AM takes aim at “biodiversity footprint” of investments

biodiversity

French asset manager BNP Paribas Asset Management is sharpening its focus on biodiversity, aiming to develop a framework for companies to report their impact on nature in partnership with non-profit organisation CDP.

According to BNP Paribas Asset Management (BNP PAM), new reporting standards will encourage companies to behave more sustainably towards nature by favouring firms that are taking action to reduce threats to ecosystems. 

Biodiversity has not received enough attention from investors so far, said speakers from BNP PAM at an online event on Wednesday.

“It's important to understand that climate change is driving nature loss, and nature loss is driving climate change – but very few climate dialogues with companies address biodiversity,” said Adam Kanzer, head of stewardship in Americas at BNP PAM, during the event.

The World Economic Forum estimates that half of global GDP depends on nature.

Nevertheless, estimates show that one million of the earth’s eight million plant and animal species are currently threatened with extinction.

According to research by WWF, the global population of mammals, birds, fish, amphibians and reptiles has fallen by an average of 68 per cent since 1970. 

Commercial industries around palm, soy, and beef are also driving habitat loss, which has been linked with the emergence of new infectious diseases, as animal species are pushed into closer proximity with humans.

“There are many important corporate engagement efforts that touch on biodiversity, but none that focus on biodiversity. It's somehow a problem that’s so large and complex that it’s fallen through the cracks,” said Kanzer. 

A recent report from ratings agency S&P found that biodiversity is often underplayed in investors’ ESG assessments, in which the focus tends to go toward combatting climate change. 

Nature-based metrics are harder to collect than those relating to greenhouse gases, and investors are confused by the lack of standardised reporting methodologies, according to S&P. 

Kanzer says that investor efforts to mitigate climate change should go hand-in-hand with protecting biodiversity.

“Every corporate climate strategy should consider nature loss, particularly strategies that rely on biofuels or carbon offsets,” said Kanzer.

He said it is “not enough” for investors to set a target of limiting global temperature increases to 1.5 degrees above pre-industrial levels, without also addressing biodiversity.

“There are a variety of paths to get to 1.5 degrees, but those that rely on carbon capture decades from now will have devastating impacts on ecosystems.”

By investing in ‘nature-based’ solutions such as protecting and restoring forests, mangroves, and peatland, it has been estimated that the planet could store an extra 10-12 gigatonnes of CO2 per year.

BNP Paribas Asset Management is also gearing up to launch an Ecosystem Restoration Fund in the coming weeks. This new fund is expected to focus on listed equities that are helping to restore oceans, land, and urban communities. 

Across the rest of its funds, the EUR500 billion asset manager also plans to report the “biodiversity footprint” by the end of 2021.

“Last year, we launched a partnership with the Iceberg data lab, and I Care & Consult for biodiversity metrics, that we launched with AXA IM and others. With this data, we will be able to disclose the biodiversity footprint of our funds by the end of 2021,” said Robert-Alexandre Poujade, ESG analyst at BNP PAM.

In 2020, BNP PAM was among a EUR6 trillion consortium of institutional investors that joined forces to develop tools for measuring investments’ impact on biodiversity.

Through these initiatives, BNP PAM hopes to move the needle on biodiversity engagement.

“Change won't happen overnight, but on these issues in particular, we're bringing a real sense of urgency,” says Kanzer.

“We're not here to target companies or to blame them. We're always looking to work with corporate management and to encourage progress over time, but we must stress that we are in crisis, and business as usual is worse than not good enough – it's literally driving us to disaster, and transformation is not optional.”