A global coalition of 27 pension funds and asset owners – which include AP7, the Church of England Pensions Board (CEPB) and the Universities Superannuation Scheme (USS) – representing approximately €2.3trn in assets under management, are calling on governments to take ambitious policy and regulatory action to halt and reverse global biodiversity loss.
Leading the initiative at COP16 in Columbia are five pension funds, AP7, CEPB and USS, along with HESTA in Australia and Caisse de dépôt et placement du Québec (CDPQ) in Canada.
“Biodiversity loss is a risk to our entire global economic system. This is a systemic risk which investors cannot avoid through diversification,” said Flora Gaber, manager ESG analysis at AP7.
“Businesses must contribute to a nature-positive society to maintain long-term profitability. And this is most feasible to achieve with consistent regulations and policies around the world. It is in the interest of all companies, investors and governments,” she added.
In a co-signed statement, the investor coalition calls for a ‘whole of government’ approach to tackling the biodiversity crisis to protect investment returns and investor confidence.
The funds have called for bold national level targets to include sector transformation plans, the implementation of mandatory disclosure on nature for companies, along with establishing regulation that addresses the five drivers of biodiversity loss, and developing and scaling financial mechanisms for nature.
These positions were reviewed by academics, non-governmental organisations and scientists, and are linked to the goals and targets of the Kunming–Montreal Global Biodiversity Framework, the group confirmed.
This initiative comes at a time of increasing awareness of the systemic threat biodiversity loss poses to investment markets.
At COP16 – which runs from 21 October until 1 November in Cali, Colombia – governments are tasked with reviewing the state of national implementation of the Kunming-Montreal Global Biodiversity Framework, which was agreed at COP15 in Montreal Canada in 2022.
The five drivers of biodiversity loss, as identified by Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) are: land use change and habitat loss; exploitation and overfishing; climate change; pollution; and invasive species and disease.
“Nature and biodiversity loss is a systemic risk which poses a material risk to all levels of the economy and can impact investment returns in all asset classes and markets. As universal owners, we cannot diversify, or stock pick our way out of large systemic risks. To safeguard the future prosperity of our beneficiaries we need to address the root causes contributing to this crisis,” the co-signed letter stated.
“The tragedy of biodiversity and nature loss will not be solved by waiting for the market in the absence of strong environmental policies and regulations,” said Laura Hillis, director of climate and environment at CEPB.
“For us as stewards of long-term retirement savings, bold action from the government holds the key to protecting long-term prosperity and wellbeing for our beneficiaries,” she added.
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