Investors are increasingly aware of the importance of biodiversity and ecosystem services (BEES) to their investment decisions, according to outreach and a literature review carried out by staff of the International Sustainability Standards Board (ISSB).

However, many are still in the early stages of understanding how to assess the related risks and opportunities.

“Investor interest in nature-related risks and opportunities tends to focus on specific nature-related topics and particular sectors and industries,” project manager Jeff Stehm told the board’s 21 November meeting.

The staff had also learned, he reported, “a clear trend” with water resources emerging as “a top concern for those assessing BEES-related risks”.

This factor was cited by investors “almost twice as frequently as land use, deforestation, pollution, biodiversity loss, and plastic pollution”.

However, the outreach also revealed that “many investors” are “in a learning and understanding phase or a capacity building phase within their organisations.”

These investors, outreach showed, are still “investigating how best to assess nature-related risks and the opportunities and what information they might find useful in their investment decisions”.

The board added the project to its workplan as a research effort following the conclusion of its recent workplan consultation on its agenda priorities for the next two years.

The ISSB’s research project on BEES is in its initial phase, with a focus on understanding the market need for more useful disclosure of information about related risks and opportunities.

The research focuses on four key areas:

  1. Investor needs: Analysing the information investors require to assess BEES-related risks and opportunities, and evaluating how well current disclosure practices meet these needs;
  2. Financial impact: Examining how BEES risks and opportunities affect companies’ cash flows, access to finance, and cost of capital;
  3. Reporting standards: Assessing the current landscape of BEES-related reporting standards and frameworks, comparing them to established standards like IFRS S1 and SASB;
  4. Current disclosures: Evaluating the current state of company disclosures on BEES-related risks and opportunities.

The meeting also heard that although the situation with BEES-related information is comparable to the situation with the early days of climate disclosures, the subject is substantially more complex and broader.

In terms of pinpoint priorities, the staff reported investors are primarily focused on specific nature-related topics and particular sectors and industries.

“Both engagements and the literature showed that water is a common focus of most investors,” they said, with freshwater being mentioned “almost twice as frequently” as “land, land use, deforestation, pollution, biodiversity loss and plastic pollution”. 

The staff team said they will continue engaging with investors globally, particularly in Latin America, the Caribbean, Middle East, and Africa, and will analyse findings to produce a final assessment paper for discussion at a future ISSB meeting.

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