Unsustainable development creates problems for biodiversity
Protecting biodiversity has become as urgent and necessary as tackling climate change. And investors have a role to play. But for Lucian Peppelenbos, Climate and Biodiversity Strategist at Robeco, this requires a complete transformation of industrial processes and human habits, something more complicated than the energy transition.
Investors can play a role in ensuring that the companies they invest in contribute to reducing or reversing the factors responsible for biodiversity loss. In October, Robeco will launch a biodiversity-focused equity strategy that will identify companies whose activities benefit nature, such as reforestation or water conservation.
As part of its Biodiversity Roadmap, Robeco is developing a broader investment framework to assess in all its investment portfolios how companies contribute to biodiversity, both positively and negatively.
PRESERVE ESSENTIAL ECOSYSTEMS
One factor in biodiversity loss is invasive species, where parasites enter an ecosystem and spread rapidly. Australia found this out the hard way when the varroa mite entered hives and began feeding on the bees. To prevent its spread, the hives had to be confined. Since the hives can no longer be moved for pollination, billions of dollars worth of crops are now at risk in Australia.
Water is another critical ecosystem service. The recent droughts that have hit every continent this year are increasing the risk of crop failure and, in some parts of Africa, food insecurity. But the effects do not stop there: rivers are drying up, even though they are essential for industrial and commercial activities. In Germany, for example, industry has experienced supply problems due to low water levels in the Rhine. And in China, car manufacturers closed for weeks due to power shortages.
The lack of water causes immediate economic damage in multiple sectors of the economy.
THE ROLE OF INVESTORS
So what can investors do to move the needle? Neither they nor asset managers have the power of governments, but they can decide where to allocate their capital and use active ownership (via engagement, for example) to make a difference.
“We can engage with companies and allocate capital to solutions, and that’s what we’ll do with our new biodiversity equity fund,” says Lucian Peppelenbos.
In addition, portfolios can be systematically oriented toward companies that are not necessarily biodiversity solutions, but are helping to reverse the decline in biodiversity.
LOCATION ANALYSES
To do this, we need data and analysis, including location.
On this basis, we are developing an investment framework that we can apply in our portfolios to really link carbon emitters to biodiversity impacts, and identify firms that are doing better than others.
The difficulty with biodiversity is that the impacts are very localized, much more so than for greenhouse gases. If one wants to link specific economic activities or supply chains to their impacts on biodiversity, it is necessary to conduct a site analysis.
These site analyses are an important part of the Task Force for Nature-related Financial Disclosures (TNFD) framework. Many asset managers, including Robeco, have already signed up to promote portfolio disclosure.
ACT NOW
Above all, we need real action to respond to the emergency.
“For me, the most important thing is that we need to avoid “paralysis analysis”, and act now,” says Lucian Peppelenbos. “Three quarters of biodiversity problems are about land and sea use change and overexploitation of natural resources. These are things that can be relatively well identified and assessed.”
“So let’s not expect perfect data.”
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Source: Allnews | 3 oct 2022 | Lucian Peppelenbos, Robeco.
Link to the online article (FR)
Lucian Peppelenbos, Climate & Biodiversity Strategist
Lucian is the climate strategist at Robeco. He oversees work on the decarbonization of investment portfolios and the integration of climate-related risks and opportunities into investment processes. Thought leadership and publications are also part of his role, working with investors, universities and policy institutions.
Robeco is an international asset management specialist. The company was founded in 1929 and is headquartered in Rotterdam, the Netherlands, with 17 offices worldwide. A global leader in sustainable investing since 1995, its unique integration of sustainable, fundamental and quantitative research enables it to offer institutional and private investors a wide range of active investment strategies, covering a broad spectrum of asset classes. Robeco is a subsidiary of ORIX Corporation Europe N.V.