Companies and investors are building up massive risk profiles on climate and biodiversity loss as they are adopting false


solutions. Paul de Zylva, Friends of the Earth


never thought that would be associated with this glamorous clothing I bought for £5.” Those things are going to get exposed.


What is harder to expose are the companies with complex sup- ply chains. Cadbury has been found out. They deny it saying that they have a code of practice, but it is not doing anything unless you are monitoring it. We are going to find you out, so let’s have a mature conversation. Woods: The question then arises, if we want companies to make more information public, we have to decide how we handle it when they are doing something wrong. It was mentioned that chocolate companies potentially have child labour in their supply chain. When Tony’s Chocolonely said they were aware of children working in their supply chain, how did we handle that conversation?


There is always this complicated balance between encouraging companies not to hide their problems versus how we handle the fact that there are going to be problems. Jackson: The first step for any company is acknowledging that there is a problem.


I used to deal with mining companies and they would often deny that there was a social problem. Then they do their own investigation and find out that there is one. Then the question is, what are you doing about it?


Either a company has to be exposed or they identify their own problems. I like them when they identify their own problems, then you know they are being open and honest. As long as somebody is showing you that there is a problem, you can have that conversation, but you have to ask yourself


16 February 2023 portfolio institutional roundtable: Biodiversity


what do you want the company to do? So, have a goal that the engagement can work toward, otherwise, if you go into it half- hearted, not knowing what you want out of it, then you are not going to get anywhere. Hill: What needs to be done to create a credible pipeline of investments? That is what I see as the elephant in the room. Vyravipillai: It comes through meeting with companies, doing your research and ultimately taking a view. This should be a comparative exercise.


I do not want to keep going back to there being a lack of data, but when that improves we will be better positioned to deter- mine if we want to invest in Company X or Company Y. Jackson: There has to be a willingness to look at companies which have identified a problem but have not yet addressed it. They are the ones with potential upside.


Do you invest in a dark brown company that is going to transi- tion, or in a light green one that is transitioning? The upside is on the dark brown one. The downside is that our carbon foot- print will go through the roof in the short term. How do we explain that to our investors? It is the same with biodiversity. If you have a company which has a massive negative impact but a plausible transition plan, I would be tempted to invest, because there is potentially more capital gain than a company that is already transitioning. Manuel: Part of the answer is solutions, but a much bigger part of it is behaviours, which goes back to stewardship. Realistically, if you are investing in a nature-based solution, most of the risk is going to exist within a broad and diversified portfolio. It is good to remind trustees that they sit at the top of an enor-


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28