mous pyramid of decisions which are being made in their name. They have more power than many of them appreciate in terms of how they can influence those decisions if they set the tone from the outset, and the top. The mechanism for deliver- ing that is stewardship.


If trustees are clear on what is important to them, what they believe in and how others should act when making decisions on their behalf, then the impact is not always measurable but there is a trickle-down effect. Micheli: It will have an impact. We have our own metrics, so we know which companies provide solutions and which are light brown or dark. We invest in the solution providers, but we engage with the others. If a food company wants more regenerative agriculture, they will want the solutions from the companies in our portfo- lio, so it will help them. We launched that strategy in December. We have another called Positive Change, which also invests in brown compa- nies. It identifies companies that are doing more than others in that they have identified an issue that can be solved and as it improves you get a re-valuation.


So, considering biodiversity when investing is a driver of alpha, not just reducing risk? Micheli: For us it is. We have had biodiversity as a financial fac- tor in our scoring for almost 10 years. It adds quite a lot of value financially.


It could be that sector allocation is the main driver, but there is also a re-valuation when companies reduce their risk. This is


something that is starting to be incorporated by the market but is more evident for climate than biodiversity. Woods: Should investors aim to be a biodiversity lead or a lead in a sub-category of biodiversity, because we said if we break it down into smaller categories we will miss the links between them? Is someone being a biodiversity lead greenwashing because there are so many areas that you could not cover? de Zylva: I like people to be good at what they do in their sector. Wouldn’t it be great if water companies were doing such a fan- tastic job that there were positive implications for soil and farming? If you get your piece of the pie right it will have impacts elsewhere and you could probably take some credit for that.


There are some corporations whose tentacles spread so far and wide so they are in every sector pretty much, but there are oth- ers who specialise. I work with people who want to go on the journey and be as good as they can be. Manuel: It is okay for investors to focus or pick out themes. Some pension funds we work with have a natural link to a theme or campaign, maybe through their corporate sponsor, or that the individuals on the trustee board believe is important. If you try to solve all the world’s problems, you are going to fail. If you channel your energy into things that matter to you, then you are more likely to get better outcomes. To return to a point discussed earlier, if you put your head above the parapet and say: “I’m doing this and I’m doing it great,” it opens you up to having a stick poked at you about the other stuff you may or may not be doing. Investors are effective when they focus on things that matter to them.


Railpen is responsible for our members’ financial futures and that means taking biodiversity risk


into account. David Vyravipillai, Railpen


February 2023 portfolio institutional roundtable: Biodiversity


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