ESG Club Conference 2022 – Feature
Marion Maloney Head of responsible investment and governance Environment Agency Pension Fund
Hannah Skeates
Co-head, sustainable investing Allspring Global Investments
Mark Hill DD climate & sustainability – business lead, regulatory policy, analysis and advice directorate The Pensions Regulator
Niamh Boyle
Associate consultant and biodiversity specialist Aon
some of the best endeavours so far. The Taskforce on Nature- related Financial Disclosures (TNFD) coming into being, form- ing that framework, is helping to shape the data side. I see it as improvement,” he said. Hannah Skeates, co-head of sustainable investing at Allspring Global Investments, said we are talking about the loss of things on which we are dependent, such as habitats and landscapes.
“Then there is a connection to climate whereby nature can help with the mitigation of climate issues. And at the same time produce the resilience we need, if you think about flooding,” she said. Biodiversity has many dimensions to it: land, oceans, freshwa- ter and atmosphere. Investors need to find the equivalent of greenhouse gases to measure progress.
Skeates said that another issue is that unlike climate change, biodiversity risk depends on the location of the company you invest in. “It is going to be what this company is doing in this location and what is appropriate from a biodiversity perspective.
“The initiatives that are happening, whether it is TNFD or Nature Action 100, are building on the ideas of climate but in a multi-dimensional way,” she added.
How big is it?
These initiatives are needed, as investors are still trying to answer one big question in this arena. “How to measure biodi- versity risk is the million dollar question,” Boyle said. One approach to spot the sectors in investment portfolios which negatively impact on biodiversity, and those impacted by its destruction. Investors can then start looking at the transi- tional or physical risks of their exposures.
There are frameworks that can help here. “When it comes to the TCFD framework, there are hundreds of metrics which can be used in biodiversity,” she said. “If you tried to split them into small sub-sectors too quickly, you could lose important information. If you try to look at everything at once, you get lost in the weeds. “We are in the early stages of trying to navigate our way through all of those different metrics and different ways of managing risk,” she added.
It is a similar situation in Maloney’s scheme. “I cannot look at my portfolio and tell you how to prepare for the physical risk of biodiversity. I can tell you some bits of it, but not holistically,” Maloney said. “We have been focusing on a certain part of our portfolio. What I want to achieve is a net-positive outcome in our portfolio but
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