Investors urged to strengthen approach to protect key areas for biodiversity conservation

ShareAction, the responsible investment charity, and UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC), have launched a new report setting out how investors should strengthen their approach to protect some of the world’s most important biodiversity-rich areas. The guidance highlights the critical role investors need to play to help halt and reverse biodiversity loss through their investment policies, capital allocation and portfolio stewardship processes.

The report focuses on the particular approach needed when investing in or near areas that have been designated as protected by governments, due to their rich biodiversity. These include areas such as the Central Amazon Conservation Complex and the River Dee in the UK. It describes practical steps investors should take to incorporate protected areas into their environmental and social risk management processes, establish clear expectations for investee companies and follow robust escalation strategies where expectations have not been met.

Key recommendations for investors include:

  • Assess and mitigate biodiversity impacts across portfolios but recognise the additional importance of protected areas. Investors should also assess if any assets or sites within their portfolios intersect with, or are adjacent to, protected areas.
  • Set ambitious targets to ensure that all assets within protected areas are only engaged in activities that align with the management plan or designation of the respective protected area.
  • Define expectations for companies to assess, disclose and manage their direct and indirect area of influence, which could extend well outside their physical footprint.
  • Ensure that investee companies have assessed whether assets intersect with lands managed by Indigenous Peoples or local communities and have adequately followed Free, Prior and Informed Consent processes.
  • Have a robust escalation strategy that covers biodiversity engagement priorities. Escalation policies should also consider the possibility of divestment if biodiversity risks are not addressed.

Commenting on the report, Alexandra Pinzon, Head of Biodiversity at ShareAction, said: “We know investors are not doing enough to adapt their investment policies to tackle the destruction of important ecosystems in protected areas.

“To address the global extinction crisis and unprecedented decline of nature, investors must recognise the vital role of protected areas as a tool for biodiversity conservation and strengthen their investment policies and engagement with companies accordingly.

“We need to see investors use the huge power they wield to reduce their nature-related risks and impacts, especially on internationally-recognised areas of importance for biodiversity conservation. This would also be beneficial for investors, as the regulatory shifts required to deliver the ambitions of the Global Biodiversity Framework result in more stringent biodiversity protections and the expansion of protected areas, which could lead to stranded assets, reputational damage and other financial consequences.”

Over the last few years, ShareAction has monitored the responsible investment policies and performance of the world’s largest asset managers, assessing the ambition and transparency of their approaches to responsible investment and safeguarding against key social and environmental risks, including policies to protect vital biodiversity.

ShareAction’s latest benchmarking reports have shown significant room for improvement in the way asset managers and insurers protect against risk towards protected areas as well as their own financial returns. 64 asset managers and 50 insurers assessed by ShareAction lack clear evidence of policies to manage risks associated to protected areas.

Welcoming the report’s recommendations, Neville Ash, Director of UNEP-WCMC, said: “Asset managers and asset owners can drive positive impacts for nature through their investment decisions. For example, when they engage with companies and exercise their voting rights, they can be influential in ensuring that businesses respect and help manage protected area networks. I therefore welcome this guidance, which clearly lays out the steps investors should take to reduce their risk associated with protected areas and drive positive change. As we move towards COP16, this is a valuable step toward the whole-of-society action that the Kunming-Montreal Global Biodiversity Framework calls for.”

Related posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.