Rathbone Greenbank Review Spring 2021

This has been a year of unprecedented challenges, touching some more than others. While as a business, we have been fortunate to continue relatively as normal, we would like to offer our sympathy to those of our readers who have been directly or indirectly affected by the pandemic.

Investor day 2020 – Biodiversity and business

We had hoped to meet as usual for our annual Investor Day in June 2020, but it eventually took place online in October — the first time we have held a virtual event of this kind. With over 450 guests joining us, our expert speakers offered their insights on the theme of ‘biodiversity and business’. Live contributions from our audience then fed into a discussion on what needs to happen to reverse the worrying trend of biodiversity decline.

In 2019, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services conducted the most comprehensive study on the state of the natural world — and its findings were frightening: up to one million species are threatened by extinction.

As Professor Sir Partha Dasgupta’s recent report on ‘The Economics of Biodiversity’ has highlighted, biodiversity and the natural world provide us with ecosystem services that are critical to our economy and our society.

Habitat clearance for agriculture is a significant contributory factor, along with pollution, the importation of invasive species, climate change and increased marine exploitation — all have combined to create a vicious cycle of biodiversity loss. Our intricate relationship with nature has come to the fore during the ongoing pandemic, with scientists connecting our disregard for nature to the emergence of the SARS-CoV-2 virus. So, it’s never been more important for us to understand the causes of biodiversity loss and to act to reduce them.

Looking to the future

Evidence suggests that few investors have a comprehensive understanding of biodiversity’s relationship to economic stability. Barriers to this include the absence of agreed biodiversity measurement methodologies, a dearth of corporate data and the lack of any internationally agreed and binding goals similar to those embedded in the Paris Agreement on climate change.

Nevertheless, there is scope for investors to create a new biodiversity narrative by emphasising the links to climate change, engaging with evolving metrics and supporting regulatory initiatives. This is why, in November 2020, Greenbank signed the Finance for Biodiversity pledge, committing to collaborate and share knowledge with other institutions, engage with portfolio companies and assess the impact of our investments on biodiversity. Signatories to the pledge will also call on global leaders to agree on effective measures to reverse nature loss this decade at the upcoming Conference of the Parties to the Convention on Biological Diversity, due to take place in China in May 2021.

Engagement with business is essential to promoting a nature-positive economy. Encouragingly, businesses are showing increased sophistication in their biodiversity management and a greater willingness to commit to net positive impacts. Progress is also being made in developing biodiversity metrics, business incentives and reliable datasets — but there are limitations.

As ethical, sustainable and impact investors, it’s vital that we understand the impact that the companies we invest in have on biodiversity and that we engage with them effectively to bring about long-lasting and beneficial change. Additionally, we believe that those companies that are best placed to manage their biodiversity impacts and dependencies could present attractive opportunities for investors seeking sustainable long-term returns.

There is no doubt that the continuing loss of our natural biodiversity poses systemic risks to both the global economy and the wellbeing of our planet. Urgent action is required by investors, individuals, businesses and policymakers alike as time is not on our side.

Read the latest edition of Rathbone Greenbank Review here.