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The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Mounting evidence of the financially material impact of biodiversity is raising concern among many stakeholders, including investors and consumers, and prompting changes in the regulatory and legal environment. Understanding the impact of biodiversity loss on asset prices, corporate value, and, by extension, investment outcomes is nascent, and lack of reliable data remains a hurdle to measurable action. Nonetheless, Wellington’s ESG Research Team believes market participants need to consider and account for the costs of biodiversity loss and the benefits associated with ecosystem preservation.
Our team aims to integrate biodiversity into our research and stewardship approach, just as we do with climate change. And, as with climate change, we prefer engagement as the primary means of helping companies and issuers understand the related risks and opportunities. We consider how companies address material biodiversity risks in our proxy votes as well, and we will continue to evolve our approach to this complex subject. Here we share recent examples of our efforts to assess companies’ risk exposure to biodiversity and better understand their plans mitigate it.
Underpinning the ESG Research Team’s approach to biodiversity stewardship is our ongoing collaboration with Woodwell Climate Research Center. The scientific data and insights we gain through our work with Woodwell is the starting point for understanding the relevance of biodiversity for the client portfolios we manage. As for engagements, our team believes in prioritizing conversations with companies that, in our view, have material exposure to biodiversity-related financial risks, such as those with heavy operational or supply-chain reliance on ecosystem services. We primarily use engagement to influence change and preserve long-term value, as we believe this is the most constructive way to enhance value and reduce risk in client portfolios. We believe active managers can enhance engagements by leveraging insights from fundamental industry research teams, climate science partners, and ESG experts. When engaging on land and water use (two key drivers of biodiversity loss) investors can also access several frameworks such as Global Canopy’s Deforestation-Free Finance Sector Roadmap and Ceres’ Investor Water Toolkit.
Awareness, governance, and strategy
Policies, planning, and operations
Regulators and governing bodies, including the European Commission, have begun to enact polices aimed at conservation and preventing ecosystem degradation. There are currently several bills moving through the US Congress that address biodiversity loss. At the same time, concerns from consumers and investors about the potential negative social and economic outcomes of biodiversity loss are mounting. Wellington’s ESG Research Team believes that companies and issuers, and the entities that invest in them, can no longer ignore the financial implications of biodiversity loss. We will continue to rely on engagement as our primary method of stewardship on biodiversity awareness and risk mitigation.
Focusing on value amid rising global challenges and opportunitiesContinue reading
Harnessing the power of engagement in stewardship investingContinue reading
Biodiversity: Why investors should take noteContinue reading
The growing power of impact investingContinue reading
Focusing on value amid rising global challenges and opportunities
Our Sustainable Investing (SI) Research Team offers a high-level view of 2023 research and engagement priorities.
Harnessing the power of engagement in stewardship investing
Equity Portfolio Manager Yolanda Courtines explores why company engagement is a key component of successful stewardship investing.
Biodiversity: Why investors should take note
With scientists now broadly agreeing on the risks posed by accelerating biodiversity loss, Chris Goolgasian and Jenny Xie assess implications for investors and steps they can take.
The growing power of impact investing
Impact Measurement and Management Practice Leader Oyin Oduya appears on the WellSaid podcast series to discuss the future of impact investing, her research approach, and how her team thinks about generating market-rate returns alongside positive social and environmental outcomes.
Driving positive outcomes: Our 2022 ESG research agenda
Director of ESG Research Carolina San Martin highlights key areas of focus for 2022, including talent management, supply chain accountability, and climate action — particularly with respect to biodiversity.