Nature Action 100: A proposal for targeted investor engagement on biodiversity

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Investors have an important role to play in addressing the twin crises of climate change and biodiversity loss, which are inextricably linked. The economic imperative to act is clear: More than 55 percent of global GDP is directly dependent on biodiversity and ecosystem services. Just as with climate change, investors should be highly motivated to mitigate biodiversity loss given the material impact nature-related risks are increasingly recognized as posing to investment portfolios. 

Over the past two years, investor activity and interest in biodiversity have grown significantly. However, no initiative has provided an avenue for coordinated investor engagement that is as targeted as Climate Action 100+, an investor-led initiative launched in late 2017 that aims to drive transition by the world’s largest corporate greenhouse gas emitters.

Learning from Climate Action 100+, investors are ideally positioned to apply similar methods as part of an initiative to drive the corporate transition to nature-smart practices. Proposals for a ‘Nature Action 100’ have been put forward by the World Bank (including in the Mobilizing Private Finance for Nature report) and others, and the structure for such an initiative is taking shape. Earlier this year, eleven graduate student researchers at Columbia University’s School of International and Public Affairs (SIPA) worked with the World Bank to create a model for a Nature 100, targeted investor engagement initiative on biodiversity loss. The team started with a case study of Climate Action 100+ and identified several takeaways:
 

  1. Momentum and Vision: Climate Action 100+ came at a critical time when investors were becoming well-versed in climate risks and opportunities following the Paris Agreement. Building on a large body of preceding engagement work, the platform provided much-needed aggregation of initiatives and was able to communicate the need for companies to develop transition strategies aligned with the goals of Paris, alongside baseline requests for disclosures and emissions reductions. As such, it attracted many high-profile investors and generated momentum that pushed investee companies to act.
     
  2. Benchmarking: Despite Climate Action 100+’s clear articulation of its goals and its success in holding the largest companies accountable, the initiative missed the opportunity to set a well-defined benchmark to assess companies’ performance from the start. The Net Zero Company Benchmark was only set in 2021. As a result, target-setting has not been ambitious enough: Only 43 percent of investee companies have targets to reach net zero by 2050, and some stated targets, especially in the oil and gas sector, are not aligned with a scenario of a global temperature increase below 1.5 degree Celsius.
     
  3. Disclosure Blind Spots: While companies disclose exposure to a variety of environmental risks, physical risk related to climate and forests in their value chains, and transition risk related to water are both consistently under-reported.
     
  4. Governance Inefficiencies: Climate Action 100+ experienced some inefficiencies related to governance, being managed by five partner organizations. Moreover, despite regional representation in the governance, Climate Action 100+ engaged with fewer companies in Asia (34) compared to North America (54) and Europe (57), despite some of the largest emitters being based in Asia.
     

Based on the experience of Climate Action 100+, recommendations for the potential goals, governance structure, and implementation process for Nature Action 100 have become clear: 

  • Goals: Nature Action 100 should be a platform through which investors can articulate a clear vision for corporate action on biodiversity: Net zero loss of biodiversity in the near to medium term and net positive impact on biodiversity in the long term. A critical aspect in this regard is converging around a single, universal metric for measuring biodiversity loss. Four priority areas of work suggested for Nature Action 100 are: engagement, awareness and education, reporting and measurement, and policy/regulatory advocacy.
     
  • Governance: Nature Action 100 should have centralized management with a clear line of accountability—managed by a single organization while tapping into the expertise of multiple partners.
     
  • Implementation: To maximize momentum around the launch of Nature Action 100, the initiative could be launched at the upcoming Conference of the Parties (COP) 15 to the Convention on Biological Diversity (CBD), taking place in October 2021 in Kunming, China.
     
  • Membership: A staggered approach to membership is recommended. In the initial stages, any interested investors should be allowed to join to maximize scale and momentum benefits. Later, the initiative should employ a tiered model where investors self-select into groups depending on how much action they are willing to take on biodiversity. Investors should be added at regular junctions, and existing engagement groups should be opened to new investors, in order to maximize engagement for investors who join off-cycle.  

In their report, the student group also proposed a methodology for shortlisting target companies for Nature Action 100. Using ENCORE data, the students developed an interactive tool that investors could use to identify companies to engage with based on their impacts or dependencies on nature. The full summary of the students’ findings and methodology can be accessed here.

Several investor groups and other initiatives are contributing to the development of a Nature Action 100 concept—including the Finance for Biodiversity Pledge and the World Benchmarking Alliance. The concept will be presented by a supporting investor at The Financial Sector and the Post-2020 Global Biodiversity Framework workshop on June 17, organized by the CBD. The aim of the workshop is to engage relevant actors in laying out a vision and identifying priority actions for how the financial sector can best contribute to achieving the goals of the global biodiversity framework. Nature Action 100 will be put forth as a potential action.

The World Bank looks forward to building on the work of these students by cooperating with all interested partners to advance this initiative and support engagement that drives corporate transition to nature-smart practice. The draft post-2020 global biodiversity framework recognizes this transition as critical to stabilizing the trends that have driven biodiversity loss in recent decades and enabling the recovery of natural ecosystems to achieve the vision of the CBD: “living in harmony with nature by 2050.”


This research was conducted by a team of Capstone students at Columbia University’s School of International and Public Affairs: Angela Attrey, Alexandra Carruthers, Aldo Defilippi, Ananya Misra, Anna Rautenberg, Brian Kennedy, Elizabeth Reichart, Emily Udal, Gabriela Eslava Bejarano, Hyunah Shim, and Tianhao Niu. Special input was provided by Laura Kunstler-Brooks, Cary Krosinsky, and Thomas Murtha.

Authors

Fiona Stewart

Lead Financial Sector Specialist

Samantha Power

Sustainable Finance Consultant

Join the Conversation

Julia Kochetygova
June 21, 2021

In view of the future launch of Nature Action 100 in October this year, what is the status of investor signing up process? Who is coordinating it? We at Northern Trust Asset Management are interested in a chance to speak with the leadership group of this initiative. Thank you.

June 21, 2021

Thank you for your interest. Please send your contact information to our Communications Lead, Elizabeth Price [email protected] with the subject line: Nature Action 100 and we will be in touch.