How investors are incorporating biodiversity into decision making

GIIA hosted a webinar with Oliver Wyman and WWF this week, to unveil findings from their new report "Biodiversity and Infrastructure Investing: How infrastructure investors are factoring biodiversity impacts into decision making."

The report builds upon the 2020 white paper "Incorporating Sustainability into Infrastructure," which looked at a range of ESG considerations where biodiversity was one of the factors. It highlights several sector case studies to help guide the investment community in assessing and integrating biodiversity considerations within their investment processes.

In developing the findings, 51 infrastructure investors and lenders managing over USD $5 billion in assets were surveyed to understand how infrastructure projects impact biodiversity and the associated risks for investors. It was clear that there is growing awareness among investors regarding biodiversity issues, with increased action in this area.

The discussion focused on current practices of investors, approaches, frameworks, and metrics that investors use to assess biodiversity impacts, as well as exploring a future outlook for biodiversity assessment.

The report finds that:

Biodiversity loss and climate change are both critical crises that investors and advisors must address as part of risk management and global citizenship. increased policy attention, driven by the 2022 Kunming-Montreal Global Biodiversity Framework, will make biodiversity a necessary consideration in future infrastructure investments.

• Progress is achievable now, despite the lack of mandated common standards from regulators and governments. investors already have enough information to begin assessing biodiversity impacts and risks, and those who act early will be better prepared for future transition risks.
• A nature-positive transition offers new opportunities. reversing or slowing biodiversity loss will be essential, and infrastructure investors can enhance returns by incorporating positive nature impacts into projects. compliance with new regulations and participation in emerging natural capital markets, such as biodiversity credit markets, will also be necessary.
• Financial returns and investor preferences are the main reasons for considering biodiversity. Investors are increasingly incorporating biodiversity to mitigate financial risks and enhance returns through green financing. Brand reputation, liquidity risk, and government intervention were less relevant than the factors above.
• Investors view each nature impact differently. Climate change is the highest priority in investment decisions; however, resource use, pollution, and habitat changes are rising up the priority list for investors. While not prioritised, invasive species are starting to gain investors’ attention.

Several case studies are also covered in the report, which take a deep dive into biodiversity considerations throughout the investment lifecycle. 

The report will be shared when it is available from Oliver Wyman and WWF.

If you would like more information, please do reach to info@giia or Vlad Benn vbenn@giia.net.