Four asset managers partner to measure biodiversity impact of investments

AXA Investment Managers, BNP Paribas Asset Management, Mirova, and Sycomore Asset Management strongly believe that preserving the planet’s biodiversity is an urgent priority. Together, they have launched a call for expressions of interest (CEI) for a partner to develop and implement an innovative tool to measure the impact of investments on biodiversity.  The goal of the CEI is to find a player capable, on a large scale, of measuring companies’ biodiversity impact.

There is growing interest in quantitative indicators among regulators, investors, and their clients because these indicators can be used to measure the impact of investments, particularly environmental impact, in order to obtain concrete portfolio sustainability assessments.

Since COP 21 in 2015, the number of tools available has multiplied. Today, there are tools for measuring carbon impact, for measuring the extent portfolios are in line with the 2°C trajectory and many others, but these assessments remain largely focused on climate change. However, it is equally important that we preserve species and ecosystems. There is scientific consensus in this regard: one million species are facing extinction[1]. Biodiversity plays a vital role, and its collapse would jeopardise the future of humanity.

Today, AXA IM, BNP Paribas AM, Mirova, and Sycomore AM are joining forces in order to raise awareness in the financial community and develop the necessary tools for investors to respond to this threat.

This coalition of investors is looking to work with an ESG data provider that is capable of developing and implementing a methodology for measuring the impact of a company’s activity on biodiversity. The long-term goal is to create a dedicated database. In order to provide investors with the most significant and useful assessments possible, the methodology must be consistent with the following principles:

  • Impact measurement: the methodology must provide a “physical” indicator (e.g.: km2 mean species abundance, potentially disappeared fraction of species, etc.)
  • “Lifecycle” approach: the methodology must factor in the entire supply chain from product use to end-of-life.
  • Sector estimatessector assessment grids should make estimates tailored to the specificities of each sector possible.
  • Ease of use, for a variety of purposes: communicating about impact on biodiversity, providing more extensive reporting, etc.
  • Flexibility and transparency: the methodology must be compatible with the public taxonomies and internal environmental assessment systems already in use, regardless of whether they’re proprietary or open source.
  • Aggregation and communication: the data provided must simplify portfolio performance assessment in relation to an index.
  • Application scope: the approach must be applicable to companies active in the main market indices (listed equities and fixed income funds). Ideally the method should be compatible with other asset classes (listed and unlisted equities, fixed income funds, infrastructure, real estate, etc.).
  • Financial materiality: companies’ levels of exposure to the challenges presented by biodiversity must be assessed in addition to physical impact.

Interested data providers will be assessed based on the quality and transparency of their approach and on their experience in processing environmental data. Applications may be submitted through March 31.

Julien Foll from AXA IM, Robert-Alexandre Poujade from BNPP AM, Sarah Maillard from Mirova and Jean-Guillaume Péladan de Sycomore AM have issued the following statement: “It is critical that we begin to take into account biodiversity-related challenges. We believe it is crucial that the financial community addresses this issue in the same way that it has addressed climate change. We hope that the tool we develop will be used by all market players, and that it will become a benchmark tool.

1 IPBES report– May 6, 2019
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