In October, the Cambridge Institute of Sustainability Leadership (CISL) published a landmark report, “Let’s Discuss Nature with Climate: Engagement Guide”, which gives detailed guidance to banks and investment managers about how to bring nature into their engagement with clients and investee companies.
Nature has been moving up the corporate and investor agendas for some years. The adoption of the Global Biodiversity Framework at the end of 2022 and the launch of the Taskforce on Nature-related Financial Disclosures’ (TNFD) recommendations a few weeks ago have given the issue further impetus.
However, while there is a growing awareness that nature-related risks and opportunities affect financials, understanding the complexity behind nature and acting on it remains in its early stages, especially compared with its climate counterpart. That said, since the nature and climate agendas are inextricably linked, addressing the two in tandem makes sense.
Nature and climate: two sides of the same coin
Climate change disrupts the natural order of ecosystems and biodiversity. Equally, biodiversity loss reduces the Earth’s carbon storage capacity, further accentuating climate change.
Therefore, instead of addressing these two issues separately, companies and financial institutions should leverage the progress that has been made on mainstreaming climate action to make progress on the nature agenda.
“We know nature and climate crises are deeply interconnected. Banks and investment managers, with their global reach, hold the power to reshape the connection between the financial and real economy and drive systemic change needed to address both crises in tandem.”
Dr Nina Seega, Director, Centre for Sustainable Finance, CISL
A guide to engaging clients and companies on nature
Banks and investment managers can play an important role in accelerating the transition to a nature-positive economy by helping to bring nature-related factors into investment decisions.
Engagement with portfolio clients and investee companies on nature protection and restoration is a key tool in this effort, and existing engagements on climate can offer an entry point for bringing nature into the discussion.
To better support financial institutions, CISL recently published the report, “Let’s Discuss Nature with Climate: Engagement Guide”.
Designed in collaboration with global banks and investors, the guide aims to prepare and empower portfolio managers, analysts and relationship managers to explore new economic opportunities for portfolio clients and investee companies, reconcile emerging portfolio risks and meet compliance demands associated with nature and climate.
By integrating the consideration of nature into existing climate engagements, capital can move more quickly towards activities that address climate change and restore and protect nature, preserving financial and natural capital for the long term.
Outlining a five-phase approach, the guide points frontline staff towards the most pertinent questions, kickstarting the right conversations and providing practical “how to” tools for clients and investee companies to integrate nature and climate.
UBP, which contributed to this guide, welcomes this practical tool as a key element in driving systemic change towards a nature-positive future by providing a roadmap for constructive engagement with this complex topic.
“This engagement guide equips investment managers to conduct constructive and effective conversations with investee companies, building upon the momentum from climate-related action. Reframing engagement this way, as a partnership for change, is fundamental to transforming current systems and building a more nature positive economy.”
Victoria Leggett, Head of Impact Investing and Equity Fund Manager, UBP
Victoria Leggett
Head of Impact Investing
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