NEI Responsible Investing & ESG Services team includes biodiversity as a focus theme for corporate engagement and policy advocacy.
Our first year of including biodiversity as a focus theme for corporate engagement and policy advocacy wrapped with a flurry of activity, capped with attendance at the COP15 conference in Montreal. Michela Gregory, Director of ESG Services, was part of a delegation assembled by the Principles for Responsible Investment. On December 13, to coincide with the conference, the PRI published an investor statement in support of a Global Biodiversity Framework; NEI was among 150 signatories together managing over US$24 trillion.
Corporate outreach kicked into high gear in Q3 and Q4. In addition to our collaborative engagement with other signatories to the Financial Sector Commitment Letter on Eliminating Commodity-Driven Deforestation, we initiated solo engagements on biodiversity and deforestation. Through a mix of letters (sent via email) and meetings, we engaged 27 companies. We asked them to share more about:
- How they are dependent on nature, and how they impact nature
- How they mitigate and manage nature-related risks and opportunities
- Whether they plan to commit to eliminate commodity-driven deforestation (if relevant to their business)
- How they intend to implement any commitments already made to eliminate commodity-driven deforestation
Our primary objective with this first touchpoint was to better understand the capacity of our portfolio companies to assess and respond to nature-related risks and opportunities. We recognize that disclosure in these areas is new and unfamiliar to many organizations, and as such we wanted to set a baseline for our own expectations of corporate practice.
Companies who received letters include Kellogg, Samsung, Coca Cola, France-based healthcare firm Sanofi, and China technology conglomerate Tencent.
To identify firms, we consulted guidance from the World Economic Forum, PwC, and Global Canopy’s Forest 500 list to determine the sectors with the highest dependencies and impacts on biodiversity. We then cross-referenced these sectors with our holdings. We sought to meet with companies that had made varying levels of progress to understand their challenges and successes. Our questions sprung from the Taskforce on Nature-related Financial Disclosures’ LEAP framework: Locate your interface with nature; Evaluate dependencies and impacts; Assess risks and opportunities; Prepare to respond and report.
Responses to date indicate that companies acknowledge the crucial importance of biodiversity while displaying a wide range of maturity. Some companies have been at the forefront of their industries in assessing impacts and dependencies and making bold pledges, while others are at the beginning of their journey and looking for guidance from investors. All companies are wrestling with how to develop useful disclosure.
We will be increasing our attention on biodiversity further in the New Year. Details about our planned approach will be announced in our 2023 Focus List, available in March.
