In 2009, the Natural Value Initiative (NVI) developed the Ecosystem Services Benchmarking (ESB) tool to assist investors to identify risks relating to biodiversity and ecosystem services within the food, beverage and tobacco sectors. It was developed in collaboration with investors from Europe, Brazil, the USA and Australia: three UK based asset managers (Aviva Investors, F&C Investments and Insight Investment); US-based asset manager (Pax World); Brazilian based bank (Grupo Santander Brasil) and a leading Australian pension fund, VicSuper. At the time of the production of the tool, these investors held € 455 billion (£ 398 billion, US$ 633 billion16) of assets under management.
In conjunction with the investors listed above, the NVI applied the Ecosystem Services Benchmark to 31 companies within the food, beverage and tobacco sectors representing a market capitalization of over € 790 billion at 15th September 2009. This analysis, and the individual company reports that supported it, were used by the investors involved as the basis of an ongoing engagement process between the investors and the companies evaluated, encouraging the companies to improve their management of biodiversity and ecosystem services where weaknesses were identified.
In 2010, the NVI undertook a study with KPMG, titled Biodiversity and ecosystem services: Risk and opportunity analysis within the pharmaceutical sector. Undertaken on behalf of asset manager Robeco with the view to create greater awareness among the investor community, the study reviewed the risk exposure of 10 leading global pharmaceutical companies, based on their impacts and dependencies on biodiversity and ecosystem services (BES). The companies include Astra Zeneca, Bayer, Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson, Novartis, Novo Nordisk, Pfizer, Roche and Sanofi. The results of the analysis are being used by Robeco in their ongoing engagement with the companies concerned.
In 2011, the NVI undertook a review of 30 companies in the mining and oil and gas sectors with a total market capitalisation of £1,638 billion using the Ecosystem Services Benchmark. The study was conducted on behalf of the following investors: UK-based asset managers Aviva Investors and F&C Investments, US-based asset managers Calvert Investment Management, Inc. and Pax World, Dutch investors Mn Services, Robeco and Syntrus Achmea, an Australian pension fund, VicSuper, and in collaboration with a Swedish advisor to institutional investors, Ethix SRI Advisors. Collectively, these represent £787 billion of assets under management. Each company reviewed received an individual report analyzing the strengths and weaknesses of their approach to managing biodiversity and ecosystem services risks and opportunities. The resulting reports will be used by the investors working with the NVI to inform their ongoing engagement with these companies.
Is drawing down natural capital a material issue?
The NVI is working with KPMG and the Association of Chartered Certified Accountants (ACCA), to explore the financial materiality of biodiversity and ecosystem services with the intention of producing a publication aimed at accountants, standard setting bodies and chief financial officers in 2012.
Mainstream the consideration of biodiversity and ecosystem services into investment analysis
As part of our agenda to mainstream biodiversity and ecosystem services into investment decision-making, we are working to integrate biodiversity and ecosystem services criteria into environmental, social and governance investment indices through engaging with index providers. We are undertaking a scoping study to explore how investment indices and tailored investment funds might offer the opportunity to incentivise more effective and widespread corporate management of biodiversity and ecosystem services impacts and dependencies.
Scoping out a sustainability rating of the fisheries sector
Traffic light systems that inform consumers about the sustainability of seafood have catalysed the seafood market to shift from disinterest to a position of proven market preference for sustainable seafood. We are exploring whether this methodology can be adapted and used for the financial sector, evaluating whether it can be used to evaluate companies rather than fish species. This will provide the financiers of the fisheries sector with the information then need to encourage improved corporate sustainability performance and result in a greater move towards sustainable fishing practices. We are undertaking this work with Stichting de Nordzee, Synnervate and Scomber Consultancy, funded by the Oak Foundation and Arcadia Foundation.