Pension funds and other investors representing €6 trillion ($6.5 trillion) in assets have called for the creation of a framework to measure biodiversity impact.
The 128.4 billion Danish kroner ($18.6 billion) MP Pension, Gentofte, Denmark, and the A$105 billion ($67.3 billion) First State Super, Sydney, are among 34 signatories to an investor statement outlining the importance of the earth's biosphere, "the very foundation of the resilience and progress of humanity" and expressing the need for ways to measure biodiversity-related impacts.
"We lack the tools to accurately and consistently measure these impacts, although we recognize that a wide range of industries are having a direct impact on biodiversity," the letter said. "We need better tools to allow us to measure and reduce the physical impact of investments on ecosystems."
The investors expect data providers to develop metrics that capture the physical impact and financial materiality of companies and projects on ecosystems. "In this respect, data providers also have responsibility to engage with companies on biodiversity disclosure, to encourage them to provide relevant biodiversity information," the letter said.
Both positive and negative impacts should be captured by metrics, allowing investors to identify beneficial and harmful investments.
Further, the scope of coverage of the metrics "should be as broad as possible to ensure that investors are able to apply these indicators across large portfolios and to compare with broadly used market benchmarks, with data that is granular and flexible enough to permit analysis at the portfolio as well as issuer level."
Transparency is also a requirement and data providers should leverage "the already existing large base of information and data sources" in their efforts.
The initiative was coordinated by AXA Investment Managers, BNP Paribas Asset Management, Sycomore Asset Management and Mirova.