16 October 2024 15 minute read
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Our society, economies and financial systems are embedded in nature, not external to it. This paper sets out the actions we are taking to understand nature-related risks and opportunities to deliver outcomes that meet our clients’ needs, and to support nature-related global goals.

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Navigating nature: Opportunities for the investor of tomorrow 2024

Nature is so important for everyone, everywhere, and for everything we do.

As of last year, six of nine “planetary boundaries” have now been transgressed, increasing the risk of irreversible environmental damage. Global wildlife populations have declined by an average 69 per cent in the past 50 years and around one million animal and plant species are now threatened with extinction, many within decades.1,2,3 The scale of the problem is daunting.

So, why should this issue matter to investors? As a global asset manager, we at Aviva Investors recognise the significant investment risks and opportunities that derive from our portfolios’ interactions with nature. Understanding potential exposure to nature-related risks, and addressing them, is crucial to safeguarding the long-term value of investments.

We see the enormity of the challenge but we also see solutions. Investors who are engaged with, understand, and can identify nature-related risks and opportunities are better positioned to make investments focused on harnessing nature to enhance resilience and adaptability. We believe this can ultimately contribute to long-term profitability and growth for investors. Additionally, direct investment into nature-based solutions projects that aim to enhance biodiversity and deliver social outcomes, alongside carbon sequestration, has the potential to provide attractive returns whilst tackling key sustainability issues.

We have developed innovative solutions to support our efforts to deliver investment outcomes for our clients

We have developed innovative solutions such as data analytics tools to support our efforts to deliver investment outcomes for our clients. These solutions allow us to better identify, evaluate and track nature-related risks and opportunities across portfolios and provide our clients with data on the nature-related “footprint” of their investments.

We have integrated nature into the core of our firms’ “holistic stewardship” plans.4 Working together with companies to reverse biodiversity loss is a key part of this approach. In addition to our existing engagement programmes, we are excited to have launched our new Nature Engagement Programme. As part of this, we have selected globally significant players across our credit and equity portfolios that have substantial impacts and dependencies on biodiversity and forests, and which we hope can demonstrate leadership on this issue and catalyse systemic change across their respective industries.

To date, many sustainability initiatives have tended to focus on climate change, whilst not sufficiently recognising the interdependence between climate and nature. However, it is imperative to recognise that biodiversity loss is a critical driver of the climate crisis, just as climate change is a driver of biodiversity loss.5 As a result, the state of nature is critical to the climate crisis and protecting and restoring nature is crucial beyond climate considerations.

We believe nature can present significant opportunities for investors looking to position their portfolios for the future economy

Whilst substantive challenges remain, we believe nature can present significant opportunities for investors looking to position their portfolios for the future economy. These opportunities are there to be grasped by investors willing to look for them, and we are ready to take the lead in providing clients with the products and solutions to do this in line with their sustainability preferences. We will continue to develop and refine our approach as data, modelling and policy and regulation matures in this fast-moving and dynamic space. 

Finally, we are committed to working in partnership with investors to exchange views and progress action on the increasingly pressing challenges that protecting nature presents. Much remains to be done. But we believe that through responsible stewardship and a thoughtful approach to investment, asset managers like us can support our clients to deliver on their investment goals, whilst contributing to the vital work of protecting and restoring our most precious asset - nature. This publication shows how.

Download “Navigating nature: Opportunities for the investor of tomorrow” to understand:

  • Why nature-related risks and opportunities matter
  • How investors can identify and engage with nature-related issues to seize opportunities
  • What actions we are taking to deliver outcomes that meet our clients’ needs and expectations and support global nature goals

References

  1. This is a framework that outlines the limits within which human activity can be considered sustainable. Source: Katherine Richardson, et al., “Earth beyond six of nine planetary boundaries”, Science Advances, September 13, 2023.
  2. “Planetary boundaries”, Stockholm Resilience Centre, as of September 26, 2024.
  3. Rosamunde Almond, et al., “Living Planet Report 2022 – Building a nature-positive society”, World Wildlife Fund, 2022.
  4. Download “Navigating nature: Opportunities for the investor of tomorrow” and see the section on “Unlocking long-term value through stewardship” for further detail.
  5. E. S. Brondizio, et al., “Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services”, IPBES, 2019.

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Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable but, has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. Some data shown are hypothetical or projected and may not come to pass as stated due to changes in market conditions and are not guarantees of future outcomes. This material is not a recommendation to sell or purchase any investment.

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In Europe, this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK, this document is issued by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: 80 Fenchurch Street, London EC3M 4AE. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178. In Switzerland, this document is issued by Aviva Investors Schweiz GmbH.

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