Amid the growing recognition of how vital ecosystem services are to economies, public health and human well-being, several organisations – including WWF, the Taskforce for Nature-related Financial Disclosures (TNFD) and the Glasgow Financial Alliance for Net Zero – have released guidance on how to create National Transition Plans (NTPs) to align investments with global sustainability goals.
Given this, PA Future’s global reporter Holly Downes talks to Rob Gardner, chief executive of Rebalance Earth, about the importance of NTPs among asset managers, how best to implement these strategies, and whether enough firms are taking appropriate action.
Why are NTPs important for asset owners to consider?
Nature underpins the global economy, yet it is facing unprecedented threats. From clean water and fertile soil to pollination and carbon sequestration, ecosystems provide the essential services that industries, companies, and society rely on.
For asset owners, this is a systemic risk. Key industries such as agriculture, pharmaceuticals, and technology depend heavily on natural resources like water, raw materials, and functioning ecosystems. When these systems are disrupted – whether through deforestation, soil degradation, or water scarcity – supply chains are affected, operational costs increase, and revenues face pressure. Over time, this loss of value jeopardises the long-term financial returns for investors, especially pension funds and endowments that have multi-decade investment horizons.
Also read: More asset owners are embracing nature and biodiversity in sustainability strategies
NTPs provide a framework for tackling these risks head-on. They help investors identify and mitigate harmful exposures within their portfolios, such as companies linked to deforestation or unsustainable water use. Crucially, they enable asset owners to allocate capital to Nature-positive projects that restore ecosystems – reforestation, peatland restoration, and regenerative agriculture.
The regulatory environment is also shifting. Frameworks like the TNFD encourage asset owners to assess how their portfolios depend on and impact natural systems. With over 500 organisations already committed, TNFD is becoming a standard for managing nature-related risks.
For example, Nestlé’s deforestation-free supply chain commitment demonstrates how companies can reduce their exposure to biodiversity risks while creating value.
Adopting NTPs for asset owners is about portfolio risk management for their assets and members while positioning themselves as leaders in the transition to a sustainable economy.
Are you seeing more companies with NTPs, or are there still very few?
Momentum is building, but the pace of adoption remains uneven. Companies in resource-intensive industries, such as agriculture, consumer goods,] and infrastructure, are leading the way in addressing nature-related risks.
However, many organisations are still in the early stages of recognising and mitigating their dependencies on nature. According to the World Economic Forum, only 6% of companies globally disclose comprehensive data on their dependencies and impacts on natural ecosystems – a striking gap given the scale of the challenge.
Sectors like technology and financial services, which are less directly tied to natural capital, tend to lag behind in addressing biodiversity risks. Alarmingly, only 1% of European financial institutions reporting through the CDP have set water security targets, despite water’s critical role in industrial processes and business continuity.
This lack of action presents systemic risks. Nature degradation and biodiversity loss could lead to disruptions across supply chains, increased operational costs, and diminished asset values. Without incorporating these risks into financial modelling, banks, regulators and investors remain exposed to vulnerabilities.
If left unaddressed, these gaps could destabilise credit portfolios and misalign capital flows with broader societal and environmental goals.
Part of the problem lies in the complexity of measuring nature-related impacts and the lack of standardised, comparable data.
However, there are reasons for optimism. Frameworks such as the TNFD and initiatives like Nature Action 100 are encouraging progress. These platforms engage high-impact companies and provide consistent methods for assessing nature-related risks. While we are not yet at a tipping point, the direction of travel is clear: companies that fail to integrate nature into their strategic planning risk being left behind in a rapidly evolving regulatory and market environment.
How can fund selectors assess NTPs when choosing funds?
Fund selectors play a critical role in ensuring that investments align with both financial and environmental goals. By focusing on clear objectives, robust metrics, and real-world impact, fund selectors can identify funds that align with their fiduciary responsibilities and contribute to global sustainability goals. Nature transition plans are a critical pathway to building resilient portfolios and restoring ecosystems for future generations.
A credible fund should articulate its nature-related goals with precision. Is its aim to “do no harm” by excluding harmful activities such as deforestation-linked supply chains? Or does it actively promote nature restoration by funding initiatives like habitat conservation or regenerative agriculture?
For example: AXA’s Biodiversity Impact fund invests in companies actively restoring ecosystems and addressing biodiversity loss. Elsewhere, UBP’s Biodiversity Restoration fund prioritises investments in sustainable food systems and water conservation projects, highlighting the importance of targeted objectives for positive environmental outcomes. Fund selectors must ensure that these objectives are measurable, time-bound, and aligned with global biodiversity goals, such as those outlined in the GBF.
Reliable and forward-looking metrics are essential for evaluating a fund’s impact and accountability. Fund selectors should ask about carbon intensity, water footprint and biodiversity improvement. By prioritising funds with transparent metrics and detailed reporting, selectors can assess whether a fund is making tangible progress or potentially greenwashing.
Real-world impact is the ultimate test of a fund’s NTP. Fund selectors should prioritise funds that demonstrate how their investments contribute to global biodiversity and climate goals while delivering long-term financial returns.
How should fund managers assess NTPs in their investments?
For fund managers, assessing NTPs requires a structured framework that integrates environmental considerations into every stage of the investment process. For example, a listed equities manager will use a combination of global frameworks, assessment tools, and active engagement.
First, there should be an alignment with global frameworks. Frameworks such as the TNFD and the EU Taxonomy promote consistency and accountability in investments. They ensure that these investments align with global biodiversity goals, including the target of protecting 30% of land and sea by 2030, as outlined in the GBF.
Many fund managers can evaluate how investments depend on and impact nature by using cutting-edge tools and technologies. These tools provide the data needed to understand critical dependencies, assess risks, and track progress toward biodiversity goals.
For example, ENCORE (Exploring Natural Capital Opportunities, Risks, and Exposure) helps fund managers identify biodiversity risks and dependencies across different sectors. This enables them to assess their exposure to critical ecosystem services, such as water provision, pollination, and soil health. Additionally, platforms like NatureAlpha can help integrate Nature-related risks into the investment process.
For example, a manufacturing company in a water-intensive sector can be evaluated for its exposure to water scarcity using tools such as ENCORE and NatureAlpha. These insights enable fund managers to engage with the company, advocating for sustainable water management practices and investments in habitat restoration to mitigate risks and enhance resilience.
Further, active engagement is key. It transforms commitments into measurable actions, aligns corporate behaviour with biodiversity and climate goals, and ensures accountability while driving long-term financial and environmental value.
What should fund managers and selectors look for in a ‘credible’ NTP?
A credible NTP is aligned, clear, and measurable with global standards. It goes beyond aspirational statements to provide a concrete roadmap for halting harm, protecting ecosystems, and restoring nature. However, many plans focus too narrowly on carbon, neglecting other critical issues like biodiversity and water.
Key features of a credible plan include, first, materiality, where the plan identifies key risks and dependencies specific to the company or fund, such as, a consumer goods company might target water efficiency and deforestation-free supply chains. It should also have measurable targets, where goals should include specific, time-bound metrics, such as reducing emissions, conserving water, or restoring hectares of degraded land. Transparency is also key to build trust and accountability, and lastly, these NTPs must be aligned with global frameworks.
A good example of a company with a credible NTP is Nestlé. The company has pledged to eliminate deforestation from its supply chains by 2025 and is transitioning to regenerative agriculture. Further, it is improving transparency and accountability through supplier engagement and satellite monitoring while restoring soil health and conserving water.
Overall, there is a lack of consistency across industries. Some industries, such as agriculture and consumer goods, are making progress, driven by direct dependencies on nature. Others, like technology, are lagging due to less understood links to natural capital.
However, as more companies adopt standardised frameworks, and more shareholders engage, expect greater consistency. Fund managers and selectors must push for plans that balance ambition with practicality, ensuring measurable progress toward halting and reversing nature loss.
