Investors must recognise “the vital role of protected areas” as a tool for biodiversity conservation and strengthen their investment policies and engagement with companies accordingly, a report ShareAction has said.
Published in collaboration with the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC), the report – Risk Management in Protected Areas – sets out how investors should strengthen their approach to protect some of the world’s most important biodiversity-rich regions.
ShareAction’s latest benchmarking reports showed “significant room for improvement” in the way asset managers and insurers protect against risk towards protected areas as well as their own financial returns. Some 64 asset managers and 50 insurers assessed by ShareAction “lacked clear evidence of policies to manage risks associated with protected areas”.
Commenting on the report, Alexandra Pinzon, head of biodiversity at ShareAction, said: “We know investors are not doing enough to adapt their investment policies to tackle the destruction of important ecosystems in protected areas.
“To address the global extinction crisis and unprecedented decline of nature, we need to see investors use the huge power they wield to reduce their nature-related risks and impacts, especially on internationally-recognised areas of importance for biodiversity conservation. This would also be beneficial for investors, as the regulatory shifts required to deliver the ambitions of the Global Biodiversity Framework result in more stringent biodiversity protections and the expansion of protected areas, which could lead to stranded assets, reputational damage and other financial consequences.”
Key recommendations
The guidance highlighted the critical role investors need to play to help halt and reverse biodiversity loss through their investment policies, capital allocation and portfolio stewardship processes.
This includes assessing and mitigating biodiversity impacts across portfolios, but also recognising the additional importance of protected areas. Investors are also urged to assess if any assets or sites within their portfolios intersect with, or are adjacent to, protected areas.
Subsequently, the guidance recommends setting ambitious targets for investee companies to ensure all assets within protected areas are only engaged in activities that align with the management plan of that area; establishing clear expectations for companies to assess, disclose and manage their direct and indirect area of influence; and following robust escalation strategies where expectations have not been met.
Welcoming the report’s recommendations, Neville Ash, director of UNEP-WCMC, commented: “Asset managers and asset owners can drive positive impacts for nature through their investment decisions. For example, when they engage with companies and exercise their voting rights, they can be influential in ensuring that businesses respect and help manage protected area networks. I therefore welcome this guidance, which clearly lays out the steps investors should take to reduce the risk associated with protected areas and drive positive change.
“As we move towards COP16, this is a valuable step toward the whole-of-society action that the Kunming-Montreal Global Biodiversity Framework calls for.”
