Schroders has created a proprietary tool, NatCapEx, to “help fill the nature data gap”. Launched earlier this year, the tool supports nature-aligned analysis across 9,000 public companies, building on Schroders’ SustainEx model.
Schroders has now used the tool to create its first Group Nature Report, which follows the recommendations of the Taskforce on Nature-related Disclosures (TNFD) issued in 2023. It aims to identify potential nature-related risks and opportunities and how Schroders is responding to them.
According to the Group Nature Report, the degradation of nature, such as changes in soil quality or water availability, and the consequential loss of ecosystem services that economic activity depends upon, pose financially material risks to clients’ potential investment returns.
For example, the World Bank estimates even a partial collapse of three ecosystem services – pollination, fisheries and timber production – would cost the global economy 2.3% of GDP annually.
At the same time, the shift to nature-positive practices could unlock $10.1trn of annual business opportunities for investors.
Schroders’ report assessed our holdings across public and private assets to assess its greatest nature-related impacts and dependencies. The main impacts include carbon emissions, water use and terrestrial ecosystem use. The group found its highest dependencies are water-related.
It has participated in an initiative called Nature Action 100 last year, taking part in six collaborative engagements across various sectors including mining, chemicals and consumer staples companies. The goal of Nature 100 is to encourage companies to protect nature and reverse biodiversity loss.
At Schroders London headquarters, it said it has reduced total waste produced by 36% compared to 2019 levels, and has increased recycling rates from 75% to 92%. It has also conducted biodiversity surveys at its campus in Horsham, given its proximity to a biodiversity sensitive area.
Andy Howard, global head of sustainable investment at Schroders, said: “As a proudly active asset manager, we are leading by example through proactively disclosing our nature-related risks and opportunities, as well as developing our new proprietary tool, NatCapEx, to help fill the nature data gap.
“With the world’s natural environments under growing pressure, measuring and managing the nature-exposed risks of our investments is becoming increasingly important.
“We also hope this voluntary disclosure in line with TNFD will help galvanise broader progress in corporate and investment disclosures. We will continue to engage with companies to encourage them to publish their own nature-related disclosures and shed light on this increasingly important risk and opportunity.”
To read Schroders’ inaugural Group Nature Report in full, please click here.
See also: Revenues for Nature to fund seven projects to unlock nature restoration investment
