Schroders, Aviva and other UK asset managers seek to profit from demand for biodiversity-focused investment products
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ome of the UK’s biggest money managers are launching new funds and investment products aimed at generating profits from a long-overlooked corner of green finance: biodiversity. Aviva Plc has opened a natural-capital equity fund to invest in the likes of plant-based protein company Beyond Meat Inc. Jupiter Asset Management has added to its series of so-called ecology funds. Schroders Plc and Climate Asset Management, a joint venture between HSBC Global Asset Management and Pollination, are backing carbon-offset projects that offer biodiversity perks. And Gresham House is creating new so-called biodiversity net-gain credits.
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The decline in biodiversity— the breadth and variety of life and ecosystems on earth, covering polar bears to plankton— poses a growing long-term risk, not only to the planet, but also to the investment industry’s future returns. The World Economic Forum estimates that roughly half of global gross domestic product, or about $44 trillion of economic value, depends on the natural world in some way, meaning its destruction represents an enormous financial loss. “We don’t believe that markets are properly pricing in the cost and consequences of natural-capital depletion,” said Eugenie Mathieu, a former Greenpeace activist who’s now a
senior ESG analyst at Aviva. “We see a significant investment opportunity.” As asset managers pile into this relatively new business area, climate activists and academics warn of it turning into a simple PR exercise, a distraction from the urgent task at hand. “This is at best an immaterial distraction, unlikely to have any real impact on biodiversity or nature protection,” said Adrienne Buller, senior research fellow at Common Wealth, a UK-based think tank. “At worst, it contributes to the very real problem of actively creating excuses for regulatory inaction and a lack of public investment on environmental protection and restoration.” In a report published last year, the World Bank outlined the potentially devastating consequences of inaction from an “unprecedented” decline in biodiversity, with roughly 1 million animal and plant species at risk of extinction. And a recent survey published by Citigroup Inc. found that almost 80% of respondents see an overlap between biodiversity risk and financial risk, and ranked it as a higher priority for environmental, social and governance-minded investors than social issues.
