Biodiversity: opportunity, risk and the LGPS

Is biodiversity loss a bigger issue than climate change for local government pension funds and their pools? Room151 convened a roundtable of practitioners and investment managers to discuss what role biodiversity will play in investment decision-making over the next decade.

In many respects biodiversity loss is the unloved sibling of climate change. The need to combat global warming has been embraced by a growing number of countries and companies. The target set at COP 21 in Paris in 2015 – to pursue efforts to limit global temperature rises to 1.5°C above pre-industrial times – is well understood, and there are requirements under the Task Force on Climate-Related Financial Disclosures (TCFD) and an array of net-zero targets.

But the same attention has not been paid to biodiversity loss, and the impact here could be much greater. There is a popular meme that shows the major issues impacting the world as a series of waves. Covid 19, which has occupied our attention for the past two years, is the smallest wave, followed by larger waves for recession and then climate change. However, the biggest wave is for biodiversity collapse.

So are we waking up late to the biodiversity emergency? Some figures might put this into perspective:

• More than half of global GDP depends significantly on nature
• Biodiversity loss is costing the global economy 10% of its output each year
• Humanity has caused the loss of 83% of wild mammals and half of all plants
• 60% of all medicines are based on natural organisms

Biodiversity challenge

As with climate change, biodiversity loss has significant implications for investors, including those from the Local Government Pension Scheme (LGPS). So Room151 organised a roundtable discussion involving senior people working for or with the LGPS. They included representatives from the pools, local government pension funds, local authorities, investment consultancies, advisory firms and asset managers.

Download a PDF of the full biodiversity roundtable debate here

In many respects biodiversity loss is the unloved sibling of climate change. The need to combat global warming has been embraced by a growing number of countries and companies. But the same attention has not been paid to biodiversity loss, and the impact here could be much greater.

Attendees

• Chris Dodwell, head of policy and advocacy, Impax Asset Management
• Jane Firth, head of responsible investment, Border to Coast
• George Graham, director, South Yorkshire Pension Fund
• Anastasia Guha, global head of sustainable investment, Redington
• Gemma James, senior manager, biodiversity and nature, Chronos Sustainability
• Gustave Loriot, responsible investment manager, London CIV
• Rachel Perini, head of UK institutional, Jupiter Asset Management
• Rhys Petheram, fixed income fund manager and head of environmental solutions, Jupiter Asset Management
• Scott Thompson, managing director, Impax Asset Management
• Bola Tobun, finance manager (treasury and pensions) London Borough of Enfield
• Luke Webster, chief investment officer, Greater London Authority

Chair

• Mike Thatcher, editorial director, Room151

The event took place at the Gherkin in London and was sponsored by Jupiter Asset Management and Impax Asset Management.

Issues covered included: the impact of the Taskforce on Nature-Related Financial Disclosures; a nature-positive economy; COP 15; appropriate targets for biodiversity loss; the need for government incentives; appropriate investment vehicles; and whether a sacrifice on returns is required.

You can download a PDF version of the full roundtable debate here

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