The Responsible Investment Association Australasia (RIAA) has released a nature investor ‘toolkit’ in the hopes it will help companies and investors tackle nature-related risks and opportunities within their investment portfolios.
The Nature Investor Toolkit was released at the RIAA Conference on Thursday.
The investor toolkit is designed to improve understanding of financial, environmental, and human rights factors by explaining the problems, sharing case studies, offering ways to analyse investments, and suggesting strategies for engaging with companies.
The RIAA hopes the toolkit will provide investors with tools on how to approach nature-related risks and also invest in “nature positive” solutions.
“The purpose of this toolkit is really to start to give people a really tangible, easy way to be able to start to unlock some of the understanding about nature and what are some of the risks that exist,” RIAA Co-Chief Executive Dean Hegarty told interest.co.nz.
Hegarty says it's critical for a country like New Zealand to get it right when it comes to nature disclosures as NZ has more to lose than a lot of other countries.
He uses New Zealand’s biggest export and a significant part of its economy – dairy – as an example and described the country’s agricultural sector as being entirely reliant on nature.
“There are other countries in the world that don't have the reliance on nature that New Zealand has. And that's purely from an export point of view. From a tourism perspective, our natural environment is such a massive draw card. I challenge you to find an ad trying to promote New Zealand as a country that doesn't involve a natural landscape front end,” he tells interest.co.nz.
He says New Zealand has focused more on carbon emissions and less so on nature in recent years since government legislation made it mandatory for around 200 entities to report on climate-related disclosures each year, starting in early 2023.
The Ministry of Business, Innovation and Employment (MBIE) says the goal of mandatory climate-related disclosures are to make sure that the effects of climate change are routinely considered in business, investment, lending and insurance underwriting decisions.
But the climate-disclosure system was also set up to help NZ meet its international obligations of achieving the target of net zero emissions by 2050 and make the country’s financial system more resilient.
Hegarty describes nature and the climate as being inextricably linked but nature is “more complex than carbon” because biodiversity is complex.
“Don't get me wrong, reducing our carbon emissions is absolutely critical to get to where we want to go. But at the same time, biodiversity is such a critical part of climate and nature and nature-related risks present so many additional risks on top of that, but also opportunities,” he says.
“Inevitably it's harder when you're making a risk assessment and you're looking at a balance sheet and there's not a spot on that balance sheet for nature. The reality is that if you're an organisation who's commercially fishing, the reduction in the number of fish that are in the ocean does not sit on your balance sheet.”
Hegarty uses commercial fishing as an example, describing how the declining number of fish in the ocean doesn't appear on commercial fishing company’s balance sheet – even though it’s a critical factor for their operations.
“When looking at a short term lens, that is absolutely a challenge,” he says. “When the reality is that the long term prospects of your organisation are directly linked to the number of fish that are in the ocean and available to be caught into the future, and likewise our ability to feed animals on farms, our ability for water to be available, accessible in areas of the country in the right amounts.”
While these factors may not appear on a balance sheet, from a broader perspective, they have a significant impact on the ongoing value of an organisation.
This is why Hegarty says it’s “inevitable” that understanding nature-related risks – and opportunities – will become a part of everyday investment.
“There’s no doubt that it will become both an essential part of investors assessing risk, but I think that also there’ll be policy that will follow that, [which] will start to integrate this more into some of the regulatory requirements for both companies, but also for investors,” he says.
“There's no doubt that in New Zealand there's been a reliance on the government to lead on where we should go and what we should do whereas we've seen in Australia, organisations have really been out at the front and pushing the government in a lot of instances to do more.”
The RIAA is the largest and most active network of people and organisations engaged in responsible, ethical and impact investing across Australia and New Zealand.
It has over 500 members who include asset managers, asset owners, trusts, consultants, impact investors, financial advisers and research/data providers and who represent US$29 trillion (NZ$46.8 trillion) in assets under management.
The RIAA’s membership accounts for 73% of all professionally managed funds in New Zealand.
2 Comments
This is only half-way there.
It isn't 'nature' that is the problem, it is resource draw-down, and it isn't singular; it's interrelated. Life is a web, fish-stocks are a web; everything intrudes onto everything else. But one species levered fossilised sunlight, to displace many other species (to Great Extinction point) and utilise other for our sole consumption/use.
We are now in ecological overshoot (Ella - download and read Overshoot (Catton, 1980), then Collapse of Complex Societies (Tainter 1988)) and are the only species to have gotten there by digging up an energy-source with which to achieve the overshoot (Haber-Bosch removal would see half humanity starve, let along de-mechanisation).
A better way to see is, is the Georgescu-Roegen biosphere graphic (first one down):
Energy, money and growth: The future is not the past | interest.co.nz
and a better way to address the issue is to address the need for that diagram to be made circular instead of linear. 'Nature' is a waffly concept.
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