Despite the huge geopolitical and inflationary challenges that beset economies in 2022, sustainable investing continues to evolve at pace, and our approach is evolving with it as systemic themes like nature take on greater prominence.

We seek to contribute to the health and preservation of critical systems by engaging with stakeholders on nature loss, as well as strong and effective governance, climate change and social disparities. These four systemic themes, which we have identified in 2022 (see page 30 of the report), are critical to our purpose of building more sustainable financial futures for our clients.

We have introduced an influence framework (see page 30 of the report) to identify opportunities to engage with a wider set of stakeholders to encourage change in a more holistic and effective manner that is beneficial to our investee companies and ultimately our clients. We aim to engage on these systemic themes over a multi-year timeframe, and within these address relevant sub-themes.

Many of our engagements are intended to address more than one systemic theme as they often interconnect. For example, biodiversity loss is a key driver of climate change, and vice versa. In 2022, we focused on developing a Deforestation Framework to address the risks of commodity-driven deforestation in our investment portfolios by 2025 and to support investee company efforts to achieve net zero targets.

The framework builds on previous engagements with those companies most exposed to deforestation caused by agricultural commodities like palm oil and forms a key part of our approach to a theme that is increasingly being discussed in 2023 - nature and biodiversity.

Nature positive

COP15 in late 2022 proved to be a turning point in recognising the importance of nature impacts if the world is to achieve net zero and avoid the worst effects of climate change. Several initiatives have sprung up to translate this concept into decision-useful factors for investors including the Finance for Biodiversity Foundation and the Natural Capital Investment Alliance, of which Fidelity is a member. But policymakers, regulators and investors have been coalescing around the work of the Taskforce on Nature-related Financial Disclosures (TNFD) which is building a framework around 10 core areas for nature-based disclosure.

While there is no easy way to capture risks and opportunities in relation to nature, unlike carbon emissions for climate, the push for greater corporate disclosure more generally through regulation such as the EU’s Corporate Sustainability Reporting Directive (CSRD) is bringing this area into scope relatively quickly and it is being considered for inclusion by global standard setters such as the International Sustainability Standards Board (ISSB).

To explain why biodiversity is important from an investment perspective and the associated risks and opportunities, we have created a biodiversity primer. We believe ‘nature positive’ will be the new ‘net zero’ in the coming years as climate change increasingly becomes a subset of how we think about risks to biodiversity and natural capital.

Click here to access the full article : Overview: Nature positive (fidelity.be)

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