How can investors assess impacts on nature?
Catherine Macaulay and Niall Smith from our ESG team explore how we can assess exposure to nature-related risks.
In this paper we cover what we mean by natural capital and biodiversity, why it is essential to the ongoing functioning of our economies, and why it is relevant for corporates and investors.
As this is the first in a research series on nature, we also give an overview of the sectors that are most exposed to risks and how we might go about assessing this exposure, recognising that data and approaches across the industry are changing quickly.
The topic of natural capital and biodiversity is far-reaching and encompasses a number of sub-themes, including deforestation, sustainable food and water, pollution, as well as the circular economy. We will explore each in more detail, starting with deforestation in January.
What’s covered this time:
- Nature generates value: with nature loss we lose that value
- The “Great Acceleration”: human impacts on the environment since the 1970s
- A quick overview of the science (oceans, coastal, freshwater, forests, peatlands)
- Biodiversity hotspots
- The link between natural capital and climate change
- Economic impacts: mitigation potential of climate solutions to limit global warming to 1.5 degrees Celsius
- Change in 2030 real GDP under partial ecosystem collapse scenario
- Nature and biodiversity risks as the next frontier for corporates
- Percentage of direct and supply chain Gross Value Add (GVA) with nature dependency
- How policy momentum is building
- Assessing our exposure and impact: natural capital and biodiversity in our tools and engagements
- Building a more holistic understanding of exposure and impact
- Industry impact on natural capital
The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.