AustralianSuper urges APAC investors to cooperate over biodiversity

A senior ESG professional at AustralianSuper has highlighted the need for coordinated action among asset owners to improve disclosure over how their investments impact biodiversity and natural capital.

“For systemic issues like biodiversity and natural capital, collaboration with other institutional investors can enable [AustralianSuper] to have greater influence on ESG and stewardship issues; exchange ideas and practical solutions with like-minded investors; and contribute to a larger and more effective investor voice on the ESG and stewardship issues that can impact members’ investment outcomes,” said Sandra Silea, associate director, ESG and stewardship, at AustralianSuper.

In 2020, AustralianSuper founded the Sustainable Development Investment Asset Owner Platform (SDI AOP) along with three other pension funds: PGGM, APG, and Canada’s British Columbia Investment Management Corporation (BCI) in 2020. Today, as the world’s largest investor-led sustainable investing platform, it is currently working to add data on the impact on biodiversity and natural capital, by the companies and investment assets that it covers.

At AustralianSuper, where efforts in this area currently focus on private assets, the fund is engaging in research and industry forums to explore connections between biodiversity loss and investment value, Silea said.

“Biodiversity has been a consideration as part of our ESG and stewardship due diligence processes for our unlisted asset portfolio. In considering these aspects, we review the asset’s approach to dealing with the natural environment and protecting key species in their operational jurisdictions,” she said.

SLOW IN SPEED

But critics have said that efforts by investors in APAC are not moving fast enough.

"Pension funds must understand that biodiversity risk is interwoven with climate risk, and a failure to urgently address these serious threats will ultimately accelerate the worsening impacts of climate change we're already seeing every day," said Brett Morgan, Australian campaigns coordinator at Market Forces, an affiliate of Friends of the Earth Australia that lobbies the financial sector for better environmental outcomes.

In November, Andrew Mitchell, vice chair of the stewardship council at the Taskforce on Nature-related Financial Disclosures (TNFD) — a UK-based organisation whose membership of 40 financial institutions, corporates, and market service providers collectively account for more than US$20 trillion in assets — criticised APAC asset owners and the companies they invested in for not doing enough.

"Many Asian families running profitable businesses have the fortunes of the next generation firmly in their minds,” he said. “But when it comes to protecting the environment, upon which their wealth may depend, there has been a blind spot for decades. It’s the same with ESG. Most Asian companies are significantly behind the competition and do not yet score highly on ESG. It's time for that to change."

Silea said that better data will facilitate what investors can do in this area, and pointed to the TNFD Forum, a consultative group of institutions aligned with the organisation’s mission, whose latest recommendations and guidance for organisations to work towards TNFD-aligned disclosure were published in September.

“The level of detail on natural capital and biodiversity in public reporting is at an early stage. We would encourage companies to look at the [forum’s] recommendations, in particular the LEAP approach to identify and assess their nature-related issues,” she said.  

DATA GAP

Suzy Yoon, senior consultant and acting head of sustainability at Jana Investment Advisors in Sydney, said initiatives such as the TNFD would improve disclosure of nature-related risks and opportunities, and would help address a data gap that was currently limiting investor efforts.

“Currently, the lack of data is a challenge to improving the measurement of biodiversity [and natural capital]. Standards such as TNFD will support increased data, particularly if these standards become mandatory, as we are seeing in some jurisdictions,” she said.

But she noted that investors independently had a responsibility to improve the data available to them.  

“Notwithstanding [TNFD], there are currently ways businesses can measure biodiversity [and natural capital] and asking the right questions can encourage investors and companies to think about it more tangibly, thus supporting improved measurement and disclosure,” she said.