ESG: Biodiversity Challenges

International Day for Biological Diversity 22 May 2022

The UN have designated May 22 as the International Day for Biological Diversity. Biodiversity loss is currently occurring faster than at any time in human history, and the World Economic Forum’s Global Risks Report 2022 identifies it as one of the top three most severe perceived risks on a global scale over the next ten years, behind climate action failure and extreme weather. For investors, one growing area of portfolio risk relates to litigation and liability claims brought against companies not only for their direct impact, but also for the deprivation of related ecosystem services to those communities dependent on them. Companies may also face litigation and liability cases as a result of inadequately reporting on biodiversity risks or mis-representing positive credentials.

Podcast: Fixed on ESG, Episode 1 (PGIM Fixed Income, Apr 2022)

In the first episode of 'Fixed on ESG', PGIM Fixed Income experts discuss what the meaning of ESG is in a fixed income context, outline that ESG investing doesn’t have to come at a diminution in investment returns, while deliberating on some of the key events that have impacted markets over the last year.

Biodiversity Loss: The other systemic crisis (Janus Henderson Investors, 2022)

For compliance reasons, this paper is only accessible in certain geographies

Janus Henderson explores several of the significant sustainability challenges that humanity is facing.  

Incorporating SDG Exposures While Considering Portfolio Risk (Qontigo, May 2022)

Qontigo’s paper focuses on how investors can gain and maximise exposure to one or more of the UN’s Sustainable Development goals (SDGs) without taking on significant amounts of active risk which, in turn, can be managed by a portfolio optimiser. 

Biodiversity: Obstacles in the ESG data marathon (Finbourne Technology, 2022)

Finbourne Technology illustrates how, using technology, asset managers can respond to climate change and biodiversity risks, but are also able to quantify progress against benchmarks and demonstrate real change. 

Opportunities in the Sharing Economy (Impax Asset Management, Apr 2022)

Impax Asset Management illustrates some of the opportunities they perceive in the emergent sharing economy, and how this might translate into a more sustainable, circular economic model. 

Facing Up to the Biodiversity Challenge (Franklin Templeton Investments, 2022)

For compliance reasons, this paper is only accessible in the EMEA region

In this paper, Franklin Templeton reflects on the risks of failing to address nature-related losses, and how financial institutions might work towards having a net positive impact on biodiversity. 

Sustainability Equity Indexes (Meketa, 2022)

Meketa’s report highlights the evolution in the diverse types of sustainability indices, outlines their construction methodologies and provides KPIs for several ESG indices.  

Is There Alpha in ESG Data For Sovereign Debt? (Man Group, May 2022)

Man Group argues that alpha generated from ESG factors in equities may also translate into sovereign bond selection though it is more likely to be idiosyncratic, rather than systematic alpha.  

ESG's Russia Test: Trial by fire or crash and burn? (Aswath Damodaran, 2022)

Aswath Damodaran, Professor of Finance at the Stern School of Business at NYU, presents some controversial views on ESG using the recent Russian invasion of Ukraine as a backdrop and as a benchmark to highlight the varying degrees of responses to the crisis by the ESG investment community. 

Updated Sovereign Fixed Income ESG Scores (Franklin Templeton Investments, 2022)

For compliance reasons, this paper is only accessible in the EMEA region

Templeton Global Macro demonstrates through simulations and case studies how the consideration of ESG factors in the portfolio construction process may lead to superior investment returns. 

ESG Litigation Risk (Sustainable Fitch, 2022)

Fitch notes the rising number of ESG-related lawsuits against corporations and governments, based on filing and reporting documents submitted to regulatory bodies and authorities.