Aligning listed equity investments to the Global Biodiversity Framework

Evaluating biodiversity in public equity investing is difficult given the concerns over data availability and quality and the need for practical frameworks. Companies may have various biodiversity-related policies, but the issue of evaluating the alignment of a business to biodiversity-related outcomes has not been addressed adequately. In Aligning listed equity investments to the global biodiversity framework: a comparative analysis, we propose a framework for evaluation.  

The 2022 Kunming-Montreal Global Biodiversity Framework (GBF) helps to provide a structure. It is a blueprint for a future where humans live in greater harmony with nature, setting four broad goals and 23 specific targets on issues like habitat loss, pollution, and sustainable resource use. It calls governments, business, financial institutions, and individuals to action.

To date, however, there is no formalised framework for mapping investments in public equities to the GBF. This paper by our Environmental Strategies Group helps to inform the development of the first listed-equity framework that maps company activities to the GBF, thereby guiding investments towards biodiversity-positive outcomes and improving reporting and comparability.

In the paper, we analyse two alternative frameworks: 

• The Biodiversity Finance Reference Guide by the International Finance Corporation to map fixed income instruments to the Global Biodiversity Framework; we adapted it to become asset class agnostic
• A proprietary approach by the Environmental Strategies Group using our methodology for mapping listed equity investments to the framework.