Pension funds should ignite nature-positive investment, says Scottish Widows
Scottish Widows told Net Zero Investor today it plans to call on the UK Government and the financial services sector to radically overhaul its approach to nature-positive investment.
Pension funds can lead the way on critical investment to protect nature and wildlife and harness the potential for financial growth, the company argues.
In a new paper, which was shared with NZI, the insurance and pensions giant makes a number of critical policy recommendations that include a rally for industry-wide adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) framework – and active intervention from Government to mobilise finance to regenerate nature and wildlife.
The report also includes input from the relatively well-known environmentalist, Dr Tony Juniper CBE and Author of What has Nature Ever Done for Us?
To date, global economic growth has led to a dramatic degradation of nature.
Since 1990, 420 million hectares of forest have been converted into alternative land use. 75% of terrestrial environments globally are now classed as being “severely altered” by human action.
One million animal and plant species now face extinction, risking significant knock-on impacts for both humanity and the global economy.
$60 trillion worth of assets
Controlling nearly $60 trillion worth of assets globally, pension funds have a major role to play in driving responsible investment into projects that could make or break natural regeneration efforts.
Scottish Widows’ report outlines several policy and pension fund recommendations to convene industry action on this issue and enable nature-positive asset allocation throughout the financial services sector.
These include calling on the UK government and regulators to deliver transformative policy action that demonstrates leadership, supports mobilisation of nature-positive capital from the finance sector, and optimises cross-stakeholder collaboration.
Moreover, encouraging pension funds to consider the systemic risk of biodiversity loss and adopt the Taskforce on Nature-related Financial Disclosures framework, which will support better pension outcomes, risk management, and decision making.
Finally, advocating for regulation of the voluntary carbon markets in the UK, to drive the setting of high-quality standards, help address the nature financing gap, and support actions on decarbonisation and preservation of nature.
Maria Nazarova-Doyle, Head of Responsible Investments and Stewardship at Scottish Widows, said: “While overseeing trillions of pounds worth of investments, pension funds play a huge role in the economy: their investment decisions don’t just influence the long-term financial wellbeing of millions of savers, but have the potential to influence the long-term health of nature and the planet too.
She added: “Yet, as we mark two years since the publication of The Dasgupta Review on the Economics of Biodiversity, the financial services industry has yet to make ample progress on nature action.
“In order for nature-positive pension investments to materialise, pioneers and policymakers must band together, doing more to engage and educate the industry on how to positively reshape portfolios and avert ecological collapse. This isn’t simply a balance-sheet issue – it’s an existential one too.”
Dr Tony Juniper CBE added: “More action is needed, and the protection of nature must become a primary concern for the financial services sector more broadly."
He noted that "today’s publication represents a solid starting point for greater collaboration across the industry and beyond on this existential issue, evidencing the art of the possible on nature-positive investment."