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- Over 200 investors managing $15 trillion engage in the Spring initiative.
- Targeting 60 key companies influencing critical natural ecosystems.
- Focus on responsible political engagement to address deforestation risks.
The Principles for Responsible Investment (PRI) has launched Spring, a stewardship initiative backed by over 200 investors managing $15 trillion in assets. The initiative focuses on reducing the financial risks associated with biodiversity loss by engaging with 60 key companies across various sectors. The effort emphasizes responsible political engagement and aligns with global biodiversity targets, aiming to mitigate operational risks and ensure sustainable practices.
The Principles for Responsible Investment (PRI) has launched Spring, an investor stewardship initiative addressing the financial risks of biodiversity loss by 2030. Supported by over 200 investors managing $15 trillion in assets, the initiative kicks off with engagements involving 60 key companies.
Spring focuses on responsible political engagement, a vital aspect of corporate governance. Investors will engage with companies with the objective to improve the nature impacts and risks in their 1) business operation and risk management; 2) supply chain management; and 3) political engagement. The initiative is suited to investors who look to manage financially material nature related risks, as well as investors looking for sustainability outcomes, in line with their fiduciary duty.
David Atkin, PRI’s CEO, emphasized, “Nature risk is climate risk. Investors recognize the importance of nature in managing material investment risks. Spring provides an opportunity to address the financially material risks stemming from global nature loss while aligning with the Global Biodiversity Framework.”
The initiative targets critical natural ecosystems, including emerging markets like Brazil, and engages companies from sectors such as food and agriculture, mining, automotive, chemicals, and banking. Key companies include L’Oreal, Toyota, Bayer, and Brasil Foods SA.
PRI will develop targeted engagement strategies for each company, focusing on improving nature impacts in their operations. Investors will work to enhance risk management, supply chain practices, and political engagement.
Denisio Liberato, CEO BB Asset, Brazil, highlighted, “The world is at a pivotal moment in the preservation of nature and biodiversity. We need to foster the urgent implementation of public policies that mitigate the risk of biodiversity loss across several supply chains. Through UNPRI Spring, investors can enhance the impact of corporate engagement processes on nature and advocate for a more sustainable and balanced planet, which will also bring more resilient long-term investment returns.”
Emine Isciel, Head of Climate and Environment, Storebrand Asset Management, stated, “Halting and reversing forest loss and land degradation is fundamental for a healthy climate, a sustainable future and long-term investment results. We recognize the need for sound public policy to achieve this goal. Spring’s focus on responsible political engagement fits well with Storebrand’s approach to nature and our involvement in collaborative initiatives. We look forward to working with peers from around the world on this important topic.”
Spring aims to align with other investor-led nature initiatives, building on existing efforts to address wide-ranging nature issues. Investors can apply to participate in engagements with the newly announced batch of 20 focus companies, continuing the initiative’s momentum.
Oshadee Siyaguna, Senior Thematic Investment Analyst at Reagan and Spring Advisory Committee member, added, “We have been supportive of the UNPRI Spring initiative from its very inception, having recognised the importance of responsible political engagement, a key focus of the initiative, in delivering meaningful policy responses to enhance the resiliency of ecological, social, and economic systems. This enhanced resiliency will ultimately contribute to more predictable and stable investment outcomes for investors in the longer term.”
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Rebecca Vaughan, Program Manager at Influence Map, noted, “Reforming the political influence wielded by companies and industry associations is essential to enabling urgently needed public policy to deliver the goals of the Global Biodiversity Framework. It is very encouraging to see Spring gather investors around this critical issue, recognizing both the immediate risk to companies’ corporate governance of their environmental footprints, and the systemic risk to global progress on biodiversity loss.”
Everything You Need To Know About Spring:
Objective:
The Spring Initiative aims to address forest loss and land degradation, critical drivers of biodiversity loss and significant contributors to global CO2 emissions. This initiative aligns with the Glasgow Leaders’ Declaration on Forests and Land Use to halt and reverse these trends by 2030, recognizing the reputational, legal, market, and financial risks for businesses and investors associated with this issue.
Engagement Approach:
- Focus on Five Geographies: Prioritizes interventions in key areas most affected by forest loss and land degradation.
- Investor Engagement: Engages companies to adopt and advocate for robust public policies to mitigate deforestation, land conversion, and related human rights abuses.
- Responsible Political Engagement: Encourages companies to influence public policies positively, either directly or through affiliations with trade associations and think tanks.
Importance of the Initiative:
- Economic Risks: Nature deterioration poses systemic and financially material risks to institutional investors. The World Bank projects a potential USD 2.7 trillion GDP contraction by 2030 due to ecosystem service loss.
- Regulatory Recognition: Financial systems’ dependence on nature is increasingly acknowledged by central banks and financial regulators. Failure to address nature-related risks threatens financial stability.
- Material Risks for Businesses: Forest loss and land degradation present both physical risks (e.g., lower agricultural revenues, land flooding) and transition risks (e.g., reduced market access due to regulations, stranded assets).
Policy Alignment:
- Need for Public Policy: Effective public policies are crucial to mitigate nature and biodiversity loss. The initiative stresses the importance of sound policy frameworks, as voluntary corporate actions alone are insufficient.
- Building Momentum: Recent global agreements like the Kunming-Montreal Global Biodiversity Framework and the Glasgow Leaders’ Declaration emphasize increased regulatory actions.
Governance and Structure:
- PRI Leadership: The initiative is led by PRI staff, supported by a Signatory Advisory Committee and a Technical Advisory Group, providing strategic and technical advice.
- Investor Working Group: Comprises lead investors, co-lead investors, and collaborating investors, forming engagement groups for focused companies.
Timeline:
- Initial Engagements: Starting in Q3 2024, with investor applications for the second batch open until 20 September 2024.
- Long-term Commitment: The initiative runs until February 2029, with participants encouraged to commit for the full duration.