Which topics within Biodiversity do you prioritise?
In short, all of them! There are five major drivers of biodiversity loss; change in land and sea use, direct exploitation of organisms, invasive alien species, climate change and pollution.
We have translated these into our six investment themes which contain numerous industry sub verticals from which we can draw the perimeter of our focused investment watchlist.
While we may have relative overweights and underweights to certain themes at any given moment, we believe that we need to be invested across this opportunity set.
If pushed for some particular areas of interest and opportunity for new ideas over the next six to twelve months, two that we are looking at with particular focus are the farming theme, namely efficiencies in food processing and distribution, and our sustainable living theme where we are looking at businesses helping to drive Biodiversity regulatory compliance.
What are Biodiversity Champions, and how can they have a positive impact?
Biodiversity as a theme affects basically every company in the world, and we can think about different tiers of exposure and opportunity.
Biodiversity Champions are the businesses which have the greatest capacity to benefit from the introduction of pro-biodiversity legislation, or consumers demanding more sustainable products.
We define Biodiversity Champions as either businesses which demonstrably provide a solution to biodiversity loss, or businesses which mitigate biodiversity risk in hard to abate sectors.
Why have we chosen to focus on investing in these champions? Well, simply because we think that these businesses, more so than transition names, stand to benefit from the exciting multi-year trends and regulations which underpin our investment thesis.
Importantly there is a rich breadth of business models and exposures we can find within the champions class, and we are confident that this will be an exciting and lucrative investment opportunity set in the coming years.
We’re very strict on our definition of Biodiversity Champions, and we want to hold the highest bar and standard possible while maintaining a clear and determined focus on delivering returns for our investors.
How do you ensure that Biodiversity standards are maintained?
We’re very strict on our definition of Biodiversity Champions, and we want to hold the highest bar and standard possible while maintaining a clear and determined focus on delivering returns for our investors.
We are disciplined in staying true to our process for qualifying a name as a Biodiversity Champion, which is twofold. Firstly, can we make a qualitative case that this business is either a solutions provider to biodiversity loss, or is materially helping to mitigate biodiversity risk in hard to abate sectors? We are advantaged as a firm with a wealth of in-house knowledge across our team, EOS (our industry leading engagement analyst resource) and private markets capabilities. Secondly, we must be able to make a quantitative assessment of the biodiversity impact of each business.
In September we launched our first Biodiversity annual report, which contained insights from our proprietary Biodiversity Impact Database. In this, we calculate metrics such as the land use avoided, the biodiversity footprint saved, and even the species prevented from risk, by the businesses in which we invest. This extends a competence we’ve built on the team since 2020, and really does help ensure that we are investing in businesses where we can credibly demonstrate the impact that they are generating.
Biodiversity Annual Report, 2022-23
To find out more about our Biodiversity Equity, please explore the strategy’s capability page.
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