Biodiversity Equity
Investing in companies
that help fight biodiversity loss.
Reasons to invest
We have reached a tipping point
Human activity has severely altered 75% of the planet’s land surface and 66% of the marine environment. Average species population sizes fell by 68% between 1970 and 20161
Biodiversity offers critical mitigation against climate change
Forests, peatlands and grasslands are natural carbon sinks that absorb and store CO2. Protecting and restoring these ecosystems is considered the second most effective solution to climate change after switching from fossil fuels.
Biodiversity impacts the economy:
Research suggests over 50% of global GDP is highly or moderately dependent on nature.2 Failure to act could result in collapsing food systems, loss of livelihoods and pose a systemic risk to the global economy.
The role of finance
Companies and investors have largely ignored this problem thus far. We are facing a global biodiversity funding gap of >$800m3 per annum, and the financial industry can play a key role through capital allocation and stewardship.
Quick links
The negative impacts of biodiversity loss pose a systemic risk to the global economy and we must stop taking nature’s permanence for granted. We believe now is a crucial moment to invest in the companies that help mitigate biodiversity decline.
Ingrid Kukuljan - Portfolio Manager
Why Biodiversity Equity?
We aim to achieve long-term capital appreciation by investing in a concentrated portfolio of companies that are best in class and are providing solutions to avert loss of and support restoration of biodiversity.
We have extensively researched the major regional and global threats to biodiversity and have defined six investable themes: land pollution, marine pollution and exploitation, unsustainable living, climate change, unsustainable farming, and deforestation. Each of these themes has multiple sub-verticals that are aligned to specific UN Sustainable Development Goals (SDGs).
As well as investing in companies that offer solutions to the biodiversity crisis, we also engage with transitioning companies. EOS at Federated Hermes (EOS) is a leading global engagement and stewardship team with expertise on topics including climate change, deforestation, sustainable food systems, and plastics.
Federated Hermes is a pioneer in this field, with a strong record advocating and engaging around biodiversity. We are members of industry organisations including the Finance for Biodiversity Pledge, the PRI Sustainable Commodities Practitioners’ Group, the SPOTT Supporter Network, the Partnership for Biodiversity Accounting Financials, and the PRI plastics working group.
Our commitment to nature was outlined by EOS at Federated Hermes in their recent biodiversity white paper.
How we invest
Each of our six SDG-aligned investible themes consist of a number of sub-verticals, which link directly to biodiversity. For example, the land pollution theme consists of waste management, plastic recycling and alternatives, and hazardous chemical management.
We look for best-in-class companies, which help preserve or replenish biodiversity. For each company, we analyse financials, ESG factors, and complete a biodiversity assessment to determine company impacts and dependencies.
We seek to quantify this, where possible, through our impact database.
We will engage with portfolio companies on biodiversity and broader ESG themes. We are also focused on public policy engagement and advocacy related to biodiversity, including through being an active signatory of the Finance for Biodiversity Pledge.
Team
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Ingrid Kukuljan Head of Impact & Sustainable Investing |
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Sonya Liktman Lead Engager, EOS |
Our Purpose
To deliver Sustainable Wealth Creation
Like all our investment capabilities, Federated Hermes Biodiversity Equity aims to deliver Sustainable Wealth Creation: the generation of wealth through investments that enrich investors, society and the environment over the long term.
Our business provides three equally powerful pathways to achieving this aim. Biodiversity Equity features in the Impact route.
