Key takeaways:

Rising Investor Focus
Investor awareness and focus on biodiversity and nature are on the rise, driven by better understanding of the economic importance of nature and rapid pace of regulatory changes. Yet deciding where and how to invest can be a challenge, even for those familiar with the climate-investing market.

Growing pains for a nascent market 
Despite the increasing investor focus, expanded adoption is still hampered by key issues associated with a fledgling market. The climate change playbook cannot be easily adapted to biodiversity. The wide variety of terminology and approaches can also make it difficult for investors to navigate.

Clarify the objective
Investors have many reasons for integrating biodiversity into their investment process, such as managing material nature-related risks, mitigating potential negative impacts, and increasing exposure to positive solutions. Clarifying the investment objective helps investors to identify the appropriate investment tools.

Customise the toolkit
Having identified their investment objectives, investors can assemble assessment tools that support their goals. Goldman Sachs Asset Management think a toolkit that facilitates bottom-up analysis at the company level may yield more targeted, actionable and accurate insights.

Unlocking positive potential solutions
Start with sub-asset classes where impact on biodiversity is more direct, facilitating demonstration of additionality and intentionality, and develop a clear framework for identifying companies that are aligned with an investor’s definition of a biodiversity solution.

Please see the full article’s disclosures for additional risk considerations. 

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