A growing majority of asset owners are incorporating nature and biodiversity into their sustainability strategies, with 65% already integrating these factors and another 20% planning to do so, according to a report.
The report has highlighted the increasing recognition of biodiversity risks as a financial materiality issue. Asset owners are becoming more aware of ecosystem fragility and supply chain vulnerabilities, which pose long-term threats to investments. According to the report, the momentum is evident, with an additional 20% of asset owners actively working to embed biodiversity considerations within the next year.
The report has been prepared by Pensions for Purpose, a UK-based knowledge-sharing platform that connects pension funds, asset managers, etc to promote impact investing and sustainable finance, and commissioned by the First Sentier MUFG Sustainable Investment Institute, a provider of research on topics that can advance sustainable investing.
COP16 emphasised the urgency of protecting 30% of global ecosystems by 2030, but efforts remain inadequate. Researchers noted that developing nations, home to most biodiversity, are calling for greater international financial support.
However, asset owners continue to face challenges in reporting nature-related risks. The study has shown that the issue is not a lack of data, but rather its variety and interpretation. Unlike carbon emissions, which can be measured more directly, biodiversity assessments require a mix of qualitative and quantitative insights. Many asset owners are still building internal capacity, developing suitable metrics, and collaborating with academic institutions and NGOs to navigate these complexities.
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The report has also highlighted the growing connection between nature and climate within sustainability strategies. Asset owners increasingly view nature-based solutions as critical for carbon sequestration and climate resilience, reinforcing their importance within ESG frameworks. However, most funds still lack dedicated governance structures for biodiversity, with nature considerations often embedded within broader climate-focused ESG policies.
To address this governance gap, many asset owners are expanding sustainability teams or seeking external expertise to inform trustee decision-making.
Bruna Bauer, research manager at Pensions for Purpose, said: “Financial materiality, rather than regulatory pressure, has emerged as the primary reason for asset owners to act. Biodiversity loss poses tangible risks to investments, including supply chain vulnerabilities and ecosystem fragility, prompting schemes to move proactively to protect their portfolios. Asset owner respondents have realised ignoring nature-related risks is not just a sustainability issue but has financial consequences too, leading to the integration of nature into sustainable strategies before more regulation mandates it.”
Sudip Hazra, director, First Sentier MUFG Sustainable Investment Institute, added: “The First Sentier MUFG Sustainable Investment Institute sponsored this report as asset owners are at a critical point in their nature and biodiversity journeys. As more funds engage with the TNFD framework, clarity is being sought on key motivations, challenges and gaps as the need for the theme to be integrated more deeply into portfolios progressively strengthens.”
