The business case for investing in biodiversity is strong. Biodiversity – the abundance and variety of life on earth – represents an essential part of natural capital and is both directly and indirectly linked to other forms of capital in our economic system. USD 44 trillion worth of economic value generated each year is dependent on nature. This is more than 50% of global GDP. Nature delivers valuable services like the pollination of crops, water purification, flood protection, and carbon sequestration that many economic activities rely on. While these services are provided free of charge, their estimated monetary value ranges from USD 125 to 140 trillion per year. The expected economic gains from protecting and restoring biodiversity are therefore significant.
This biodiversity restoration strategy aims at identifying and investing in the solution-providers that, through their products and supply chains, protect and restore species and natural habitats on the planet. This global all-cap portfolio composed of 45 to 55 stocks invests in seven industrial verticals such as the sustainable management of natural resources, green cities and sustainable food production. Ultimately, the goal is to create a nature-positive portfolio. The strategy will follow the same rigorous selection process and systematic engagement approach UBP applies to the rest of its impact platform, using its proprietary impact assessment tool, the IMAP (for Intentionality, Materiality, Additionality and Potential), and its Impact Engagement Framework (IEF). It is co-managed by Victoria Leggett, Head of Impact Investing, Charlie Anniss, Senior Portfolio Manager and Adrien Cambonie, Fund Manager and Impact Analyst.
Recognising the challenges behind investing in biodiversity restoration, UBP has teamed up with biodiversity partner the Peace Parks Foundation and plans also to collaborate with the Cambridge Conservation Initiative (CCI). 25% of the management fee will be invested directly in their on-the-ground conservation and world-leading academic and policy-making skills. This partnership enables the creation of an exceptional bank of knowledge that can be used to support and guide engagement with investee companies, in addition to generating tangible non-financial returns.
To support this multi-stakeholder approach and help achieve the ambitious goal of delivering a nature-positive portfolio, UBP is adding a new Biodiversity Committee to the impact team’s oversight structure. Chaired by Tony Juniper (Chair of Nature England and Executive Director for Advocacy and Campaigns for WWF-UK) and supported by members of the Bank’s two partner NGOs, this group will provide the investment team with strategic guidance and set out clear biodiversity objectives and performance indicators. The Biodiversity Committee will report to the existing Impact Advisory Board, chaired by Anne Rotman de Picciotto, and the Impact Investment Committee, chaired by Simon Pickard.
This one is the third vehicle launched on UBP’s impact investing platform. UBP started its impact investing offering in listed equities in 2018. Two years later, it launched an impact strategy investing in emerging markets. In total the impact investment team now manages close to USD 1.4 billion.
Victoria Leggett, Head of Impact Investing at UBP and co-manager of this new strategy, explains: “It’s time to broaden the focus from ‘carbon-neutral’ to include ‘nature-positive’. The level of awareness of the biodiversity crisis is where climate change was 5–10 years ago, and there is now a huge amount of momentum behind it, including the UN’s ‘Decade on Ecosystem Restoration’ and COP15 on biodiversity. The associated regulatory shift and capex support should drive change in the investment opportunity set and with it returns for investors.”
“UBP is convinced that collaboration between stakeholders is the biggest chance to overcome the challenges investing in biodiversity restoration poses. This is why we are extremely pleased to have found the right partners to support our investment approach in this field. It is our belief that the triangulation of expertise made possible through this fund is a unique and innovative approach and has the potential to catalyse positive change at scale, while generating significant financial returns,” says Nicolas Faller, Co-CEO Asset Management at UBP.
Colin Porteous, Chief Investment Officer at Peace Parks Foundation, adds: “Biodiversity affects everyone’s resources, from food and materials to clean air and water. For biodiversity to continue providing value, large-scale ecosystems need to be in balance and that means people working in harmony with Nature. That is what Peace Parks Foundation does: working with governments, communities and experienced partners such as UBP to ensure the protection and restoration of connected landscapes.”
Mike Maunder, Executive Director at The Cambridge Conservation Initiative (CCI), declares: “We are delighted to be working with UBP and to explore the challenges of creating pro-nature financing. This blending of an innovative bank, researchers and practical conservationists has the potential to achieve real gain for nature and business. If we want a future where business thrives, we have to rebuild nature and reverse the trajectory of damage that has been accelerating for the last century and particularly in the last fifty years. We need to move towards an economy that is carbon-neutral, nature-positive and equitable.”