Insurance Insights: Nature Positive Investing framework
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Responsible Investing
Optimising for net zero and nature positive outcomes
Net zero and nature positive investing may seem aligned in their goals, yet our analysis reveals that certain net zero investment strategies could inadvertently embed nature risks. Our latest research also highlights the approaches insurance investors can take for nature positive investing.
Different outcomes for net zero and nature positive
From assessing different investment tilt strategies focused on greenhouse gas (GHG) emissions exposure relative to broader nature impact exposure, we draw three key conclusions:
- Nature exposure cannot be reasonably mitigated through an approach that seeks to exclude or underweight specific sectors
- Nature and GHG emissions exposures are aligned in the majority of circumstances, but an emissions-only strategy will have more limited benefits for nature
- Nature creates overlapping dependencies across economic sectors that – if nature were to become more priced-in to markets – would undermine traditional diversification strategies
Actionable insights for insurers
Our work also indicates three actionable insights for insurers seeking to integrate nature considerations could:
- Prioritize three areas: use of natural resources, land use change and waste/pollution generation.
- Apply a science-based approach to nature positive investment.
- Consider fixed income as a first step in nature based investing.
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Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well.
