Biodiversity in Crisis: Erste Asset Management publishes a new policy

The global biodiversity crisis is a threat to our planet. Our financial and economic systems are not exempt from this. However, investments in nature also offer opportunities. With a new biodiversity policy, Erste Asset Management (Erste AM) therefore defines concrete measures and goals that Erste AM integrates via engagement initiatives and voting as an active investor.

The deterioration of ecosystems is, on the one hand, a challenge to the resilience of the planet. On the other hand, the profitability and stability of financial systems are also threatened by the impact of the biodiversity crisis. For example, according to UNEP FI (United Nations Environment Programme Initiative), the production processes of 13 of the 18 sectors represented in the FTSE 100 have a high or very high degree of material dependence on nature.

 

 

This illustrates that the loss of nature and biodiversity constitutes a major risk for companies. However, investing in nature also offers opportunities. New legal frameworks such as the EU Renaturation Act, the EU Taxonomy or the CSRD disclosure requirement will help to support investments in products and services that contain fewer risks to nature.

A positive contribution is also possible in the area of capital investment: on the one hand directly, such as through the long-standing partnership of Erste AM and WWF Austria with the ERSTE WWF STOCK ENVIRONMENT fund (N.B. please note the legal information on the fund mentioned). Over the past 20 years, more than EUR 5mn has been invested in biodiversity projects. On the other hand, also indirectly, through investments in, and dialogue with, companies.

As part of the investment process, Erste AM already bears in mind challenges related to the preservation of biodiversity and ecosystems, for example through the evaluation of sustainable land use and sustainable water management. This includes assessing companies according to their water risk, their water management, and their contribution to water-saving products and services. In addition, Erste AM also evaluates companies on the proximity of their operations to sensitive ecosystems, as well as their involvement in controversies regarding deforestation.

As a first step towards an even more targeted integration of biodiversity issues, Erste AM signed the “Statement from the private financial sector to the conference of the parties to the convention on biological diversity”, which was created by UNEP FI, among others. This statement was signed by 154 financial institutions with more than USD 24.8 trillion in assets under management. The Commitment includes a commitment to “contribute to the protection and restoration of biodiversity and ecosystems through financing activities and investments”.

With the help of the now published Biodiversity Policy, we also want to formally integrate these agendas into the processes of Erste AM. To this end, and in order to live up to our own claim to promote biodiversity, we have defined targets that are to be achieved by 2030:

We will implement specific data on biodiversity and ecosystems in the active ownership approach to identify companies with biodiversity risks and potential for improvement in this context.We shall support shareholder resolutions specifically related to biodiversity and ecosystem. This has already been stated in Erste AM's Voting Policy.We will launch engagement initiatives with companies identified as having potential for improvement. To this end, Erste AM intends to take an active role within the Nature Action 100 initiative. This initiative identifies 100 companies that are relevant from a biodiversity perspective and initiates investor engagement to demand corporate action that promotes the protection and restoration of nature.We intend to prepare progress reports on the basis of key indicators to ensure that improvements have indeed been made. In the event of insufficient progress on the part of the companies despite the commitment of Erste AM, the final escalation stage is divestment.For the Biodiversity Policy of Erste AM, please follow this link.

In order to draw more attention to the protection of biodiversity and ecosystems, the latest issue of Erste AM's ESGenius Letter is also dedicated to this topic. We have illustrated various aspects of biodiversity in a series of articles.For example, the ecologist and Scientist of the Year 2022, Franz Essl, has his say and explains the serious effects of the loss of species. Other topics include the current regulatory framework with regard to biodiversity, as well as concrete measures that companies can take, which are highlighted in a guest article by WWF Austria.

For all articles of the latest ESGenius Letter, please follow this link.

For enquiries, please contact:

Erste Asset Management GmbH | Communications & Digital Marketing | Am Belvedere 1, 1100 Vienna Paul Severin, +43 (0)50100 19982, E-Mail: [email protected]Philipp Marchhart, +43 (0)50100 19854, E-Mail: [email protected]