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ESG Viewpoint: Engaging companies on biodiversity

We explore how companies are responding to biodiversity loss and why they need to step up their efforts.
December 2021
Marcus Wilert

Marcus Wilert

Vice President, Responsible Investment team
Lorraine Hau

Lorraine Hau

Associate, Responsible Investment

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Biodiversity is the variability of living organisms, including diversity within and between species. Together with water and soil, it forms the ecosystems we all depend on for clean water, air, and liveable conditions of our environment. Ecosystem services also include the absorption of carbon dioxide from the atmosphere, the pollination of flowers and plants, and the aesthetic value we derive from our natural environment. In financial terms, according to the World Economic Forum, over half of the world’s GDP depends on nature and the services it provides.

However, degradation of ecosystem and loss of biodiversity by human activity is an urgent and critical issue. The World Wildlife Foundation reports that the rate of loss of species is between 1,000 and 10,000 times higher than the natural extinction rate.

Investor engagement with companies has so far largely focused on impacts, such as loss of biodiversity through climate change, deforestation, introduction of invasive species decimating natural habitats, and the pollution of land and water. However, biodiversity is fundamental to the ecosystem services on which society and business depend. Purification of water and air, the capture and sequestration of carbon dioxide, and the pollination of crops that provide food are just some examples. It is therefore key that the company’s dependencies on such ecosystem services are included in any biodiversity assessment.

Our 2021 biodiversity engagement project is designed to explore the biodiversity-related governance, strategy and targets of companies in selected sectors classified by UNEP-IF as impacting and depending most heavily on biodiversity.

Key findings from our engagement

  • While biodiversity is not always recognised by companies as a specific topic, most of the companies we engaged had taken steps to assess impact.
  • While biodiversity loss stemming from high-profile issues such as deforestation linked to commodities was well recognised, not many companies had conducted a wider assessment along the value chain.
  • Few companies had taken a holistic approach to nature-related impact, such as linking biodiversity with climate change strategies.

Interested in learning more We explore why biodiversity matters; explain how we’ve engaged with companies across a number of sectors and explore our findings. Download the full viewpoint to discover more.

Risk warnings
Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.
The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

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Get to know the authors

Marcus Wilert

Get to know the authors

Marcus Wilert, Vice President, Responsible Investment team

Marcus joined the Responsible Investment team at BMO GAM in 2020 and is focusing on labour standards and biodiversity. Before joining BMO, Marcus spent a decade and a half in supply chain sustainability across the world. When not working, he enjoys sailing and Filipino martial arts.

Lorraine Hau

Lorraine Hau, Associate, Responsible Investment

Lorraine joined the Responsible Investment team at BMO GAM in 2021 and is focusing on biodiversity and the TMT sector. Before joining BMO, she worked at an investor network raising awareness on sustainability in food systems. When not working, she likes to spend her time practicing yoga and making lopsided bowls in pottery studios.

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