Biodiversity
New nature-related policies and regulation being developed should drive new investment opportunities as corporates commit to biodiversity positive business models.
What is biodiversity?
Our planet’s biodiversity, or the variety of life on earth, is being lost at an alarming rate. This loss is threatening the planet’s future, and human economic activity is the main driver. There is growing recognition of the economic and human costs associated with biodiversity loss – and over time these externalized costs will start to be a financial expense for companies.
Biodiversity decline leads to large-scale environmental and social costs, currently costing the global economy 10% of its output each year.1 Strategic investments by companies are needed to restore and protect biodiversity on a global scale.
Drivers of biodiversity loss are diverse and include pollution, population growth, over-exploitation and hunting, human consumption, plastic waste, climate change, overharvesting, urban sprawl, invasive species, and deforestation.
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Why consider investing in biodiversity?
The urgent need to prevent and mitigate biodiversity loss can create responsible investment opportunities driven by increasingly stringent and tangible global regulations, long-term targets and corporate reporting[OW1] commitments
New nature-related policies and regulation being developed will drive new investment opportunities as corporates commit to biodiversity positive business models.
Consumers, governments, and companies have realized the urgency and we are seeing:
Consumer consumption patterns changing - deploying money into brands perceived as doing better on environmental issues such as biodiversity protection and restoration
Corporates have clear economic opportunities to help mitigate their ecosystem damage. Companies who can deliver solutions to help in mitigating biodiversity impact via their innovations will keep investing in R&D to develop new technologies.
Source: AXA IM. For illustrative purposes only
Biodiversity decline leads to large-scale environmental and social costs, currently costing the global economy 10% of its output each year2 . Strategic investments by companies are needed to restore and protect biodiversity on a global scale. It is perhaps useful to think of awareness of the biodiversity crisis being at a similar point to climate about 10 years ago.
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Our biodiversity strategy
The AXA IM Biodiversity Strategy** has a dual objective of seeking to deliver long-term financial returns and generating a positive and measurable impact on the environment.
The objective of the strategy is to achieve long-term capital growth by investing in listed companies whose activities are effectively preserving life on land, water and air through providing sustainable alternative products and services which are protecting and supporting ecosystem preservation.
The strategy targets opportunities linked to the United Nations SDGs that support the preservation and restoration of the ecosystem. We invest in companies that have a clear alignment to the below four UN SDGs3 :
- 6 – Clean Water & Sanitation (Ensure availability and sustainable management of water and sanitation for all)
- 12 – Responsible Consumption & Production (Ensure sustainable consumption and production patterns)
- 14 – Life Below Water (Conserve and sustainably use the oceans, seas and marine resources for sustainable development)
- 15 – Life on land (Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss)
The targeting of specific SDGs does not imply the endorsement of the United Nations of AXA Investment Managers, its products or services, or of its planned activities and does not constitute, explicitly or implicitly, a recommendation for an investment strategy.
The strategy invests in a diversified opportunity set across the areas of sustainable materials, land and animal preservation, water ecosystems, recycling and recirculation. We achieve this by investing across four key areas:
- Sustainable materials
- Land and animal preservation
- Water ecosystems
- Recycling and recirculation
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Clean Economy
Innovative companies are creating solutions to address pressures on scarce natural resources and the need for greenhouse gas emission reduction.
Green bonds
Green bonds are among the most interesting innovations of the last decade in the field of socially responsible investment products.
US high yield low carbon
We believe the global economy has entered a ‘decade of transition’ towards a more sustainable, de-carbonised model.
Social bonds
Rapid growth in the social bonds market can offer a compelling opportunity to invest in the social dimension of the transition to a low carbon economy.
Social progress
Invest in the companies providing strong social utility by making essential products and services better quality, more affordable and more accessible to all.
Risks
No assurance can be given that the Biodiversity strategy will be successful. Investors can lose some or all of their capital investors. The Biodiversity strategy is subject to risks including counterparty risk, geopolitical risk and the impact of any techniques such as derivatives.
Disclaimer
Not for retail distribution: This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.
This page is for informational purposes only and does not constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services and should not be considered as a solicitation or as investment, legal or tax advice. The strategies discussed herein may not be available in all jurisdictions and/or to certain types of investors. Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.