Fidelity International has launched a new biodiversity fund as part of its sustainable fund range.
This fund offers the opportunity to invest in a global equity portfolio of companies contributing to biodiversity preservation.
There is growing consensus that maintaining a balance and variety of plant and animal species is important to human survival. This fund is launched after the World Economic Forum revealed that a biodiversity loss is linked to three of the most severe risks threatening the planet over the next 10 years.
Fidelity offers a range of sustainable fund options as part of its workplace default solution.
Fidelity says that the investment potential in this ‘mega trend’ is vast. It points out that the UN Environment Programme conservatively estimates that meeting international biodiversity commitments will require $8.1 trillion of cumulative investment in nature-based solutions between now and 2050.
It says this figure will be significantly higher given the interlinked relationships with climate change, which requires a further $117 trillion in investment by 2050.
The annual investment in biodiversity preservation is currently $133 billion, while the spending in solving climate change was around $800 billion in 2021.
This Sustainable Biodiversity Fund will be managed by Velislava Dimitrova. The fund invests in the value chain of companies involved in providing ‘solutions’ to reduce biodiversity loss, while also allocating capital towards biodiversity ‘best-in-class’ companies. These are defined as companies which are either market-leading in terms of their own operational improvement to minimise impact on biodiversity, or companies developing new solutions to address biodiversity loss.
Both the solution providers and the best-in-class companies span many areas of economic activity and are diversified on a global and sector basis.
Dimitrova says: “In the past, market participants have taken nature for granted, viewing this capital stock as a perpetual resource. But evidence shows that nature continues to degrade as a result of human activity.
“The world is now waking up to the urgent threat to biodiversity and natural capital. Biodiversity investment solutions are emerging as the largest investment mega-trend in our generation and provides opportunities for investors. The theme is at an inflection point, and belatedly transforming from a neglected risk into a top priority.”
The is part of Fidelity’s growing range of sustainable funds, offering clients access to a range of funds with a strict and coherent ESG framework to ensure consistent, transparent and credible ESG attributes across multiple asset classes.
The fund adopts a sustainable thematic strategy under which 70 per cent of the fund’s net assets will be invested in issuers that maintain sustainable characteristics.
