Two-thirds of asset managers now engage on nature-related risks with companies, according to new research, but less than a quarter are making disclosures on potential risks to longer-term asset values.
This survey, by Hargreaves Lansdown comes ahead of the latest global climate summit, COP30. This is being held in Brazil, with biodiversity loss expected to be a major theme.
The HL survey shows that while the majority of asset managers recognise this as a potential risk, just 25 per cent are making nature-related disclosures, and only 10 per cent are setting formal nature-related targets.
The research found that a handful of firms – including Axa, L&G and Schroders – are leading the way, when it comes to combining engagement, disclosures and targets. HL says that achieving all three demands “deep expertise, consistent data and firm-wide commitment”. It says these are resources that smaller managers often lack.
This research covered 55 global and UK asset managers. Hargreaves Lansdown senior ESG analyst Tara Irwin says: “The race to protect nature is on – but most investors are still at the starting line.
“While managers are beginning to engage with companies on nature-related risks, only a small fraction have set measurable targets. The HL research findings come as policymakers and investors gear up for COP30, where financing nature and halting biodiversity loss are expected to take centre stage.”
Irwin adds: “While engagement is gathering pace, tangible target-setting remains limited. The research reveals a clear divide between large global managers with dedicated sustainability teams and smaller firms that lack the resources to conduct detailed, bottom-up assessments of nature dependencies and impacts.
“For most, progress depends on the availability of robust, comparable data and a clear materiality framework to identify which nature-related issues are most relevant. For example, water dependencies may be critical for semiconductor producers, while soil degradation is more material for agricultural businesses. Engagement is a key tool managers can leverage to improve disclosures and impact assessments.”
HL says these findings highlight a growing recognition that nature loss is not just an environmental concern but a material financial risk with direct implications for long-term economic value.
According to the Green Finance Institute, here in the UK, damage to the natural environment is slowing economic growth and could reduce GDP by up to 12 per cent in the next decade.
While engagement marks progress for the industry, setting clear, time-bound nature targets is what enables investors to quantify and manage these dependencies.
Irwin adds that targets can also also drive transparency and accountability, encouraging better data and disclosure.
“With COP30 set to focus on implementation of the Global Biodiversity Framework, investors are under growing pressure to integrate nature into their financial decision-making.
Frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) aim to provide a roadmap, but adoption remains patchy across the industry.
The TNFD is a science-based and government-supported global initiative, building on the success of the Taskforce on Climate-related Financial Disclosures (TCFD), which is now mandatory in the UK for large entities.
Early signals suggest the TNFD could follow a similar path in UK regulation, bringing nature-related reporting into the mainstream.”