ASN Bank is the first bank globally to set itself the goal to realise an overall net positive effect on biodiversity in 2030 with the total of its investments. We talk about ASN’s strategy to reach this goal, how pension funds and insurers can set ambitious biodiversity goals and the importance of vision versus data and measuring.
A net positive effect on biodiversity is very ambitious, what is your approach?
It’s certainly an audacious challenge. Biodiversity and ecosystems are complex and mitigating the negative impacts on biodiversity is difficult. Right now, we have a lot more negative impact than positive impact on biodiversity with our investments, even though we have very strict sustainability policies in place. So how to go from here to a net-positive impact?
We have developed five strategies to realise our long-term goal:
- The development of an open-source methodology to measure the impact we have on biodiversity (the Biodiversity Footprint Financial Institutions (BFFI)). We started this complex work in 2015 as one of the first financial institutions globally. It’s really great to see the development of new tools, methodologies and data since then.
- Decreasing our negative impact on biodiversity. We have developed strict sustainability policies to prevent and minimize negative impacts on biodiversity. Since 2015 we have used the BFFI to measure and decrease our negative impact on biodiversity.
- Increasing our positive impact on biodiversity. To be able to invest in activities that contribute to the protection and restoration of biodiversity we needed to create a new vehicle for investing. For this reason, ASN Impact Investors have developed the ASN Biodiversity Fund. This fund invests in four themes, Sustainable forestry, sustainable agroforestry and regenerative farming, sustainable seas and oceans and ecotourism. We have also started exploring opportunities in this market with our bank lending department.
- Contributing to the much-needed standardization of biodiversity impact and dependency assessments via the initiation and support of the development of the PBAF Standard.
- Support of civil society and nature partners and projects, e.g. Natuur en Milieu, IVN, De Rijke Noordzee.
Can you tell more about the biodiversity funds that now exist?
Globally, there are approximately 20 funds that aim to improve biodiversity. There is quite a big difference in the approach they take, in my opinion, they vary from grey with a green label to dark green with real impact.
There is New Forests, which is focused on forestry and forest conservation to support biodiversity as well as climate goals. Other funds combine environmental with social solutions. For instance, Clarmondial invests in sustainable smallholder farmers in Sub-Saharan Africa with their Food Securities Fund, or the Amazon Biodiversity Fund, which directs their investments towards inhabitants of the Amazon who work on improving biodiversity in this area.
The aim of the ASN biodiversity fund that was developed by ASN Impact Investors is to invest in projects and companies that regenerate and conserve biodiversity, with a focus on sustainable forestry, sustainable agroforestry and regenerative farming, sustainable seas and oceans and ecotourism. It’s the first listed biodiversity fund that is open to retail and institutional investors. This accessibility makes it easier for us to reach our goals. However, the fund still needs to grow significantly to reach our ultimate goal to become net positive. Fortunately, the fund has a lot of potential to grow. And institutional investors are well suited to play a role in scaling up the fund and the underlying projects.
Would there be enough projects and companies to invest in if the biodiversity fund would grow?
This is a chicken and egg discussion. The number of projects is not the main problem, there is enough pipeline development in the market. The appetite of investors should really increase. Of course, it takes time for project developers to develop new projects, but the number and feasibility of projects is also a matter of active demand. Right now, we mainly invest in listed funds, in which governments and institutions like the World Bank are often involved. However, only government finance is not sufficient to restore nature, it is really important that also more institutional investors and also listed companies take responsibility.
What approach should pension funds and insurers take?
I can start a whole story about the importance of impact assessment, but it is actually much simpler than that: make sure that there is a good policy on biodiversity that contributes to the regeneration and protection of nature. It is best if this policy is specific. For instance, a separate policy for deforestation. This is the low-hanging fruit because you do not need much to take this step: have a good discussion about your perspective on biodiversity, your dependencies on nature and target-setting. Also, consider the expected (financial & impact) returns in the choices you make. This does not mean that measuring your impact on biodiversity isn’t important, this is a good next step.
I would like to see that for some topics, like biodiversity, investors adapt the traditional framework on which their investment choices are normally based. Biodiversity is too important to ignore or see as a cool new theme, it should be part of the framework, both as a condition to mitigate negative impact and as well as an investment opportunity to contribute to a liveable planet and future.
So what do you think is more important: ambition or impact assessment?
The question is: what is the best way to activate people and organisations? Climate awareness and action have increased, also among financial institutions and companies. It is time to also take biodiversity into account seriously. This is not so much about ambition as it is about common sense and being realistic. Both setting up and adhering to ambitious policies and measuring impact are important, as long as this contributes to achieving the goal. Measuring can also become a way of delaying if you get lost in it. Don’t wait for the perfect data before you start and try to have an impact every single day.
How to measure effectively without getting lost in it?
With the PBAF partners, we developed many requirements and recommendations for data and impact assessment methods. The first approach we used was biodiversity footprinting, now there is an increasing number of other methods of assessing the expected impact of investments on biodiversity like satellites, E-DNA, databases with protected areas, dependencies etc. Within PBAF we have several working groups in which we bring the different methods and sector-level data together and share and discuss this technical work with financial institutions.
In this way, they are supported by the fast-ongoing developments in this field. We also have a helpdesk for members to help financial institutions in their journey and support them in assessing and disclosing the impact and dependencies on biodiversity. However, the role of measuring is not only to gather data but also to raise awareness of our huge dependency and impact on nature and take steps. In order for people to take biodiversity and nature into account in their decisions, it is essential that they realize its value and our dependency on it. It’s difficult to pinpoint the moment when you go from effectively measuring to delaying to take action. One thing you can do is follow the frontrunners and learn how they tackled the challenges on their journey.