Advisory Partners

The FT Moral Money Forum is supported by its advisory partners, Diageo, High Meadows Institute, Vontobel and White & Case. They help to fund the reports.

The partners share their business perspectives on the forum advisory board. They discuss topics that the forum should cover but the final decision rests with the editorial director. The reports are written and edited by Financial Times journalists and are editorially independent.

Our partners feature in the following pages. Each profiles their business and offers a view on biodiversity. Partners’ views stand alone. They are separate from each other, the FT and the FT Moral Money Forum.

How can food and beverage companies improve biodiversity outcomes using regenerative agriculture?

Andy Griffiths, head of sustainable procurement at Diageo

The Financial Times notes that the language around nature is part of the problem of companies and investors proving slow to respond to warnings on nature loss. They describe the word “biodiversity” conjuring up “something beautiful, but non-essential" and therefore compounding the lack of urgency.

In recent years the term “regenerative agriculture” has created similar challenges. It’s become the buzzword that promises to mark a new future for farming and business — yet its practicalities feel hard to adopt. But if we’re able to scale regenerative agriculture, and bring farmers along on the journey, the effect could be game-changing. 

We believe regenerative agricultural farming practices should leave the soil, biodiversity, water and the environment in a better state than we found it. This has the potential to bring significant benefits to nature, water and climate, as well as improve the resilience of our communities across our supply chains around the world.

The raw materials that we source are central to Diageo products. With biodiversity under threat, industries are under increasing pressure to adapt in order to continue growing the crops they need, to make the products we all love to eat and drink. 

We need to involve farmers every step of the way. By enabling our global network of farmers to adopt more sustainable practices, we can address climate change and help foster stronger communities in the process. 

We’re also looking to identify where we can optimise resources and costs. We know from an assessment conducted across 44 farms in Ireland as part of our Guinness regenerative agriculture programme, that 75 per cent of the carbon footprint of barley production is generated by nitrogen fertilisers. That is why our programme is hoping to achieve a 30 per cent reduction in emissions through the implementation of low-carbon fertilisers and cover crops in the first phase. 

Initiatives such as the Landscape Enterprise Networks model are a real step in the right direction for enabling effective, shared interest investment into the regeneration of landscapes for farmers and communities. Implementing the LENs model into our supply chain helps us to build resilient, nature-based solutions, which in turn benefits biodiversity.

But there is still a lot more to do. 

Regenerative agriculture should be central to efforts to build climate resilience and adaptation — but for this to work at scale, organisations need to collaborate better. We want to see co-operation accelerating innovation in regenerative agriculture, to create a tangible positive impact on biodiversity. We hope this will be a key takeaway from COP28. 

This requires us all to reimagine where we can collectively direct our creativity and funding, to meet the scale and pace of progress required to create meaningful change for a long-term sustainable business. This level of collaboration is a key way to change industry practices in a way that benefits agricultural communities and the landscapes they call home.

Finance and biodiversity

Chris Pinney, president, High Meadows Institute

The rapid rise of biodiversity as a leading sustainability concern gets to the core of the challenge facing humanity, namely our destruction of nature, the operating system on which human development depends. A WWF (2022) report referred to the current situation as a “code red” alert for humanity, noting an average 69 per cent decline in global populations of mammals, fish, birds, reptiles and amphibians between 1970 and 2018.

A better understanding of the impact of our current economic model on nature, using frameworks like the recently released Taskforce on Nature-related Financial Disclosures, is an important first step in understanding and “pricing in” the cost of biodiversity loss. As with climate, however, making serious progress on biodiversity requires more than better reporting. As the TNFD report notes: “Nature is no longer a corporate social responsibility issue, but a core and strategic risk management issue alongside climate change.” As with climate, protecting biodiversity requires a fundamental change in mindset and a rethink of the high-carbon, extractive economic model under which most companies currently operate. It means accelerating the transition to a low-carbon sustainable economy that minimises negative climate and biodiversity impacts and enhances the natural ecosystem. 

A good example of the kind of transition now needed is the circular economy. The benefits of a circularity model are many. By maintaining the value of products, materials and other resources in the economy for as long as possible, enhancing their efficient use in production and consumption, and returning them to the product cycle at the end of their life, the circular economy business model reduces the need for resource extraction and reduces wastewater use, carbon emissions and pollution. This in turn can significantly help reduce the rate of biodiversity loss. At the same time, a recent EU study found that moving towards a more circular economy could increase competitiveness, stimulate innovation, boost economic growth, and create 700,000 new jobs in the EU alone by 2030.

Greater investment in the transition to a low-carbon economy from private and public markets is key. To fulfil this role, however, requires moving beyond the assumptions and limitations of current market orthodoxy and modern portfolio theory, which focuses narrowly on efficiency and risk management. It requires moving to a systems perspective that balances efficiency with resilience and integrates and considers the contributions and impact of the financial system on the natural systems environment in which it operates and in which risk cannot be “diversified” away. 

Large institutional investors, as universal owners acting in the long-term interests of their beneficiaries, have a dual role to play here. In addition to investing directly in circular economy and regenerative business activities, they are well positioned through their investment stewardship function to ensure the mainstream economy companies they invest in are actively pursuing strategies to ensure their transition to a sustainable low-carbon business model that protects biodiversity. 

Beyond engaging with equity markets, it will also be important to explore how the broader financial and capital market systems can support the low-carbon transition. To date, 90 per cent or more of the efforts on sustainable finance have focused on the $101.2tn global public equity markets. While this is a crucial step, it leaves us with little insight into the larger half of financial markets, the $129.8tn global bond markets, and the role it needs to play in helping address the biodiversity challenge. The approximately $500bn currently invested in green bonds has just scratched the surface in this regard.

While the engagement of private capital in addressing the biodiversity and climate crises is urgently needed, public sector leadership and public investment remain key in ensuring progress. While adaptive instruments such as blended finance are important tools for attracting greater private capital investment in higher-risk transition ventures, particularly in emerging markets, private markets cannot be expected to replace effective public policies and investment in addressing the biodiversity crisis.

Biodiversity is essential for a strong and sustainable global economy

Christel Rendu de Lint, head of investments at Vontobel

Healthy biodiversity is necessary for sustaining life on earth, but we’ve let it degrade into a pernicious situation that also threatens our global economy. The statistics around biodiversity are sobering: only 23 per cent of species and 16 per cent of habitats under the EU’s Nature Directives are considered in good health and we are facing what the UN refers to as a “nature apocalypse”.  Until now climate change has been the focus of many efforts to address the dangerous position of our environment, and while global warming affects nature, we’ve yet to zoom in on the degradation of our ecosystems with the same level of alarm and subsequent action.

The bitter irony is that while much of the erosion of a dynamic biodiversity is due to economic development, its destruction will boomerang back and have a damaging effect on the global economy. With all this in mind, seeking to deliver future-proof investment solutions must involve the consideration of biodiversity and natural capital at large. Nature loss is a systemic risk, and investors must address it. Investors increasingly need to integrate nature into their investment decisions. But how should they do this?

Nature as an economic building block

Thinking about nature in economic terms, biodiversity is valued at an estimated $44tn, roughly twice the GDP of the US, and close to half of the world’s GDP. Biodiversity is also a fundamental building block of industry and manufacturing and any impact on nature has a flow-on effect into the global economy. Consider that soil health and quality are key for land fertility and crop yields, yet land degradation has already reduced the productivity of 23 per cent of global land. And while 70 per cent of global water consumption is used for agricultural purposes, we have already seen examples of major multinational companies forced to close manufacturing sites in India and Pakistan due to water scarcity.

Even though nature is under pressure, the demands being placed on it will not decrease. The human population continues to expand at a rapid rate, and demand for these increasingly scarce resources will grow. With scarcity comes pricing pressure, which has the potential to radically affect the investment decisions people, companies and governments take with the help of investment managers. Resources, and their pricing, are at the very core of investing and investors can take a page from how we already assess commodities and apply it to other natural resources. 

Resources

We already formally price natural resources like commodities, but we struggle to make the link elsewhere (eg water purification, clean air, soil quality). The UN has created a System of Environmental-Economic Accounting that integrates nature capital contributions, but thus far, it is not a widely used framework. To truly understand our exposure to nature-related risks, corporations should be transparent about their full value chains, and publicly map out their asset locations. 

Despite the fact that we’ve made great strides on the accessibility of geospatial data with complex layers, from biomass to species, thus far we still see challenges in mapping relevant data for investors with value chain asset location. Ascertaining a company’s activities/manufacturing assets is often inaccurate. Supply chain mapping is often based on the assumption that access to resources will remain unfettered and ongoing, as will the trade resulting from that access. 

Promising steps

So where does this uncertainty leave investors concerned about healthy biodiversity? The past few years have included some major steps forward in terms of countries and companies taking biodiversity and nature more seriously from a financial and economic perspective. As Sarah Murray mentions, last year’s UN biodiversity summit in Montreal was an important milestone, as it made clear that private sector companies are showing an increasing interest in protecting biodiversity. The conference ended with an agreement to impose nature reporting requirements for companies. In addition, more than 190 countries adopted the Kunming-Montreal Global Biodiversity Framework in December 2022 which, among other targets, calls for conservation of 30 per cent of the earth’s land and seas by 2030.

In 2020, we also saw the development of the EU's Biodiversity Strategy for 2030 and the EU taxonomy for sustainable activities (with objectives 3 and 6), which emphasises its commitment to protecting nature and reversing the degradation of ecosystems. More specifically, the EU’s deforestation-free regulation came into force in June 2023, which establishes strict due diligence requirements for companies that place certain raw materials such as timber and soy and derivative products on the European market or export them. Finally, the Corporate Sustainability Reporting Directive, which came into operation in January 2023, requires businesses to disclose all policies relating to biodiversity and ecosystems and other environmental and social topics.

It's clear: companies cannot continue to value aspects of nature like water, and even clean air, as “free” resources — they are finite, and unfortunately increasingly scarce. We must make further progress on understanding how to price these resources to ensure a sustainable economy and society.

One year on from The Kunming-Montreal Global Biodiversity Framework: Legal perspectives 

Clare Connellan, Seth Kerschner, Lachlan Low, Janina Moutia-Bloom

The Kunming-Montreal Global Biodiversity Framework adopted last December at COP 15 aims to halt and reverse biodiversity loss by 2030, and features 23 non-legally binding targets for States. Target 15 concerns tools that enable businesses to assess and disclose biodiversity-related risks throughout their own operations and value chains. 

Such tools are taking their legal shape.  The Taskforce on Nature-related Financial Disclosures (TNFD) spent two years developing its nature-focused international corporate disclosure framework, finally released in September 2023. Much like the TCFD framework and ISSB standards, the TNFD framework is expected to be incorporated into some national regulatory frameworks in the coming years. The UK government has signalled its intention to implement the TNFD framework into domestic legislative architecture, in line with Target 15. 

At a regional level, the EU has already introduced mandatory nature-related reporting obligations under the Corporate Sustainability Reporting Directive (CSRD), by obliging companies to report in line with the European Sustainability Reporting Standards (ESRS). Some of the ESRS integrate aspects of the TNFD’s guiding approach, including the specific ESRS on pollution, water and marine resources, and biodiversity and ecosystems. 

Certain jurisdictions have therefore underscored the need for companies to tackle the twin risks of climate change and biodiversity loss in an integrated way. Both risks are embedded into the architecture of the TNFD, which is built around the TCFD’s 11 recommended disclosures, but through a nature lens. Strategic litigants are also requiring companies to view both risks in tandem. 

An increase in strategic litigation that attempts to connect biodiversity loss with climate change is expected in some jurisdictions, with such claims focusing on corporates’ duties to adequately manage nature-impacts in recognition of either a biodiversity-climate nexus, and/or biodiversity-human rights nexus. For example, in Australia, a new claim was brought in November 2023 by a shareholder against a financial institution, seeking the production of internal risk management documents relating to both climate change and biodiversity loss. 

In some jurisdictions, directors could face allegations of personal liability for breaching their duty of care and diligence for failing to adequately manage nature-related risks (as recognised by the October 2023 Australian legal opinion referred to in the main report). In November 2023, the European Parliament and Council reached an agreement on the revised directive on “the protection of environment through criminal law”, which provides that strict criminal sanctions could be imposed (including prison sentences) on companies and/or directors complicit in “offences comparable to ecocide”.  The EU’s Deforestation Regulation, targeting forest protection for specific commodities, is already in force. 

The explosion of “greenwashing” litigation against companies in the past year points to a new potential frontier of “nature-washing” claims. The European Parliament and Council are close to finalising the revised consumer protection directive on “unfair commercial practices” (UCPD) which has been frequently deployed in recent years as the legal basis for greenwashing claims before European domestic courts and consumer protection authorities. The revised directive expressly prohibits companies from making unsubstantiated generic ‘green’ claims such as “nature’s friend” about their products or services. 

Greenwashing accusations have also been levelled against companies relying on carbon credits, allegedly in place of direct greenhouse gas emissions reductions. In a previous FT Moral Money Forum report, we commented on how the voluntary carbon market has been met with controversy due to concerns around integrity and the end-use of credits. The voluntary biodiversity credit market (VBM) is evolving gradually – for example, New Zealand recently launched a consultation on a proposed biodiversity credit system, and carbon markets standard-setter Verra, released its biodiversity credit standard for consultation. The VBM could expose companies to similar litigation and reputational risk, if they rely on unsubstantiated or exaggerated biodiversity credits claims in their corporate disclosures or consumer-facing adverts.

Although a rare breed to-date, biodiversity-related shareholder resolutions are set to feature more prominently at future AGMs. In some jurisdictions, shareholder scrutiny is expected to increase across all industries, as Nature Action 100’s ‘eight key sectors’ from which target companies will be drawn include: (i) biotechnology and pharma; (ii) chemicals; (iii) household and personal goods; (iv) consumer goods retail; (v) food production; (vi) food and beverage retail; (vii) forestry and paper; and (viii) metals and mining.