A new biodiversity guide for trustee chairs of pension funds has been published by Accounting for Sustainability (A4S), a charity set up by King Charles III, to deepen the understanding of nature-related risks among trustee chairs and their boards. 

 

The guide, ‘Managing nature risks and investing in the opportunities – top tips for pension fund chairs and trustees’, aims to help trustees get started by identifying one key risk and opportunity, manage the portfolio risks and invest in the opportunities among others. It is authored by sustainable investment adviser Nick Spencer from Gordian Advice and Kerry King, director of capital markets at A4S. 

 

The guide is introduced by HSBC Bank (UK) Pensions Trust chair Russell Picot, Catherine Claydon, who chairs the BBC Pension Trust, and David Craig, co-chair of the Task Force for Nature Related Financial Disclosures. Picot is chair and Clayden vice-chair of A4S’s Asset Owners Network. 

 

The new guide explains why nature is a financial and fiduciary risk, offers an overview of frameworks and tools including how they relate to each other, and provides practical tips from pension fund chairs and trustees who are already integrating nature into their decision making. 

 

Examples include how the local government pension pool Border to Coast Pension Partnership identified waste and water management as common themes among partner funds and joining an engagement initiative led by Royal London Asset Management to engage with UK water utilities. 

 

Defined contribution master trust Smart Pension invested in climate and nature-related impact funds, which came out as most compelling in a review. “This enabled us allocate more than twice our initial target of c.5%, and we are considering ways to grow our allocation to impactful strategies further,” said Fiona Smith, investment proposition manager at Smart. 

 

The HSBC Bank (UK) Pension Trust started by highlighting nature as a priority to advisers and managers and is beginning to explore data, metrics and tools. 

 

“What is evident is that this is still an underdeveloped area and that a huge amount of work will need to be done by all those in the investment chain, including the asset managers, investment advisers and data providers, so that we can confidently understand the risks and opportunities of biodiversity and nature and develop a pathway to address it. We know this won’t be easy, but we must start somewhere and are prepared to work at pace,” said Emma Hunt, head of responsible investment at the HSBC scheme. 

 

“We expect our asset managers and advisers to be proactive, and we will continue to challenge each group on their thinking in this area,” she added. 

 

The TNFD published its final recommendations on disclosing nature risks last month to help companies and investors address these, with additional guidance for financial institutions, such as asset owners and asset managers. 

   

    

In June, the Zoological Society of London, together with Caceis Investor Services, launched a guide for pension funds.