UK investors prioritise short-term returns over nature outcomes

A new report on the attitudes of hundreds of institutional investors has revealed a lack of focus on climate-related financial opportunities, but growing exposure to them.
 

Climate and nature advisory and markets specialist Pollination’s Nature Finance Focus: Tracking Global Trends In Nature Investment took into account 557 investors. 332 were managing more than $100billion in assets in key jurisdictions including Britain, France, the US, Japan, Singapore and Australia. 

The analysis shows that three quarters of those surveyed believe nature-related investments will evolve into an asset class of their own. However, reading into the results further reveals problems with with how these opportunities are viewed by those making capital decisions.

The UK came out as the country where investors were least likely to have nature outcomes as a primary motivator (19%), and most likely to look at short-term returns (22%). Looking at all territories in the survey, 23% of investors say they are now primarily motivated by nature outcomes.

Experts in Britain were also least likely to yield to activist-led pressure (16%). This compares with Singapore, where 50% are influenced by activism. Conversely, though, the UK reported a comparatively high frequency of exposure to nature-based investment, with 47% of respondents saying they had dealings in this area. Private equity and alternatives are now the country’s most nature-exposed asset class.

Looking to other regions, in the US 87% of investors engaged with nature were looking to increase activity in this space. Singapore and Australia ranked second and third for this, with 79 and 76% respectively. The report has been published in the wake of the UN’s Taskforce on Nature-related Financial Disclosures (TNFD) publishing new framework for reporting, which stipulates organisations should make a full set of nature-related dependencies public. This includes impacts, risks and opportunities from all operations across their value chain.

You can download the full report here.

‘Investing in the natural world is investing in the resilience of the economy. It’s clear that investors across the globe are starting to recognise the potential nature-related investments have for producing returns as well as reducing systemic risk, alongside protecting and improving the natural environment. But we need much more: a significant and sustained build in capability across capital markets is needed, including skills and human capital, information infrastructure and new models and norms,’ said Martijn Wilder, co-founder and CEO and Pollination. 

‘The TNFD’s final framework marks another step in the journey towards a nature positive future, one which will be material for companies and investors,’ he continued. ‘It further clarifies the path for investors to integrate nature-related risks and opportunities into their strategies. We need to recognise this as a watershed moment; for both systems-level change, and for the nations and institutions working to transform our relationship with nature.’

More on climate and investment:

Cost of European wildfires counted as UN pleas for climate investment

Ocean 14 Capital Fund invests in alternative seabed harvesting

First of A Kind: FOAK thinking is essential in climate technology

Image: Geoff Henson