Nature and biodiversity have gained significant traction as an ESG consideration for private markets firms, to the extent that the majority of interested institutional investors view nature as a distinct asset class. The architecture of measurement and reporting frameworks has begun to take shape: the Taskforce on Nature-related Financial Disclosures (TNFD) last month released its final recommendations for nature-related risk management and disclosure.
PAI unveiled the resource, titled Bloom, at its sustainability summit in London yesterday. Head of ESG and sustainability Denise Odaro described it as “the world’s best primer of biodiversity for private equity”.
The primer identifies five key steps that private equity investors ought to undertake. They are as follows:
- “Build your own understanding of your biodiversity and its importance to your portfolio”: this would involve investors familiarising themselves with the UN SDGs and the commitments made at COP15, as well as understanding the regulatory landscape at national and international level.
- “Launch a structured information campaign”: managers and investors should identify which people in their organisation need to develop knowledge of biodiversity issues, and look to provide them with training resources.
- “Organise a system to integrate biodiversity considerations across your investment process”: biodiversity considerations should be brought into the due diligence process. Impact investors should explore the opportunities to invest in areas that have a positive impact on biodiversity.
- “Open a dialogue with industry stakeholders”: this would include joining groups such as EU Business & Biodiversity Platform or Natural Capital Investment Alliance.
- “Manage your reporting in line with globally accepted reporting frameworks”: reporting should follow the disclosures recommended by TNFD.
The document “takes you into how you can actually meet each one of these steps” Odaro explained. “It signposts really everything that you can do and takes you to the resources that will essentially level up your ambitions around biodiversity.
“It is a public good and the audience it’s targeted at [is] LPs, GPs and the rest of the ecosystem,” she added.
Paris-headquartered PAI is raising its eighth flagship Europe-focused buyout fund. The firm has form in terms of developing industry guidance; it was one of the five French private equity firms that came together to found Initiative Climat International, which is now a global climate knowledge sharing programme that has produced guidance for firms to set and meet portfolio-level net-zero targets.