Introduction

This toolkit emphasises the importance of integrating nature-related risks and opportunities into investment strategies. Nature loss and its degradation threaten global economic stability, with nature underpinning over US$44 trillion in economic value. Investors are encouraged to focus on regulatory shifts, dependencies on nature, and tools for better risk management. The toolkit also highlights the varying impacts nature loss can have on different sectors and assets, urging investors to take a comprehensive approach.

Assessing nature-related risks and opportunities in existing investment portfolios

Nature-related risks, including biodiversity loss, climate change, and ecosystem collapse, present significant threats to sectors that directly or indirectly depend on natural capital. Investors are encouraged to assess these risks using tools such as ENCORE, which helps to pinpoint the environmental dependencies of various industries. The toolkit stresses that sectors like agriculture, forestry, and fisheries are particularly exposed due to their direct reliance on natural ecosystems. It also advises investors to include nature-related risks within broader Environmental, Social, and Governance (ESG) assessments, ensuring a holistic approach to risk management.

Importantly, risk assessments vary by asset class, requiring distinct strategies for equities, fixed income, and sovereign bonds. For instance, publicly listed companies often disclose more nature-related data than private firms, making listed equities easier to evaluate. The toolkit recommends using biodiversity metrics, sectoral exposure analyses, and location-based risk assessments to guide investment decisions. Metrics such as the percentage of assets exposed to nature-related risks or financial exposure to specific environmental impacts are crucial for transparency and decision-making.

New nature-related opportunities

The toolkit identifies significant opportunities for investors to engage in nature-positive investments, such as nature-based solutions (NbS) and regenerative agriculture. These opportunities not only mitigate risks but also create long-term value. For example, NbS—such as reforestation, sustainable land use, and biodiversity restoration—can generate financial returns while addressing pressing global environmental challenges. Investors are advised to seek out nature-aligned and pure-play opportunities, focusing on sectors transitioning towards sustainability, such as renewable energy, sustainable agriculture, and green infrastructure.

The toolkit highlights that nature-based investments are gaining traction as governments and markets recognise the economic benefits of restoring and maintaining natural systems. Additionally, investors can leverage tools like the WBCSD Nature-based Solutions Map and the Finance for Biodiversity Pledge to identify and develop nature-positive strategies that align with their portfolios. Quantitative data, such as Australia’s GDP being 30% dependent on nature and ecosystem services, provides strong evidence of the value of integrating nature into investment strategies.

Engagement, policy, advocacy, and communication

Effective engagement with stakeholders, particularly Indigenous Peoples and Local Communities (IPLC), is critical for investors aiming to manage nature-related risks and opportunities. The toolkit recommends adhering to the principle of Free, Prior, and Informed Consent (FPIC) when engaging with IPLC to ensure community involvement and support for nature-positive projects. This is particularly important for sectors like mining, agriculture, and forestry, where operations often overlap with Indigenous territories.

The toolkit offers case studies demonstrating successful IPLC engagement, such as in forestry projects where local knowledge enhanced sustainability outcomes. Investors are also encouraged to use their influence through proxy voting and shareholder resolutions to push for corporate action on nature-related issues. Communication of nature-related risks and activities is another key area, and the toolkit advises using established frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) to standardise reporting. This not only ensures transparency but also enhances credibility with stakeholders and regulators. Policy advocacy is highlighted as a vital tool for investors to influence the regulatory landscape, with opportunities to support legislation that promotes nature restoration and sustainable resource use.