Sweden’s KPA Pension has said that although biodiversity is becoming an important focus in its pursuit of sustainable investment, “options are limited at present”.

The pension provider said that biodiversity is becoming a more important area for KPA Pension and it is municipal sustainability projects that are leading the way.

However, KPA Pension business developer for sustainable investments, Mark Johnsson, said investment options are “limited at present”.

“Unlike climate data, biodiversity data is very complex. Measuring the impact on biodiversity is not as simple as measuring carbon footprints," Johnsson said.

He added: “Of course, this is entirely in line with our overall commitment to sustainable investments. We have been pushing the issue for several years within the framework of climate and environment. Among other things, we use our shareholder vote at annual general meetings to influence the companies we invest in to conduct sustainability work.”

Biodiversity is rising up the environmental, social and governance (ESG) agenda. For example, the United Nations now recognises biodiversity loss as a problem as big as climate change. Moreover, the two are interlinked – intact ecosystems can help prevent the outcomes of climate change, such as intense rainfall and flooding, KPA Pension noted.

According to Johnsson, KPA Pension is in an "exploratory phase" when it comes to biodiversity. For example, external fund companies in unit-linked insurance will be surveyed based on their work on biodiversity.

The pension provider wants to raise awareness of the topic and gather information for its work and it believes that "just asking the question is influential".

It is also looking at how to measure biodiversity in its investments with its property department looking at the CLIMB valuation tool and testing it in a couple of pilot projects.

“It's about compensating for natural values after construction, and if that model can be quantified and measurable targets set, then we've come a long way," Johnsson said.

Furthermore, KPA Pension thinks Sweden's municipalities play an important role in the context of biodiversity. Many are struggling with invasive species and working to restore wetlands. As a result, many municipalities collaborate with various associations and the County Administrative Board to build up knowledge in their organisation.

"This is an extremely important step for new sustainability projects to be realised. This is where opportunities exist for pension capital to contribute to biodiversity enhancement while generating returns,” he said.

“Nacka municipality has a green bond with several different projects that we have invested in. It's everything from building solar panels to a school and water pipes. It touches on everything exciting for us. They also have a wetland restoration project, which is proof of Nacka's care for nature. "Wetlands are our buffer against drying out and a natural cleaning plant. It is gratifying that more municipalities are now trying to restore them.

"We'd like to see more of them take the initiative,” he concluded.

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