Less than one in 10 (9 per cent) listed high-risk companies invested in by Finnish earnings-related pension provider Varma have an action plan to address biodiversity loss within their operations, research from Varma has found.

This is the second survey conducted by Varma to assess how companies in its investment portfolio have incorporated biodiversity considerations into their business practices.

The study surveyed 318 companies operating in high-risk sectors, with a market value exceeding €1m, including listed equity investments and exchange-traded funds.

These sectors included electricity and heat production, oil and gas, mining, forestry, automotive, building materials, transportation, food, and chemicals.

This year, the agricultural, pharmaceutical, personal products, packaging, textile, luxury goods, and waste management industries were also included in the survey.

The research found that over a third (39 per cent) of companies had set targets to address biodiversity within their operations.

However, less than half (43 per cent) of companies said they intended to take action or compensate for their impact on biodiversity, while 9 per cent said they had developed a concrete action plan to fulfil the commitment.

The research also revealed that 18 per cent of companies had not taken biodiversity-related issues into account in their public policies at all.

"A key finding in the study was that taking biodiversity loss into account requires much more practical measures from companies,” Varma senior vice president of sustainability, Hanna Kaskela, said.

“Biodiversity loss poses significant risks to companies' operations, and the related regulation will have a strong impact on companies. This will change the operating conditions.

"Considering how much information is available on biodiversity loss, it is a miracle that so many companies lacked a concrete action plan to take biodiversity into account.”

Varma has been actively assessing financial risks related to biodiversity as part of its investment strategy.

"As an investor, we aim to identify companies' dependencies on biodiversity and invest in companies that are the best players in their field,” Kaskela added.

“We encourage companies to identify the impacts of their own operations on biodiversity loss and to make plans to take the impacts into account. The guidelines and policies made by companies must extend all the way to the subcontracting chain.”

Furthermore, the provider has joined the Nature Action 100 initiative, which seeks to drive greater corporate action on tackling biodiversity loss.

The initiative is focused on engaging companies deemed “systematically important” to help reverse nature and biodiversity loss.

The survey also suggested that European countries were at the “forefront” of setting targets compared to North American and Asian companies. However, Japan was the exception as half of the companies examined in Japan set targets for preventing biodiversity loss.

In its operations, Varma committed to joint agreements to halt biodiversity loss and restore nature on the path to recovery by 2030.

However, Varma was not the only company in Europe facing resistance in terms of biodiversity, as a report from Sweden’s KPA Pension highlighted similar challenges.

It noted that despite biodiversity moving up the environmental, social and governance (ESG) agenda, there was a “limited availability” of investment options that directly address biodiversity goals.

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