Finnish pension company, Varma, has announced plans to integrate biodiversity considerations into the investment process by 2023, publishing a biodiversity roadmap that outlines a framework to help prevent nature loss.

As part of this work, Varma undertook analysis to identify the biggest biodiversity risks facing its investments, also mapping how much of Varma's investments are exposed to risks caused by nature loss.

This analysis covered Varma's direct investments in companies as well as equity, loan and hedge funds, which is 77 percent of Varma's entire investment portfolio.

Following the analysis, Varma argued that while almost all industries face risks from diminishing biodiversity, there are some "particularly risky sectors" whose dependencies and impacts on biodiversity are particularly large.

These sectors covered 10 per cent of Varma's investment portfolio in 2021, and included electricity generation, oil and gas, mining, forestry, automobile, construction, transportation, and food and chemical industries.

The roadmap also identified increasing regulation, technological development and changes in consumer behaviour constitute as transition risks, whilst regional ecosystem collapse was highlighted as the most extreme of the risks.

In addition to this, it included a number of monitoring targets, including changes in land use, monitoring of endangered species, depletion of natural resources and various effects on weather phenomena.

The roadmap therefore outlines the framework for investment responsibility requirements to prevent nature loss, in line with the provider's goal to integrate biodiversity consideration into the investment process for certain types of shares by 2023.

This will then be expanded, with biodiversity guidelines for the real estate portfolio expected to be implemented in stages from 2023 to 2025.

Commenting on the plans, Varma director of responsibility, Hanna Kaskela, stated: “During the UN Nature Conference, it has become clear that there is a lot to be done to prevent the loss of nature, because the impoverishment of nature has continued.

"As a responsible investor, we cannot just wait for the results of the summits, but we must create our own goals to preserve biodiversity. As investors, we must build a world that is sustainable for future generations as well.

“It is important for the investor to understand what kind of risks nature loss can cause. If, for example, the Amazon rainforest is allowed to be destroyed, rainfall can change as far away as the United States.

"Taking biodiversity into account is risk management and should be included in financial decision-making. In addition to protecting nature, it is also about the use of natural resources being sustainable.

“Along with the climate work, we want to make the consideration of natural diversity an integral part of our responsibility work. Our goal is that in the near future the biodiversity and climate goals are equal and together promote our environmental responsibility.

“We recommend companies to transparently report on the current and future effects of nature loss on the company's business and growth opportunities. We also encourage our investment targets to draw up policies regarding biodiversity by 2024."

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