Danica Pension: We are doing the first mapping of biodiversity as part of protecting nature and pension savings
17 July 2023
Danica Pension publishes on its website:
As the first pension company, we publish a mapping of how our investments potentially affect and depend on biodiversity. It supports the Montreal Biodiversity Agreement and is another initiative to enable us to set biodiversity goals and better manage investment risks for customers – and ultimately help to restore and protect nature.
In Montreal last year, the countries of the world agreed on a historic agreement to slow the destruction of nature and biodiversity and restore it. A central element of the agreement is that companies and the financial industry should report on their impacts and dependencies on biodiversity, which today is disappearing at a rapid pace.
We have now embarked on this and have made the first mapping of the biodiversity aspects for our share and bond investments.
“Society cannot function without biodiversity and healthy ecosystems, because nature helps slow down climate change and is the basis for half of the world’s economy. Therefore, companies must strengthen their efforts to protect biodiversity, because otherwise they will cut off the branch they need to be able to do business. It is an investment risk when nature decays, and with the mapping we get the first, overall insight into the biodiversity conditions of companies we invest in and where we need to invest,” says Søren Lockwood, managing director of Danica Pension.
According to the WWF World Wildlife Fund, it is important that the pension sector considers the investment risks that the biodiversity crisis entails, and that the industry gets policies and practices in place to address nature loss in their investments. The sector has a great responsibility to invest purposefully in a sustainable future and to invest with respect for climate change and nature loss, otherwise you are gambling with both Danes’ pension savings and our common future.
“It is incredibly positive that Danica, as the first Danish pension company, publishes the results of how their investments affect – and are dependent on – biodiversity. Danica’s analysis is in line with WWF’s recommendations for the sector and shows that there are data and measurement methods to start the work. The natural crisis is escalating, and we only have limited time to turn the tide. Therefore, I would strongly encourage the other Danish pension companies to follow suit and start their work with biodiversity,” says Bo Øksnebjerg, secretary general of the WWF World Wildlife Fund.
“It is an investment risk when nature decays, and with the mapping we get the first overall insight into the biodiversity conditions of companies we invest in and where we need to invest.”
Søren Lockwood, director of Danica Pension
First assessment
The analysis indicates that approximately two-thirds of the investments have a potentially high impact on various ecosystems and biodiversity via their operation. In particular, they contribute to the loss of biodiversity through their CO2 emissions, pollution and overuse of natural resources.
We have also investigated the extent to which investments are dependent on biodiversity and healthy ecosystems in order to produce goods and other services. Here, it is estimated that a third of the investments have a potentially high dependence on natural resources such as water, trees, plants and animals as well as protection against storms and floods.
Overall, it is investments within the machine industry, the pharmaceutical and energy sectors as well as food processing that have the potentially greatest damaging effect and dependence on biodiversity.
“Although biodiversity data is immature and still under development, it is an important analysis that can guide us in our further work. Now we have to start mapping to what extent the companies actually affect and need biodiversity, and whether they handle it. It deals with everything from water consumption, CO2 emissions, waste and waste water management to pollution, protection of coastal ecosystems or raw materials. All the time, we want to build on top of that so that we can better handle investment risks, set the right biodiversity requirements for companies and set objectives in the area that together can help restore nature and support the green transition,” says Søren Lockwood.
We are working on some of the attention points of the analysis today. Among other things, we work focused on green transition and have CO2 reduction targets, and precisely a reduction of the climate burden is important to minimize biodiversity loss. At the same time, we have also started a targeted effort on companies’ actions in sea and forest areas, where we want to help them start looking after the natural areas and improve reporting and will continuously follow up on their progress.
Must be able to be measured and weighed
It is necessary to gain greater knowledge and a better understanding of how companies exactly interact with biodiversity throughout the entire value chain. The same applies to how they work to minimize the drag on biodiversity and actively protect the resources that are necessary to do business. Here, active ownership plays a significant role, where through dialogue we will encourage companies to improve reporting, set targets and raise efforts to protect and take care of business-critical biodiversity issues.
“We must move to where biodiversity aspects can be measured at company level and throughout the supply chain, so that we can direct investments towards those who work seriously in the area. In the dialogue, we therefore emphasize that the companies quickly begin mapping their specific biodiversity conditions and prepare for future requirements and reporting standards. It is a process that we want to initiate and in this way get companies to take responsibility for nature, which will also benefit our customers,” says Søren Lockwood.
About the analysis
- The analysis includes our equity and bond investments and is based on data from the tool ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure), which the organization Natural Capital Finance Alliance is behind. The tool supports the financial industry in being able to assess the financial risks caused by natural deterioration and companies’ dependence on natural resources.
- The analysis provides an estimate of the extent to which sectors may have a significant potential dependence and impact on biodiversity and ecosystems from their operations. It is ranked from very low, low, medium, high and very high.
- ENCORE consists of data from a large number of leading institutions from around the world that monitor and research ecosystems, climate, meteorology, animals and plants, soils, the biosphere and other relevant aspects related to the earth’s biodiversity.
Our work with biodiversity
- Towards 2025, we will enter into a targeted dialogue with 30 large, global companies, where the goal is to help them start to strengthen efforts to minimize the impact and manage the dependence on biodiversity in forest and marine areas, as well as improve reporting in the area.
- These are companies within, for example, the energy, financial, food, clothing, transport or pharmaceutical industries. Together with the individual company, we will discuss which efforts they can start with in the short or longer term, depending on how far they are in the field today and what knowledge and data are available.
- Going forward, we will develop a biodiversity strategy for each new Danish property project in collaboration with landscape architects or biologists. At the same time, we will set requirements for biodiversity aspects for building materials and activate the outdoor areas around our existing Danish properties to create better living conditions for plants and animals.
