In 2022, Montreal was the backdrop for an historic agreement whereby the countries of the world adopted a framework to halt and reverse the degradation of the natural environment and biodiversity. A core element of the framework is that businesses and the financial sector should report on their impact and dependence on biodiversity, which today is being degraded at a rapid rate.
We have now begun this process and have compiled our first biodiversity mapping of our equity and bond investments.
“Society can’t function without biodiversity and healthy ecosystems because our natural environment helps curb climate change, and nature’s resources are the foundation for half of the global economy. So businesses need to strengthen their efforts to protect biodiversity, otherwise they’ll be sawing off the branch they’re sitting on and lose the entire foundation of their business. The degradation of nature’s resources represents an investment risk. And with our mapping, we will get the first overall insight into the biodiversity-related aspects within the companies we invest in and can see where we need to act,” says Dorte Eckhoff, Head of Sustainability at Danica Pension.
According to WWF, it is important that pension companies take into consideration the investment-related risks that the biodiversity crisis gives rise to and that the sector establishes policies and procedures to address any loss of the natural environment as a result of their investments. The sector has a massive responsibility to invest purposefully in a sustainable future and to invest with respect to climate change and loss of the natural environment and resources. Failing to do so means gambling not only with the pension savings of people in Denmark but also with our common future.
“It’s incredibly positive that Danica Pension is the first Danish pension company to publish information on how its investments affect – and depend upon – biodiversity. Danica Pension’s analysis is in line with WWF’s recommendations for the sector and shows that data and methodologies exist to enable the work to begin. The crisis facing the natural environment is escalating, and we have only a limited amount of time to reverse this trend. That’s why I strongly urge the other pension companies in Denmark to follow suit and get started with their work on biodiversity,” says Bo Øksnebjerg, Secretary General at WWF.
We have also examined to what extent the companies invested in depend on biodiversity and healthy ecosystems in order to be able to produce goods and support other services. One third of our investments have been assessed as being in companies that have a potentially high level of dependence on natural resources such as water, trees, plants and animals and as protection against storms and flooding.
Overall, investments in the industrial machinery, pharmaceutical, energy and food products sectors have the potentially largest adverse impact on and dependence on biodiversity.
“Although biodiversity data is immature and still under development, our analysis is still important because it can guide us in our subsequent work. Now we need to map the extent to which companies actually impact and rely on biodiversity and whether they’re managing their biodiversity risks. This covers everything from water consumption, carbon emissions, waste and wastewater management to pollution, the protection of coastal ecosystems and raw materials. We’ll continue to build further on top of our work so that we can better manage investment risks, set the right biodiversity requirements for companies and set biodiversity-related targets that can collectively help restore the natural environment and support the green transition,” explains Dorte Eckhoff.
We are already working with some of the points flagged by our analysis. Among other things, we have a dedicated focus on the green transition and have carbon reduction targets – and reducing climate impact in particular is important for minimising biodiversity loss. At the same time, we have also started a targeted initiative focussing on companies’ activities in marine and forest environments. With this initiative, we want to help companies protect these natural environments and improve reporting, and we will follow up on their progress on an ongoing basis.
“We need to get to the stage where biodiversity aspects can be measured at a company level and throughout the entire supply chain so we can channel investments towards those companies that are taking a serious approach to their work in this area. So, in the dialogue we emphasise the fact that the companies need to quickly begin mapping the specific biodiversity-related aspects of their operations and also need to make preparations for incoming regulations and reporting standards. We want to initiate this process so we can get companies to take responsibility for the natural environment and natural resources, which will also benefit our customers,” says Dorte Eckhoff.
We have now begun this process and have compiled our first biodiversity mapping of our equity and bond investments.
“Society can’t function without biodiversity and healthy ecosystems because our natural environment helps curb climate change, and nature’s resources are the foundation for half of the global economy. So businesses need to strengthen their efforts to protect biodiversity, otherwise they’ll be sawing off the branch they’re sitting on and lose the entire foundation of their business. The degradation of nature’s resources represents an investment risk. And with our mapping, we will get the first overall insight into the biodiversity-related aspects within the companies we invest in and can see where we need to act,” says Dorte Eckhoff, Head of Sustainability at Danica Pension.
According to WWF, it is important that pension companies take into consideration the investment-related risks that the biodiversity crisis gives rise to and that the sector establishes policies and procedures to address any loss of the natural environment as a result of their investments. The sector has a massive responsibility to invest purposefully in a sustainable future and to invest with respect to climate change and loss of the natural environment and resources. Failing to do so means gambling not only with the pension savings of people in Denmark but also with our common future.
“It’s incredibly positive that Danica Pension is the first Danish pension company to publish information on how its investments affect – and depend upon – biodiversity. Danica Pension’s analysis is in line with WWF’s recommendations for the sector and shows that data and methodologies exist to enable the work to begin. The crisis facing the natural environment is escalating, and we have only a limited amount of time to reverse this trend. That’s why I strongly urge the other pension companies in Denmark to follow suit and get started with their work on biodiversity,” says Bo Øksnebjerg, Secretary General at WWF.
"The degradation of nature’s resources represents an investment risk. And with our mapping, we will get the first overall insight into the biodiversity-related aspects within the companies we invest in and can see where we need to act”
Dorte Eckhoff, Head of Sustainability at Danica Pension.
Initial indications
Our analysis shows that about two thirds of our investments have a potentially high impact on different ecosystems and biodiversity through the activities of the companies invested in. In particular, they contribute to the loss of biodiversity through the carbon emissions and pollution they cause and through overuse of natural resources.We have also examined to what extent the companies invested in depend on biodiversity and healthy ecosystems in order to be able to produce goods and support other services. One third of our investments have been assessed as being in companies that have a potentially high level of dependence on natural resources such as water, trees, plants and animals and as protection against storms and flooding.
Overall, investments in the industrial machinery, pharmaceutical, energy and food products sectors have the potentially largest adverse impact on and dependence on biodiversity.
“Although biodiversity data is immature and still under development, our analysis is still important because it can guide us in our subsequent work. Now we need to map the extent to which companies actually impact and rely on biodiversity and whether they’re managing their biodiversity risks. This covers everything from water consumption, carbon emissions, waste and wastewater management to pollution, the protection of coastal ecosystems and raw materials. We’ll continue to build further on top of our work so that we can better manage investment risks, set the right biodiversity requirements for companies and set biodiversity-related targets that can collectively help restore the natural environment and support the green transition,” explains Dorte Eckhoff.
We are already working with some of the points flagged by our analysis. Among other things, we have a dedicated focus on the green transition and have carbon reduction targets – and reducing climate impact in particular is important for minimising biodiversity loss. At the same time, we have also started a targeted initiative focussing on companies’ activities in marine and forest environments. With this initiative, we want to help companies protect these natural environments and improve reporting, and we will follow up on their progress on an ongoing basis.
Measurability is key
We need to expand our knowledge and improve our understanding of the precise relationship companies have with biodiversity through their value chains. The same applies to how companies work to minimise the drain they have on biodiversity and how they actively protect the resources fundamental to the operation of their businesses. In this respect, active ownership plays an important role whereby we through dialogue encourage companies to improve their reporting, set targets and increase their efforts towards protecting and taking care of business-critical aspects related to biodiversity.“We need to get to the stage where biodiversity aspects can be measured at a company level and throughout the entire supply chain so we can channel investments towards those companies that are taking a serious approach to their work in this area. So, in the dialogue we emphasise the fact that the companies need to quickly begin mapping the specific biodiversity-related aspects of their operations and also need to make preparations for incoming regulations and reporting standards. We want to initiate this process so we can get companies to take responsibility for the natural environment and natural resources, which will also benefit our customers,” says Dorte Eckhoff.
About the analysis
- The analysis covers our equity and bond investments and is based on data from the ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) tool from the Natural Capital Finance Alliance. The tool supports the financial sector in assessing the financial risks caused by the degradation of the natural environment and companies’ dependence on natural resources.
- The analysis provides an estimate of the extent to which sectors may have significant potential dependency and impact on biodiversity and ecosystems through their operations. This is classified as being either ‘very low’, ‘low’, ‘medium’, ‘high’ or ‘very high’.
- ENCORE draws on data from a wide range of leading institutions from around the world that monitor and conduct research into ecosystems, climate, meteorology, animals and plants, soil, the biosphere and other relevant aspects related to the Earth’s biodiversity.
Read the analysis
Our work with biodiversity
- Towards 2025, we will engage in targeted dialogue with 30 large global companies with the aim of helping them to strengthen their efforts to minimise their impact on and manage their dependency on biodiversity in forestry and marine environments as well as to improve their reporting in this area.
- This includes companies operating in sectors such as energy, finance, food products, clothing, transportation and pharmaceuticals. Together with the individual company, we will discuss what measures they can begin with in the short or longer term, depending on how far advanced their work in the area of biodiversity is today and on what knowledge and data are available.
- In future, we will develop a biodiversity strategy for each new real estate project in Denmark in collaboration with landscape architects or biologists. At the same time, we will require that building materials address biodiversity-related aspects, and we will ‘activate’ the areas outside our existing properties in Denmark to create better living conditions for plant and animal life.
Read more about our initiatives
