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Enhance the value of natural capital to protect our planet

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BNP Paribas Asset Management
 

At BNP Paribas Asset Management, we invest in companies whose activities can depend or have an impact on what we call “natural capital”. According to the Natural Capital Coalition, it’s the stock of renewable and non-renewable natural resources (e.g., plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people. As humans, we rely on nature’s ecosystem services and resources to provide us with our food, our medicines or our energy. For example, pollinators such as bees are responsible for five to eight percent of global food production (1). Taken all together, the value of the total global ecosystem services in 2011 was estimated at USD125 trillion per year, which is almost twice the world's gross domestic product (2).

An overlooked concept

Unfortunately, this value is not known enough today among the investment community. Our industry tends to neglect natural capital and focus mainly on financial or social capital.

At BNP Paribas Asset Management, we think we must engage all our stakeholders to enhance the value of natural capital and protect it better.

USD125 trillion per year: it’s the value of the total global ecosystem services in 2011.

At BNP Paribas Asset Management, we think we must engage all our stakeholders to enhance the value of natural capital and protect it better.’

 

Natural capital risks

Companies in which we are investing today might have to pay for ecosystem services loss or for negative externalities such as air pollution or soil degradation. The financial risk is to be considered as well as the increasing environmental regulations: for example, some mining projects in water scarcity areas can be considerably delayed by local authorities because of unforeseen water desalination facilities requirements. The other main risk is reputation: think about the effect of boycotts from consumers on companies directly involved in deforestation. That’s why we started a natural capital assessment of our portfolios in 2017, leveraging on the fantastic work of the Natural Capital Coalition.

Assessing the impact of “natural capital” in our portfolio

Taking natural capital into account in investment decisions is a complex task. The time has come for the investment community to increase its awareness of its dependencies and impacts on natural capital, and think beyond carbon. We are now measuring our impact on climate by publishing the carbon footprint of our portfolios. We need to go further and do it for biodiversity, soils and the forest…BNPP AM started by focusing our assessment on water, other natural capital assessments are already underway. We know there are obvious methodological issues regarding the aggregation of data, but we are convinced that with the help of all our stakeholders and competitors, this will be achieved over time.

  • (1)IPBES, The assessment report on pollinators, pollination and food production, p22.
  • (2)According R. Constanza and others Scientifics, 2014

 

We are now measuring our impact on climate by publishing the carbon footprint of our portfolios. We need to go further and do it for biodiversity, soils and the forest…

 

 

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