Biodiversity loss is an emerging ESG issue, with Australian investors seeking to understand how tom manage and address the financial risks to businesses they invest in. This report provides a foundation for Australian investors to understand the scale of the issue and the types of financial risks affecting companies across different sectors of the economy.

Key findings:‍

• Tools and frameworks for investor consideration of biodiversity are rapidly emerging, with the expected release of the Taskforce for Nature related Financial Disclosures (TNFD) in 2023.
• Investors will increasingly need to consider biodiversity risk alongside climate risk in future-proofing their portfolios. Australian investors should act now to understand and manage biodiversity related risks and opportunities.
• Based on the analysis conducted, Australian companies have not yet assessed the full magnitude of their biodiversity risks and opportunities, despite their prevalence throughout the economy. Australian companies will increasingly be expected to be able to articulate their impacts and dependencies on biodiversity.

To understand these risks, the report recommends Australian investors:‍‍

• Plan and educate: Develop a clear plan for managing biodiversity related financial risks and opportunities, including setting targets. Build the capability and competence of the organisation, including by starting to align with the TNFD framework.
• Undertake corporate engagement: Begin targeted engagement with companies to understand the current state of biodiversity risk and opportunity management in portfolios and across asset classes.
• Manage portfolio risks and opportunities: Identify, assess and manage material financial risks and opportunities associated with biodiversity. Start by undertaking a portfolio-level assessment to identify risk and opportunity across asset classes and consider appropriate investment actions.
• Shape policy and framework development: Understand, and consider actively supporting, the development of the TNFD and the Finance for Biodiversity Pledge. Consider supporting the implementation of the Samuel Review to improve the management of biodiversity domestically.
• Monitor and disclose targets: Monitor company performance, and track and disclose performance against targets relating to biodiversity.