Urgency, risk and opportunity: Desjardins Global Asset Management on the integration of biodiversity and natural capital

Biodiversity and natural capital risk integration into responsible investment practices are a pressing issue that has gained traction in recent years. In 2025, the World Economic Forum escalated biodiversity loss as the second most severe global risk projected over the next decade.1 The decline of biodiversity is occurring at an alarming rate, due in large part to human activities.2 While biodiversity loss is a risk more recently considered, reducing its impact can also play a pivotal role to address climate change, providing natural solutions such as carbon sequestration that enables companies and institutions to reach their net zero goals. 

Within the financial community, biodiversity, nature and natural capital are umbrella terms often used interchangeably, albeit with varying meaning. Biodiversity encompasses the variety of life forms across terrestrial, and aquatic ecosystems, while nature comprises all the existing systems of Earth, its features, forces and processes, such as the weather, the sea or mountains.3 As for natural capital, the concept refers to the sum of natural resources providing ecological goods and services necessary to sustain human life. 

A close relationship exists between biodiversity and economic activities, with approximately US$58 trillion of the world’s GDP being moderately to highly dependent on nature.4 The ongoing loss of biodiversity thus poses a systemic risk to the financial sector. It is imperative that the financial community integrate the assessment of biodiversity-related risks and the identification of opportunities, to position itself as a catalyst for change.

In 2021, the protection of biodiversity and natural capital became one of Desjardins Global Asset Management’s (DGAM) four broad sustainability themes. Understanding exactly what biodiversity entails from an asset management perspective became part of our mandate. From then on, we increasingly integrated biodiversity into our strategies, Responsible Investment Policy (PDF, 2.2 MB), issuer analyses, and stewardship efforts. The double materiality of a sector or issuer’s impact on the various biodiversity and nature issues, inclusive to water, land, and pollution, is reviewed and accounted for within our practices. 

To deepen our integration of biodiversity issues in the food sector, we joined the Farm Animal Investment Risk and Return (FAIRR) Initiative External link in 2021. This enabled us to raise awareness of ESG risks and opportunities in the agro-industry. Through FAIRR, we conduct collaborative engagements on emerging issues, such as sustainable protein, waste and pollution.

To strengthen our understanding of the biodiversity and nature link to finance, we carried out in 2022 an extensive analysis of various global initiatives. This ultimately led us to become signatories of the Finance for Biodiversity Pledge External link and commit to its five targets:

1. Collaborating through working groups: We joined five of the Finance for Biodiversity Foundation External link working groups, the PRI Nature Reference Group External link and the Ceres Food and Nature Working Group External link to share our practices and strengthen our knowledge base.
   Sharing knowledge through panel discussions: DGAM participates in multiple panel discussions each year since 2022. These include panels at RI Canada, PRI, COP15 and COP16. 

2. Engaging with companies through our stewardship practices: Our stewardship practices support our engagement with issuers. DGAM’s Policy on the Exercise of Proxy Voting Rights (PDF, 1.1 MB) covers specific biodiversity themes such as deforestation, plastic pollution and pesticides. We always work on a case-by-case basis to evaluate shareholder proposals and strive to support best practices in each industry. We further adopted an engagement plan in which 11 Canadian companies out of 50 were specifically chosen for biodiversity reasons. In 2024, we completed 32 engagements on multiple biodiversity issues such as deforestation, risk assessment and water management, among other topics. Our participation in initiatives like FAIRR and Nature Action 100 External link, a global investor-led engagement initiative we joined in 2023, further supports our engagements.
3. Assessing impact through ENCORE: A 2023 biodiversity assessment of sector impacts and dependencies conducted using ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) underlined sectors with a larger impact, including the energy, materials, utility, industrials and consumer sectors. The end results did not come as a surprise. On the contrary, they confirmed DGAM’s materiality review performed during issuer analysis and allowed us to achieve broad materiality level understanding of how biodiversity risks are currently impacting sectors and issuers in our portfolios.
4. Setting targets: In 2022, our published target was to understand the exposure of our investment solutions to risks and opportunities related to biodiversity and natural capital by the end of 2024. We have reached our target through the ENCORE analysis5, published in 2024. Our next target is described below.
5. Reporting publicly: Our practices related to biodiversity and natural capital are reported publicly in DGAM’s annual responsible investment reports, in addition to articles and online posts. 

As we set our sight on the next chapter of biodiversity and natural capital integration, our ambition is to remain nimble in our ability to learn, adapt and understand the related risks and opportunities for our clients and their investments. As stewardship practices constitute a key tool for us, we elected to strengthen our approach to our engagements. We therefore set forth a new target:

This new target will help us formalize our engagement structure on biodiversity in order to drive change more effectively and ultimately promote sustainable practices within the companies we invest in. In addition to existing tools, the framework includes questions to encourage dialogue, identification of key metrics to further monitor issuers, and other tools to promote alignment to the target. Internally, the target will support the creation of nature-based solutions built on biodiversity material impacts from the various issuers.

As a financial institution, we have the capacity to leverage our practices with issuers, to lead them in a biodiversity-positive direction. At DGAM, we see biodiversity as a crucial part of our environment and understand the urgency for action. Our new engagement target reinforces this position. It will allow us to better track the progress of our portfolio companies on biodiversity, in addition to keeping us accountable. The target will broaden our understanding of how biodiversity can be integrated and tracked within companies, and work towards an environmentally secure future.