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Move Over ESG, Fund Managers Have A New Favorite Buzzword

  • Biodiversity is the new investment buzzword after ESG.
  • Fund managers are expanding their assets in biodiversity, which poses a significant systemic threat.
  • There is a lack of reliable data pertaining to biodiversity investments.
Biodiversity

Over the last few weeks, we have reported about billions being pulled from ESG funds, hedge funds losing ESG ratings, and companies and banks scrambling to cover up their ESG appeal in pitch decks, all after "woke" ESG name Silicon Valley Bank went under, forcing the market to focus a bit more on things that matter (i.e. solvency, cash generation) instead of the unicorn and rainbow ESG fairy tale it has been obsessed with over the last 5 years.

But, the more things change, the more they stay the same.

Bloomberg reported this week that with ESG out of favor for all of about five minutes, there's already a new "buzzword" on the street that we're certain will drum up the same interest in "green" names: biodiversity.

The term has helped some fund managers expand their asset base by 15% in two months, the report says. This comes after a "150% surge in the number of funds offering such strategies last year", it continues. While the $2.9 billion in combined assets for the buzzword pales in comparison to ESG, it feels like it could just be the beginning of more herd mentality virtue signaling FOMO like we saw in ESG. 

Ingrid Kukuljan, head of impact and sustainable investing and international lead portfolio manager at Federated Hermes, cemented those thoughts, telling Bloomberg: “The move in biodiversity that we have seen is 10 times the speed of what we have seen with carbon. And rightly so, because this is the biggest systemic threat that we face.”

Bloomberg points out the genesis of making biodiversity a key issue:

Since a landmark agreement was struck at the COP15 summit in December, the finance industry has been forced to pay attention to biodiversity. The Global Biodiversity Framework, signed by almost 200 nations, envisages a central role for banks, insurers and asset managers in reaching the stated goal of mobilizing at least $200 billion each year to protect the natural world.

But the report also notes that there's a lack of reliable biodiversity data, calling some of the calculations a "black box". Kind of like Silicon Valley Bank's balance sheet. 

Wijnand Broer, program manager at the Partnership for Biodiversity Accounting Financials and partner at CREM, a Netherlands-based consultancy, concluded: “You see more and more data providers entering the market providing biodiversity data, but it’s not always clear what the underlying assumptions are.”

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Leave a comment
  • DoRight Deikins on March 31 2023 said:
    Oops, there go all the new hydro-electric projects. Do you know how many undiscovered species of termites and algae are endangered by man's desire to save this planet from man? No one else does either, but there are lots.
  • Mamdouh Salameh on March 31 2023 said:
    Whether the name is ESG or biodiversity or Zero Asset Owner Alliance or whatever, they are swimming against the tide and are therefore doomed to fail in their endeavours or shall I call them misguided policies.

    And the tide is that oil and gas are here to stay and that they will continue to drive the global economy throughout the 21st century and probably far beyond.

    By trying to starve the global oil and gas industry from investments, they will undermine the global economy, prolong energy crises and most probably make them permanent.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment




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