Investor Profile

Equities allocation damaging biodiversity: Ilmarinen study

A recent biodiversity risk analysis at Ilmarinen, Finland’s €60 billion pension insurer, found that a quarter of the companies in its large, listed equity portfolio are highly dependent on biodiversity while one third of the companies in the portfolio actually have a damaging impact on biodiversity. Those companies are overwhelmingly in the raw materials sector, the analysis found.

Ilmarinen conducted the study as part of a concerted and bespoke push to integrate biodiversity into its investment processes via a four-stage program outlined in its Biodiversity Roadmap that includes measures to screen portfolio companies on biodiversity related issues and enhanced due diligence. Active ownership is also a key component of the roadmap, comprising voting and engagement on biodiversity, as well as possibly excluding certain economic activities from the portfolio.

“We need to identify and manage both biodiversity risks to investments and the harm to biodiversity arising from investments,” explains Karoliina Lindroos, Ilmarinen’s head of responsible investing. “So far, economic growth has happened at the expense of natural capital base that includes biodiversity. In investment terms, we should not consume the capital base itself but rather live on interest.”


The roadmap states Ilmarinen’s aim to collaborate with other asset owners and industry bodies leading on the issue. Publishing its own strategy and approach to biodiversity is part and parcel of fostering that debate, says Lindroos.

The growing number of biodiversity investor initiatives include the Taskforce on Natue-realted Financial Disclosure (TNFD), a 35-member steering group mirroring the work of the climate-focused TCFD with the objective of developing a risk management and disclosure framework for organisations to report and act on nature-related risks. Elsewhere, Nature Action 100, a collective engagement programme on biodiversity aims to replicate the impact Climate Action 100+ had on collaborative climate engagement with companies.

Measuring biodiversity risk in Ilmarinen’s equity portfolio marks the first phase of a process that will be applied across the portfolio to provide a broad estimate of the potential materiality of biodiversity at a sector level and across economic activities.

Once the investment team understand what types of investments are most significant from a biodiversity perspective, the investor will compare results against an appropriate benchmark and develop new investment and portfolio management policies.

“The aim is to gain better understanding on which sectors and economic activities are most relevant in our investment portfolio regarding biodiversity. This will help in developing further actions on company engagement and enhanced due diligence.”

Enhanced due diligence will  aim to screen and identify high-risk companies in the same way Ilmarinen currently analyses high carbon risk companies, she says.

Other approaches will include engagement with investee companies to better evaluate and report their biodiversity related risks and impacts. Potential strategies also include establishing investment selection criteria for biodiversity, supporting meaningful nature-positive AGM proposals or excluding activities that are particularly harmful to biodiversity.


Lindroos notes significant challenges on the road ahead. Like the lack of information on companies’ dependency on biodiversity and natural capital due to the lack of consistent and reliable data at a company level. Biodiversity, and the need to protect it, is also often location-specific.  Something asset manager Robeco is working to address with the World Wildlife Fund, using its expert biodiversity knowledge in Brazil and Asia to add local, granular expertise to its research processes.

Gathering biodiversity data is more challenging that climate change data, says Lindroos. Climate change is measured by a single and global unit tonne of carbon dioxide equivalent (tCO2e), measured and priced; biodiversity does not have a similar single unit because it  has a wide range of local variations, making harmonization of measurement more challenging.

Looking to the future, Ilmarinen’s strategy might evolve through initiatives like geographic identification of high-risk areas and value chains, or enhanced due diligence to minimize risks and impacts on biodiversity as well as  selecting biodiversity-beneficial or net positive investments.

Join the discussion