Specialist in Asia Pacific, China, India and South East Asia and Global Emerging Market equities.

Discover more

formerly Realindex Investments

Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.

Backed by a unique blend of research, portfolio construction and risk management, focused on uncovering original insights and translating them into investment strategies that are active and systematic, aiming to generate alpha.

Discover more

At Stewart Investors, we believe in putting people first. Our investment world-view is of a series of partnerships – with each other, with our clients, with the companies we invest in, the people who buy their goods and services, and with the wider society in which we all live and work.

Discover more

Investors can start assessing our global economy’s greatest asset now: nature

The cascading impacts of climate change and society’s overexploitation of the land and sea is giving rise to unprecedented devastation of nature and biodiversity. In the last 50 years, there has been a devastating 69% drop in wildlife populations1. The unfolding crisis is risking the very foundations of our economy, society and life itself, impacting humankind’s food security and access to clean water and air. 

Investors need well-functioning economies and societies to create stable markets. Given our economies are dependent on nature and we cannot get to net zero without nature, it is in investors’ interests to limit nature loss and protect the ecosystems.

While many investors have started to identify and assess materiality, exposure and responses to nature-related issues, drawing from the framework outlined by the Taskforce on Nature-Related Financial Disclosures (TNFD), the topic is still relatively new. 

We recognise that access to nature-related data can be challenging. It can be inaccurate, difficult to access, complex and not standardised. This is especially the case when seeking detailed commodity-related data at the country- or sector-level, which is either unavailable or in the development phase. Adding to this is the challenge of knowing what tools are available and when to use them, and alternate routes to conduct due diligence on investee companies. 

To address these gaps and drawing from an approach we developed for our investment teams to use, we have launched a nature and biodiversity guide for investors to undertake nature-related company assessments and develop engagement approaches to biodiversity risks. Titled ‘Investors Can Assess Nature Now’, we focus specifically on freshwater and forests, two areas that we view as fundamental to both the global economy and the fight against climate change. 

Download Nature and biodiversity toolkit

In our guide, we share a due diligence framework and the tools / resources to use for appraising and evaluating companies. We share an overview of the three critical steps we detail in our guide below. 

Step 1: Identify and assess sector-level exposures, dependencies and impacts

  • Specific sectors and industries are more likely to depend heavily on nature and be affected by nature-related risks and opportunities. A useful starting point for investors is to consider the water and deforestation risks in the priority sectors outlined by the TNFD, identified as being more likely to be financially impacted given their dependencies and impacts on nature. 
  • There are different water risks associated with different sectors. For example, sectors with physical assets such as real estate and infrastructure are vulnerable to flooding risks caused by storms whereas the textile and fashion, food and pharmaceutical sectors can be sensitive to water quality. 
  • The guide focuses on the sectors that produce or process agriculture-driven soft commodities such as soy, beef, palm oil, timber, and pulp and paper, because unsustainable production and sourcing of such commodities is a leading cause of deforestation. Financial institutions that lend to or invest in companies that process, procure or use such commodities can be also exposed to deforestation risks.
  • Investors can add other data points to supplement the sector-level assessment, such as country-level water and forest risk data. Sector Materiality Tool and Heatmap exercise are useful resources to conduct this sector-level assessment.

Step 2: Company prioritisation and assessments

  • A priority list of target companies can be developed based on the sector-level assessment and using available nature-related databases. These may include metrics such as water use, water intensity, water risk management or on the topic of forests, land and biodiversity use, sustainable agriculture programmes, and the strength of zero deforestation commitments. ESG data providers offer company-level data on many such metrics, although the availability of data from companies may still be limited.
  • Once a list of target companies has been developed, the next step is assessing these companies more deeply using corporate reports, website disclosure and other existing resources such as industry white papers. This due diligence process should also consider the company’s location and supply chains. 
  • On freshwater, investors can examine how a company sources water, where the water is sourced from and used (locations), and how it manages and uses water (purpose and its role in the business). Linking the source location and its significance to business with location-based water risk data can provide insights into a company’s water-related dependency and impacts in addition to information on company’s water use management.
  • On deforestation, identifying high forest risk soft commodities involved in company’s operation processes and products is an important step, then investors can assess related targets, certifications, sourcing policies or locations per each commodity. With improved traceability and supply chain disclosure on key commodities, we can expect to see more commitments and targets set out by companies to eliminate commodity-driven deforestation and land conversion.  

Step 3: Company engagement

  • Building on steps 1 and 2, it is important for investors to understand the materiality of the issues and develop clear objectives for engagements, setting time-bound implementation plans in those areas and sharing best practices with investee companies and linking to solutions. Going through a set of questions included in the guide can provide a framework for effective engagement.
  • When there is a lack of disclosure on nature-related issues, investors can strive to make this topic better acknowledged and understood by the company, so that the company starts examining this issue especially in relation to their sourcing locations. During this process, investors can try to raise awareness in the existing resources and databases that companies can utilise to improve disclosure.
  • Taking this approach is especially important given corporate disclosure on nature and biodiversity is still nascent. As investors and companies become more aware of the dependencies and impacts on nature, and as data becomes more available, investors can develop more outcome-driven objectives to engage with investee companies. 


Assessing nature is not easy, even before considering quantitative analysis of risks, impacts and dependencies. The metrics and targets will be more complex than climate disclosure, and as the biggest global issues of our time are intrinsically connected, investors must take a broad view of not only nature and biodiversity but also climate change and human rights. Corporate data is still in its early stages, making it ever more challenging for financial institutions to navigate this yet unknown space. But we cannot let our unfamiliarity with the topic or the lack of data act as a roadblock to assess our risks in this area. This guide is intended to demonstrate that financial institutions can start their journey in assessing nature now.

1 World Wide Fund for Nature (WWF), 2022: “Living Planet Report”

Important Information

This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should consider, with the assistance of a financial advisor, your individual investment needs, objectives and financial situation.

We have taken reasonable care to ensure that this material is accurate, current, and complete and fit for its intended purpose and audience as at the date of publication. To the extent this material contains any measurements or data related to environmental, social and governance (ESG) factors, these measurements or data are estimates based on information sourced by the relevant investment team from third parties including portfolio companies and such information may ultimately prove to be inaccurate. No assurance is given or liability accepted regarding the accuracy, validity or completeness of this material and we do not undertake to update it in future if circumstances change.

To the extent this material contains any expression of opinion or forward-looking statements, such opinions and statements are based on assumptions, matters and sources believed to be true and reliable at the time of publication only. This material reflects the views of the individual writers only. Those views may change, may not prove to be valid and may not reflect the views of everyone at First Sentier Investors.

About First Sentier Investors

References to ‘we’, ‘us’ or ‘our’ are references to First Sentier Investors, a global asset management business which is ultimately owned by Mitsubishi UFJ Financial Group. Certain of our investment teams operate under the trading names FSSA Investment Managers, Stewart Investors and Realindex Investments, all of which are part of the First Sentier Investors group.

We communicate and conduct business through different legal entities in different locations. This material is communicated in:

  • Australia and New Zealand by First Sentier Investors (Australia) IM Ltd, authorised and regulated in Australia by the Australian Securities and Investments Commission (AFSL 289017; ABN 89 114 194311)
  • European Economic Area by First Sentier Investors (Ireland) Limited, authorised and regulated in Ireland by the Central Bank of Ireland (CBI reg no. C182306; reg office 70 Sir John Rogerson’s Quay, Dublin 2, Ireland; reg company no. 629188)
  • Hong Kong by First Sentier Investors (Hong Kong) Limited and has not been reviewed by the Securities & Futures Commission in Hong Kong. First Sentier Investors, FSSA Investment Managers and Stewart Investors are the business names of First Sentier Investors (Hong Kong) Limited.
  • Singapore by First Sentier Investors (Singapore) (reg company no. 196900420D) and this advertisement or material has not been reviewed by the Monetary Authority of Singapore. First Sentier Investors (registration number 53236800B), FSSA Investment Managers (registration number 53314080C) and Stewart Investors (registration number 53310114W) are the business divisions of First Sentier Investors (Singapore).
  • Japan by First Sentier Investors (Japan) Limited, authorised and regulated by the Financial Service Agency (Director of Kanto Local Finance Bureau (Registered Financial Institutions) No.2611)
  • United Kingdom by First Sentier Investors (UK) Funds Limited, authorised and regulated by the Financial Conduct Authority (reg. no. 2294743; reg office Finsbury Circus House, 15 Finsbury Circus, London EC2M 7EB)
  • United States by First Sentier Investors (US) LLC, authorised and regulated by the Securities Exchange Commission (RIA 801-93167)
  • other jurisdictions, where this document may lawfully be issued, by First Sentier Investors International IM Limited, authorised and regulated in the UK by the Financial Conduct Authority (FCA ref no. 122512; Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB; Company no. SC079063).

To the extent permitted by law, MUFG and its subsidiaries are not liable for any loss or damage as a result of reliance on any statement or information contained in this document. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment products referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.

© First Sentier Investors Group