Portfolio Sustainability Analysis

𝗧𝗵𝗶𝘀 𝗶𝘀𝗻'𝘁 𝗺𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴. 𝗜𝘁'𝘀 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗿𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲. Nestlé. Mars (private). Unilever. They're core holdings in your equity portfolio. Can you quantify the risk to their margins if ecosystems collapse? They all depend on Nature: 🌊 Healthy oceans for fish 🌾 Fertile soil for crops 🐝 Pollinators for yields 💧 Freshwater to produce at scale Did you know the global pet food market is 𝘄𝗼𝗿𝘁𝗵 $𝟭𝟯𝟬𝗯𝗻, growing at 𝟱.𝟱% 𝗮𝗻𝗻𝘂𝗮𝗹𝗹𝘆? Mars Petcare is one of the largest players on Earth, with nearly 50 brands, several of them having billion-dollar franchises. Mars earns $𝟮𝟬𝗯𝗻 𝗳𝗿𝗼𝗺 𝗽𝗲𝘁 𝗰𝗮𝗿𝗲. One of those brands is Sheba, which depends on fish from coral reef ecosystems. 𝗡𝗼 𝗿𝗲𝗲𝗳, 𝗻𝗼 𝗳𝗶𝘀𝗵. 𝗡𝗼 𝗳𝗶𝘀𝗵, 𝗻𝗼 𝗦𝗵𝗲𝗯𝗮. According to WWF, over half of tropical coral reefs are already lost ecosystems that support a quarter of all marine species. So Sheba Cat Food (Mars) is restoring reefs off Indonesia not as marketing but as supply chain protection. This is Nature as resilience: protecting cash flow and margin. This is where the Taskforce on Nature-related Financial Disclosures (TNFD) comes in: → 𝗗𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝗰𝗶𝗲𝘀: What ecosystems does the business rely on? → 𝗥𝗶𝘀𝗸𝘀: How does Nature loss affect supply, price, brand, and regulation? → 𝗠𝗮𝘁𝗲𝗿𝗶𝗮𝗹𝗶𝘁𝘆: Where is Nature loss financially significant to enterprise value? → 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀: Where can ecosystem protection drive long-term financial sustainability? As an asset owner, ask your consultants and fund managers: ✅ Have you mapped Nature dependencies across our portfolio? (e.g. Norges, Scottish Widows) ✅ Have you commissioned a Nature risk assessment across our equities? → Deep-dive your top 10 holdings in FMCG, agriculture, and food; which are most exposed to ecosystem collapse? ✅ How are you integrating TNFD into stewardship, risk oversight, and engagement? 📌 The EU CSRD and UK SDR are raising the bar on Nature disclosures for companies and asset owners. This should be as standard as your TCFD report. We've built dashboards for carbon. Where's the equivalent for Nature? 🎥 Watch 𝗥𝗲𝗲𝗳 𝗕𝘂𝗶𝗹𝗱𝗲𝗿𝘀 on Prime Video & Amazon MGM Studios.  Set in Indonesia, it follows a team of coastal communities and marine biologists who brought a dying reef back to life, proving that Nature recovery is possible and essential to business survival. 🪸 This is why Sheba Cat Food (Mars) invests in coral reef restoration. https://lnkd.in/eMuj2YV2 #FromRiskToResilience #NaturePositive #NatureRisk #ReefBuilders #ShebaHopeGrows #TNFD

𝗖𝗼𝗻𝗰𝗲𝗻𝘁𝗿𝗮𝘁𝗲𝗱 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗹𝗲 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼𝘀 𝗮𝘁 𝗽𝗲𝗻𝘀𝗶𝗼𝗻 𝗳𝘂𝗻𝗱𝘀 𝗮𝗿𝗲 𝗮 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗿𝗶𝘀𝗸 𝘁𝗼 𝗺𝗲𝗺𝗯𝗲𝗿𝘀 An increasing number of Dutch pension funds are shifting towards highly concentrated equity portfolios in the name of sustainability. Sometimes fewer than 100 stocks. But a new paper by Andreas Brøgger, Joren Koëter and Mathijs van Dijk from Rotterdam School of Management, Erasmus University shows that this strategy may come at a high cost for pension members. Their findings are clear: 📌 The belief that 30 to 40 stocks are enough to diversify is outdated. You need far more to reduce risk in today’s global markets 📌 Concentrated portfolios face what the authors call FOMO risk. That is the chance of missing out on the tiny group of stocks that actually drive long term market wealth. Just 2 percent of global stocks created all net wealth from 1985 to 2023. So the strategy is not only risky. It can also hurt returns. But here is the paradox. It is not good for sustainability either. Research by Sam Hartzmark and Kelly Shue shows that avoiding brown firms can backfire. Brown firms only become greener if they have enough capital to do so. And if sustainable investors walk away, those firms may end up in the hands of investors who do not care about sustainability at all We should want brown firms to be owned by investors who push them to change. Not by investors who block sustainable progress The bottom line is this. Concentrated ESG portfolios may harm both financial outcomes and real world sustainability #pensionfunds #sustainableinvesting #ESG #assetmanagement

Sustainability Value Creation Framework for Investors 🌍 The PRI’s new framework offers a clear structure to help investors in private markets translate sustainability into financial outcomes. Developed with Bain and NYU Stern, the Sustainability Value Creation framework reflects input from over 400 investors across regions and asset classes. Rather than treating ESG as a reporting exercise, the framework positions sustainability as a driver of operational efficiency, risk reduction and growth. It shows how sustainability can unlock financial value through improved customer trust, stronger employee engagement and increased resilience. The framework addresses both investment firm level actions and portfolio company strategies, recognizing that value creation happens across the lifecycle. At the firm level, the focus is on aligning sustainability with business objectives and embedding it in every stage of investment decision making. At the portfolio level, it is about identifying material ESG topics, prioritizing initiatives with financial relevance and tracking performance over time. Organisational enablers such as leadership buy in, quality data and aligned incentives are central to delivering results. The framework is part of a multi phase effort. Phase Two focuses on methodologies to quantify the financial impact of sustainability. Phase Three will assess how ESG contributes to real liquidity events. Evidence suggests that the financial relevance of sustainability will increase and that firms equipped with credible ESG strategies will be better positioned for the future. This is especially relevant for private markets where access to data and long term engagement allow for deeper integration and clearer accountability. The framework is an invitation to build stronger investment strategies using sustainability as a lever for performance rather than compliance. #sustainability #sustainable #business #esg

🔍 Understanding the Impact of Sustainable Investments: Share our latest research on the MSCI SFDR PAI Attribution Framework, which explores how investors can better align their portfolios with sustainability objectives. 🌱 As part of our ongoing commitment to empowering institutional investors with actionable insights, this framework provides a deeper understanding of the Principal Adverse Impact (PAI) indicators under the EU’s Sustainable Finance Disclosure Regulation (SFDR). By leveraging our attribution model, investors can measure, monitor, and manage their portfolios’ sustainability impacts more effectively. 💡 This is another step forward in advancing transparency and accountability in sustainable investing—helping investors make more informed decisions that align with their values and the evolving regulatory landscape. A special thanks to my summer intern, Yichen Han, for her valuable contributions to this research. Your dedication and hard work were truly appreciated! 🔗 Check out the full report here: https://lnkd.in/enviA6z2 #SustainableInvesting #SFDR #ClimateFinance #PortfolioManagement #MSCIResearch