ASSET manager Fidelity International said that it will vote against companies in high-risk sectors that do not meet its minimum standards of deforestation-related practices and disclosure from 2024.

Tackling nature loss is one of the company’s top priorities within its sustainability strategy, given that the continued decline of nature will pose material financial risks to the economy and financial markets, Fidelity said in a statement on Wednesday (Nov 22).

It noted that nature is under intense and increasing pressure, and nature-related risks are among the most severe over the next decade.

“The loss of natural capital is a systematic risk to capital markets and prioritising the preservation of our biodiversity and ecosystems is essential,” said Paul Milon, director of sustainable investing at Fidelity.

The company said that there is a huge opportunity arising from the “significant gap” between addressing the risks associated with nature loss, and the scale of investments needed to do this.

It pointed out that the annual investment in nature-based solutions is just US$146 billion – with private capital accounting for just 17 per cent – compared to the US$8.8 trillion in cumulative investments estimated by the United Nations. Fidelity added that investors must be prepared to understand the risk and opportunity set in climate and nature adaptation as the consequences of nature loss and climate change play out.

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“For asset managers like Fidelity, this translates into an enhanced focus on integrating nature-related risks across their investment approach and stewardship activities, as well as developing a range of investment solutions addressing the need for greater investment in nature-related solutions,” said Milon.

To eliminate forest-risk agricultural commodity-driven deforestation activities in investment strategies by 2025, Fidelity said that it will use engagement and stewardship.

The company on Wednesday published its Nature Roadmap, which outlines its approach to further integrate nature-related risks and opportunities in its sustainability and stewardship processes.

Said Tina Chang, associate director of sustainable investing at Fidelity: “Conversations on deforestation cannot be held in a silo. It is important to ensure a ‘just transition’ as we aim to conserve natural capital.”