Sustainable Investing Perspectives with Nikita Singhal (Lazard) and Amantia Muhedini (UBS CIO)
Aug 29, 2023
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Amantia Muhedini and Nikita Singhal discuss the implications of the Nature Restoration Law in Europe, the impact on the agricultural industry, and the scope of the Corporate Sustainability Reporting Directive. They also explore the challenges of biodiversity data reporting and the importance of bottom-up research in ESG analysis.
The European Union's Nature Restoration Law requiring 20% of degraded ecosystems to be restored by 2030 has significant implications for investors, particularly in the agricultural sector.
The Corporate Sustainability Reporting Directive (CSRD) sets common reporting rules for ESG data, impacting a substantial portion of global companies and extending reporting requirements beyond the EU borders.
Deep dives
Implications of the European Union's Nature Restoration Law
The podcast episode discusses the European Union's Nature Restoration Law, which requires 20% of degraded ecosystems in the continent to be restored by 2030. This legislative action reflects the EU's commitment to decarbonization and protecting the environment. The law has significant implications for investors globally, especially in the agricultural space. Currently, about 60 to 70% of EU soils are considered unhealthy, posing risks to agriculture and food production. Achieving the restoration target will require significant investment in restructuring and reallocating resources in the food production system. It also presents opportunities in precision agriculture, renewable energy, data providers, and alternative protein consumption.
Corporate Sustainability Reporting Directive and Its Impact on Companies
The podcast highlights the Corporate Sustainability Reporting Directive (CSRD), which sets common reporting rules for environmental, social, and governance (ESG) data. Starting from 2025, companies in the EU or operating in EU markets with revenue exceeding 150 million euros will have to report on ESG data points. This directive covers a substantial portion of global companies, including the S&P 500 and the MSCI World Index. The CSRD is expected to provide more granular and comparable ESG information for investors. It also extends the reach of ESG reporting requirements beyond the European borders, prompting non-EU investors to consider the impact of these regulations on their investments.
Challenges and Opportunities in Biodiversity Data Reporting
The episode touches on the challenges and opportunities in reporting biodiversity data compared to other sustainability data. Due to the evolving regulatory landscape, there is increasing demand for disclosure and reporting on biodiversity-related risks, as exemplified by the EU's deforestation regulation. However, biodiversity data reporting is still in its early stages, relying mostly on self-disclosed data that lacks consistency and comparability across companies. ESG data providers are attempting to simplify biodiversity data into single metrics, but this approach risks losing the contextual and location-specific nature of the data. Therefore, comprehensive bottom-up research and analysis conducted by analysts and portfolio managers remain crucial for incorporating biodiversity considerations into investment decisions.
We touch on regulatory and legislative actions within Europe aimed at sustainability, notably as it relates to final ESG disclosure rules under the Corporate Sustainability Reporting Directive (or CRSD), along with the global investment implications surrounding the Nature Restoration Law. Featured are Amantia Muhedini, Sustainable & Impact Investing Strategist Americas with the UBS Chief Investment Officer, and Nikita Singhal, Co-Head of Sustainable Investment & ESG at Lazard Asset Management. Host: Daniel Cassidy
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