Biodiversity is Becoming a Material Credit Risk

In Credit, Climate and Nature – Now Together, the authors argue that the next stage of sustainable fixed-income investing requires integrating biodiversity alongside climate considerations, reflecting the growing link between the energy transition, natural capital and long-term portfolio resilience. 

• the paper argues that the energy transition has become a matter of national security as well as decarbonisation, while growing demand for critical minerals, land and water makes biodiversity a financially material investment risk. 
• It introduces a framework that combines climate and biodiversity assessments to identify issuers leading both transitions, enabling more forward-looking credit selection. 
• According to the authors, integrating biodiversity improves issuer selection without materially reducing portfolio diversification, helping investors balance sustainability objectives with risk-adjusted returns. 

Read the full white paper for a detailed framework on integrating climate and nature into fixed-income portfolio construction