SI Debate

SI Debate: How to go from biodiversity science to financial products?

One of the most fundamental debates in SI is how to connect sustainability science to commercially appealing investment products. It’s easy to align portfolios with sustainability metrics, but much harder to make a meaningful connection to real-world targets without diluting either the impact or the returns potential.

Authors

    Head of Sustainable Alpha Research
    Sector Lead

Summary

  1. Biodiversity measurement and investing is more complex than climate
  2. Science is clear, but uptake of biodiversity products has been limited
  3. More innovation and policy interventions are needed to highlight merits

The topic of biodiversity has grown in significance over the past decade as awareness of both the impacts and dependencies of businesses on nature has grown. The recent Business and Biodiversity Assessment by IPBES – the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services - highlighted that financial flows damaging nature amount to around USD 7.3 trillion per year, while the spend on activities that restore nature amounts to just USD 220 billion per year.

The critical challenge with measuring biodiversity is that impacts and dependencies are highly localized, while financial products typically are highly standardized, relying on broad data sets, straightforward benchmarks, and preferably short-term liquidity. This should not be a major issue, if the right measurement methods are chosen for the right purpose.

No single metric for biodiversity

For climate change, we have a single measure of carbon emissions that is universally agreed on. Whether it is the most useful metric from a real-world perspective or not, it can be used across economic and global activities and incorporated into cross-asset class solutions.

Simplicity is often valued highly versus complex scientific accuracy in scalable investment products. But we do not have a single metric or market that biodiversity products can convene around.

Even straightforward SI approaches like positive screening or exclusions seem difficult to apply to biodiversity, as so few economic activities with positive cash flows are intrinsically positive for nature. Thematic approaches such as the Robeco Biodiversity Equities strategy tend to focus on transition of biodiversity-intensive economic sectors, using methodologies such as the Robeco Traffic Light to separate leaders from laggards.

As opposed to climate change, the effects of which can be seen in the news every day, the concept of biodiversity loss and the resulting financial risk is still relatively abstract today.

Biodiversity Equities D USD

performance ytd (31-7)
3.63%
Performance 3y (31-7)
6.06%
morningstar (31-7)
2 / 5
SFDR (31-7)
Article 9
Dividend Paying (31-7)
No
View the fund
Past performance is no guarantee of future results. The value of the investments may fluctuate. Annualized (for periods longer than one year). Performances are net of fees and based on transaction prices.

It’s hard to gauge interest

These challenges have limited the market for pure biodiversity-themed products, and made it difficult to gauge asset owner interest in biodiversity alone. Combining climate and nature makes for a more scalable product today.

Direct financing also offers potential at the moment. Blended finance can combine private capital with public or philanthropic capital that absorbs initial losses in order to fund location-specific projects that may otherwise have unattractive returns for private investors.

However, blended finance flows specifically dedicated to biodiversity and nature-based solutions (NBS) represent a very small fraction of the broader sustainable finance market, typically running at USD 1.5 billion to USD 3 billion annually.

Meanwhile, transition-focused debt markets can link bond issuance to KPIs related to the transformation of the highest impact activities. Yet, even at the project level, few biodiversity projects have clear revenue streams beyond grants, or are able to tie nature benefits directly to cash flows.

Building Bridges in Geneva

The IPBES report makes the case for a supportive enabling environment that combines both public incentives and policy alignment. How we get there is another question. We will be addressing this debate in the Action Events program at Building Bridges in Geneva in October 2026.

This is the annual conference bringing together decision makers, investors, policymakers, corporate leaders, and civil society to align finance with sustainability and foster high-impact partnerships. Robeco will host a roundtable workshop on how to connect the science to scalable investment products in different asset classes and over time, with contributors from across the industry.

In the long run, we believe that investments in biodiversity will stand on their own commercial merits. But in the meantime, we need policymakers and the finance industry to collectively drive innovation to make this happen.

Keep up with the latest sustainable insights

Join our newsletter to explore the trends shaping SI.

How SI works

Let's keep the conversation going

Keep track of fast-moving events in sustainable and quantitative investing, trends and credits with our newsletters.

Don’t miss out

Robeco aims to enable its clients to achieve their financial and sustainability goals by providing superior investment returns and solutions.

Important information
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor.


Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States. This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.