Martin Currie adds biodiversity to ESG framework

8 December 2022: Martin Currie Australia, the active equity specialist investment manager of Franklin Templeton Australia Limited (Franklin Templeton), includes biodiversity impact in its analysis of the companies it invests in, alongside other critical stewardship themes such as climate, human rights and diversity.

In a recent survey conducted by Martin Currie across the top 200 ASX listed companies, it was revealed that there is widespread acceptance by large Australian companies that they have a role to play in protecting and enhancing biodiversity.

However, only a minority of listed companies have developed policies or risk management practices for addressing the issue.

The fund manager’s position is that biodiversity is in crisis and Australia’s approach to land use puts it at the forefront.

Martin Currie Lead Portfolio Manager for the Sustainable Equity Strategy, Will Baylis, says “We believe that we have a responsibility to ensure that companies we invest in on behalf of our clients are considering the potential impact of their business on biodiversity.”

Martin Currie Portfolio Manager Naomi Bant says: “Over the past few years, there’s been a lot of focus and progress on companies reducing their carbon emissions, but the reality is climate change and biodiversity are inextricably linked. We believe protecting biodiversity is the next big issue and this will get more attention with the Taskforce for Nature-related Financial Disclosures (TNFD) final recommendations next year.”

Baylis says Martin Currie has taken a clear and deliberate approach to including biodiversity in its ESG framework.

Bant says: “We surveyed the management of the top 200 ASX companies with detailed questions about their management of biodiversity in their daily operations and in their strategic planning,”

Martin Currie discovered that 82%, of the 92 ASX 200 companies that responded to its survey, accept that they have a role to play in protecting and enhancing biodiversity. Despite this, 61% of the respondents do not have biodiversity as a material component of a policy, such as an environmental policy, and were not committed to developing one in the next two years. We will be monitoring this disconnect and will ensure through our engagements companies are making progress in considering biodiversity in their daily operations.

“We found the property, mining and energy sectors to be advanced in considering biodiversity in their daily operations, and many companies in these sectors have a biodiversity policy or have biodiversity as
a material component of another policy,” Baylis says.

The biggest hurdle for businesses and investors, which the survey confirmed, is the lack of consensus around how to consistently evaluate and manage exposure to the risks and opportunities resulting from
biodiversity.

Some respondents to our survey provided examples of how biodiversity can provide financial opportunities for their companies. For example, banks and insurance companies see opportunities for the development of markets for ecosystem services and biodiversity credits, like carbon credits.

Out of this work, Martin Currie has developed a best practice framework for companies that covers identifying biodiversity impacts, setting policies, establishing accountability, and measuring and monitoring, and is sharing this with the ASX listed companies that participated in the survey.

Baylis says: “We will also be using our extensive company engagement program with boards and management to provide guidance and to push for further positive change.”

Baylis says: “We still have a lot of work to do to get a better understanding of some of these issues, but one thing is clear without biodiversity the global economy would simply not operate as we know it.”

For all media queries, please contact:
Abbey Minogue, Capital Outcomes
E: [email protected]

About Franklin Templeton
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 155 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers boutique specialization on a global scale, bringing extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the Californiabased company has 75 years of investment experience and approximately AUD 2 trillion in assets under management as of July 31, 2022.

For more information, please visit https://www.franklintempleton.com.au/

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