Boards, be prepared: the next wave of activism will be focused on biodiversity and “natural capital”. The warning comes as the United Nations’ COP 15 summit in Montréal approaches its final efforts to agree a binding deal on protecting biodiversity and ecosystems around the world.

Penning a warning on the Harvard governance blog, a top US law firm writes: “Biodiversity loss and adverse impact to nature are being viewed by investors as having wide-reaching impacts on the economy and the environment, directly and indirectly touching companies across sectors.”

The legal experts—from Wachtell, Lipton, Rosen & Katz—add companies will be “under further pressure to reduce ecological footprints and prepare for the potential loss of, or disruption to, traditional supply sources”.

They are not alone in sounding an alarm for companies to prepare. Lawyers from DLA Piper write that, though the outcome of COP 15 is unclear, the “biodiversity crisis” will have an impact on business. And even if no agreement is made, biodiversity is already an investor concern.

‘Direct risks’

“This translates into direct risks to business operations and, moreover, increasingly stringent demands from financiers and investors, customer awareness and various forms of biodiversity litigation that will more than fill the gap left by COP 15.”

There is significant investor momentum behind protecting biodiversity. This month, 150 fund managers, among them BNP Paribas, Aviva, Legal and General Investment Management, and Amundi, signed a letter calling on governments around the world to reach agreement at COP 15.

They want financial flows to be aimed at “preservation of global biodiversity”. David Atkin, chief executive of Principles for Responsible Investment (PRI), the body coordinating the campaign, says: “Climate change and biodiversity loss are inextricably linked challenges which present systemic risk for investors.”

According to campaigners, though the issue is a concern for investors around the world, voluntary action will not be enough. They argue governments need to strike a deal that will steer investment aims.

Caroline Le Meaux, global head of ESG research at French investment fund Amundi, said: “The finance sector must not forget biodiversity in the race to net zero. We recognise the importance of biodiversity which forms the foundation of our economy.”

Governance experts have been thinking through the biodiversity crisis, too. The International Corporate Governance Network (ICGN) recommends companies adopt “science-based” targets and “ensure robust governance procedures and board competence”, to supervise executive teams in their management of biodiversity risks.

Just as a critical mass of international agreements, regulatory moves and political drive got behind climate change targets, so too will it build behind biodiversity. COP 15 has not yet concluded, but even if it fails, pressure from investors is already here.