Nature & Biodiversity

Investment Rating - The report does not provide a specific investment rating for the industry but indicates that companies with stronger relative Nature Performance trade at modest premiums to laggard peers [2][13]. Core Insights - The report highlights the increasing focus on Nature and Biodiversity as a critical area for corporate sustainability strategies and sustainable investors, driven by various catalysts such as the need for Nature-based solutions and the physical and financial risks associated with biodiversity loss [5][6][8]. - The GS SUSTAIN Nature Tool is introduced as a framework to measure corporate transparency and performance related to biodiversity, aiming to provide investors with a clearer understanding of companies' impacts on nature [10][33]. Summary by Sections Executive Summary - Nature is gaining momentum as a focus area for corporate sustainability strategies, with five catalysts identified: the need for Nature-based solutions, efficiency improvements, risks of biodiversity loss, permitting processes for land development, and responses to the Global Biodiversity Framework [5][6][19]. GS SUSTAIN Nature Tool - The GS SUSTAIN Nature Tool measures corporate exposure, transparency, and performance related to biodiversity through a framework that includes assessing business activities, plans, and performance metrics [10][33]. Biodiversity Transparency and Performance - The report emphasizes that while data on biodiversity is scarce, existing data can provide context for company analysis, revealing that few companies have sector-leading plans and performance on relevant indicators [11][12]. - Companies with strong Nature Performance are observed to trade at a premium, while those with strong transparency plans tend to trade at a discount [13][24]. Stock Performance - Nature Performance leaders have underperformed compared to laggard peers and the MSCI ACWI since early 2022, indicating potential discovery value for companies with strong performance-driven outcomes [14][40]. - Nature Plan/Transparency leaders have shown similar stock performance to laggards, with both outperforming the MSCI ACWI in certain sectors [41][44]. Nature & Biodiversity Adopters and Enablers - Investors are likely to focus on sectors with high potential negative impacts on biodiversity, such as Food & Beverage and Metals & Mining [22]. - Companies providing adaptive solutions to mitigate nature-related risks are expected to gain investor favor, highlighting the importance of water resiliency, land management, and technology solutions [23][24]. GS SUSTAIN Nature Framework and Relative Valuation - The report notes that while Nature Performance leaders trade at a premium, Nature Plan leaders consistently trade at a discount, suggesting that the market rewards performance-driven outcomes over mere disclosure [24][35].