Integrating nature into investment and value creation processes for private equity firm
A leading international private equity firm sought to respond to growing interest in nature-related issues from its LP investors and better understand how nature-related risks could be integrated into portfolio management processes.
The firm wanted to strengthen its understanding of nature-related risks and opportunities across the portfolio, identify where these issues may be most material, and establish a practical foundation for alignment with emerging frameworks such as TNFD and CSRD.
Our Approach
The Biodiversity Consultancy (TBC) combined portfolio-level screening, company-level assessment and investor engagement to help identify and prioritise nature-related risks across the portfolio.
Using a range of sources about the impacts and dependence of portfolio companies on nature – including ENCORE and intelligence about high-impact commodities – as well as investment-specific information, TBC assessed the portfolio to identify nature-related hotspots and focus attention on priority companies. This was supported by targeted questionnaires, direct engagement with portfolio companies and the development of concise briefing materials to support stewardship and engagement activities.
Alongside the risk assessment, TBC reviewed sustainability and due diligence processes, providing recommendations to strengthen the consideration of nature-related issues within investment processes. Capacity-building activities, including a tailored Nature 101 session and an in-person workshop, were designed to equip investment and portfolio teams with the knowledge needed to engage on material nature-related issues. TBC also assessed alignment with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD).
Outcome
The engagement provided the firm with greater visibility of nature-related risks and opportunities across its portfolio and a clearer understanding of where these issues may be most material to portfolio companies.
By identifying companies with heightened exposure to issues such as agricultural sourcing, land-use change and broader supply chain dependencies on nature, the assessment provided a clearer basis for prioritising stewardship activities and directing management attention. Investment teams were able to focus engagement on the portfolio companies where nature-related considerations were most likely to affect business resilience and long-term value creation.
The engagement also strengthened due diligence and portfolio monitoring processes by introducing more structured approaches to gathering and reviewing nature-related information from portfolio companies. This provided a practical foundation for integrating nature considerations into investment decision-making, value creation planning and future TNFD-aligned reporting.
