Stephan Langen: Why wait for more green rules?

Stephan Langen: Why wait for more green rules?

ESG-investing Impact investing Rules and Legislation
Stephan Langen (foto archief ASN Impact Investors)

By Stephan Langen, Head of Portfolio Management at ASN Impact Investors

The Nature Restoration Law seems to be good news for investors who want to focus on returns from biodiversity. But investors should not wait for such rules, but act on their own initiative. Because Brussels will not solve the challenging sustainable dilemmas for you.

The European Nature Restoration Act has passed. At least, the European Parliament has adopted the heavily watered-down bill with a small majority and the heads of government of all member states will soon be negotiating the final version.

We will know in October what the final result will be, but it is clear that it will remain a compromise.

Nature gets more rights

It is therefore still too early to determine what the natural law will yield for the restoration of biodiversity in Europe. Nevertheless, it is a historic step: nature is given more rights. And the Nature Recovery Act will soon offer opportunities to investors like us. After all, not only governments are urged to take action, private parties will also have to put their shoulders to the wheel for solutions that unite a richer biodiversity with healthy business models.

Why wait for rules?

It is good that Brussels is taking additional measures to more or less enforce the sustainable transition. But that is precisely what concerns me personally: why do companies, governments, investors and ourselves as consumers always wait for rules before we move?

It is a matter of action perspective. As investors, we make countless choices every day with many consequences. For biodiversity, for the climate and for people. If we let those choices depend solely on available laws and regulations, that is a very narrow basis. This includes established, sometimes conflicting interests. That stops things: there are already many opportunities to invest in companies and projects that strengthen nature.

Stewardship offers perspective for action

In that respect, stewardship offers a better perspective for action than a Brussels law: the care and attention for - in this case - nature as a 'stakeholder', which, after all, we also manage. Stewardship forces you to take responsibility for all the consequences of your investment decisions. It also provides you with a broader view than a framework of rules drawn up by a government.

What action perspective do we offer farmers if they have to stop their business because of nitrogen emissions? Regenerative agriculture is a big part of the solution: it is high time to invest more in it.

Or take emission-free mobility, another apparent no-brainer that has already been prescribed in Europe. Fully investing in EVs has consequences for both human lives and nature: we will have to mine masses of lithium and rare earth metals to realize the electric ambitions.

Dilemmas for investors

These are difficult dilemmas about which you should be well informed as an investor in order to make the right choices. But that's no reason to sit on your hands until that ecological miracle battery arrives. Invest now in the innovations that can significantly reduce our negative impact and increase the positive impact, I would say. A lot of people worldwide are already working hard on smart solutions that not only make the necessary transitions possible, but can also accelerate them.

For us as investors, an analogy to that famous phrase by John F. Kennedy offers perhaps the best perspective for action if you combine it with stewardship: don't ask yourself how much return sustainability should cost, but ask yourself how much sustainability brings to your return, nature and humanity.

Stephan Langen is Head of Portfolio Management at ASN Impact Investors. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.