Pension scheme trustees and policymakers should work together to mobilise private sector investment to complement public sector action on nature, Scottish Widows has said, arguing that pension schemes are the "key" to unlocking the potential of nature.

The report, What Has Nature Ever Done For Us, argued that pension schemes have a "major role" to play in driving responsible investment into projects that could make or break natural regeneration efforts, controlling nearly $60trn worth of assets globally.

It also outlined a blueprint to help pension schemes and providers deliver more investment into ‘nature-positive assets’, which guide capital flows into projects that help restore nature, while delivering financial returns in the longer term.

Whilst the firm acknowledged that parts of the industry are still grappling with aligning fiduciary duty and certain material environmental, social and governance (ESG) issues, it argued that, when it comes to biodiversity loss, it is "clear that investors should ensure consideration of this systemic risk".

In light of this, the report outlined several policy and pension fund recommendations to convene industry action on this issue and enable nature-positive asset allocation throughout the financial services sector, including recommendations for how to approach biodiversity in pension investment, stewardship and advocacy strategies.

In particular, the firm encouraged trustees to increase their awareness around nature and biodiversity issues, and engage as much as possible in Taskforce on Nature-related Financial Disclosures testing, to help them understand how the future framework can be integrated into their existing reporting infrastructure.

It also suggested that trustees should assess their scheme’s portfolio exposure to measurable nature-related risks such as deforestation, as well as support corporate engagement and transformative action.

The report also called for government action, arguing that policies must represent the requisite level of change, and action to deliver their targets is of "paramount urgency", urging the government to demonstrate leadership and optimise cross-stakeholder collaboration.

In addition to this, it suggested that the government consider incentivising capital flows into nature protection and restoration via regulation of the voluntary carbon market, and integrating nature-related risks and targets into all policy and regulatory matters.

Scottish Widows head of responsible investments and stewardship, Maria Nazarova-Doyle, stated: “While overseeing trillions of pounds worth of investments, pension funds play a huge role in the economy: their investment decisions don’t just influence the long-term financial wellbeing of millions of savers, but have the potential to influence the long-term health of nature and the planet too.

“Yet, as we mark two years since the publication of The Dasgupta Review on the Economics of Biodiversity, the financial services industry has yet to make ample progress on nature action.

“In order for nature-positive pension investments to materialise, pioneers and policymakers must band together, doing more to engage and educate the industry on how to positively reshape portfolios and avert ecological collapse.

"This isn’t simply a balance-sheet issue – it’s an existential one too.”

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