The question isn't why, but how to invest in biodiversity

BOTH by Ring Capital Issue #27 — Interview with Alix Faure, Chief Sustainability Officer @Sienna IM

Dear community,

This month, we discussed how investors can address biodiversity challenges with Alix Faure, Chief Sustainability Officer at Sienna Investment Managers.

At Sienna IM, biodiversity is a key pillar of their ESG commitments, embedded at both the corporate level and across asset classes — from listed equities to private debt and real estate. Recognising the urgency of direct action, they’ve taken it a step further with a private debt fund dedicated to biodiversity.

Beyond investment, Alix highlights the importance of education and collaboration. By equipping investment teams with scientific knowledge, partnering with experts to measure and enhance biodiversity outcomes, and by actively participating in the advancement of scientific research in this field.

Our conviction: biodiversity is a pre-competitive issue on which we must work together. This means developing relevant investment strategies to address biodiversity preservation and restoration, and better integrating biodiversity into environmental impact measurement.

Together, we must support and amplify these efforts — to fund solutions and inspire a shift across all sectors.

This is what BOTH is about: showcasing the faces behind vital change.

🫵 Which entrepreneur, solution, project or concept related to impact would you like us to cover in this newsletter? Feel free to send us your ideas!

Can you introduce yourself and tell us about your background?

I graduated from French Business school EM Lyon. I have spent most of my career in asset management, with the exception of a few years during which I took a significant detour to get a pastry qualification and launch an online patisserie. This interlude lasted for three years, until I returned to a more conventional job for personal and family reasons.

So, I went back to asset management, and more specifically to responsible investment, a field I was already involved in before. Out of my twenty years of professional experience, fifteen were dedicated to sustainable investment, three to patisserie, and two to strategic marketing. For the past two years, I have been Sienna IM’s Chief Sustainability Officer, where I oversee responsible investment in its many forms: impact, extra-financial analysis, and CSR for internal operations.

Biodiversity is one of the three pillars of your ESG commitments. How does this translate into your investment strategies?

At Sienna, we have three extra-financial pillars: climate, biodiversity, and diversity. We ensure that they are not covered in isolation but are integrated both at the corporate level and within our investments.

More specifically, regarding biodiversity, we decided three years ago to address it through an equity investment in Iceberg DataLab, a key player in biodiversity impact measurement. This is a way of incorporating biodiversity into our own operations. In terms of investments, we defined a biodiversity policy a year and a half ago, which applies across all our areas of expertise: listed asset management, private debt, and real estate. We purchase data from Iceberg DataLab, which applies to our entire portfolio to measure our impacts, as progress is impossible without reliable data.

Moreover, we launched a biodiversity impact private debt fund in 2024. We aim to strengthen our policy in this area this year, particularly at portfolio level. We thus have set up an internal working group to push these efforts even further.

You have launched a private debt fund focused on biodiversity. How do you invest in such a complex field?

Our fund finances European companies that contribute to the preservation or restoration of biodiversity. It is a SFDR Article 9 fund, positioned within the framework of the five pressures identified by IPBES and the 23 targets of the Kunming-Montreal agreement. We have identified three complementary types of companies: solutions, transition, and best practices.

The first category, ‘solution’ companies, provides direct solutions to major challenges linked to biodiversity loss, such as regenerative agriculture’s practices. We hope to maximise this segment, but we know it won’t constitute 100% of the portfolio. Such companies are often young and require more equity capital than debt. Future vintages of the fund will likely be able to invest more in solutions.

We also support transition companies that need to finance their capital expenditure to change their business model or industrial processes to improve their biodiversity impact. At Sienna, we believe that the role of an asset manager is to channel clients' savings towards transitioning to a more sustainable economy. We have targeted specific sectors, but we can look across almost all industries for companies seeking to improve their practices with a strong biodiversity focus. Impact indicators will be particularly important here, as they will encourage companies to improve. As a debt fund, we decided to implement impact clauses: when a company meets the agreed targets, we lower the interest rate. It’s a win-win situation.

The third category consists of companies that implement exemplary biodiversity practices in their sector. By financing them, we believe these good practices will spread across their industry.

“KPIs will differ [from a company to another and] we accept this diversity of indicators without trying to aggregate them at the portfolio level. […] It is an impact fund, with impact occurring at each company’s level.”

What indicators do you use to measure biodiversity impact?

At present, we do not yet measure our biodiversity impact at the corporate level. For our investments, we use the MSA (Mean Species Abundance) per square kilometre, provided by Iceberg DataLab. This is a useful indicator for our LPs, as it allows them to compare funds.

For our biodiversity impact fund, we go further by defining physical and company-specific indicators. By ‘physical and specific’, I mean material, tangible, and suited to the company’s activity. For example, KPIs will differ for a regenerative farm, a biogas plant, or a real estate project. We accept this diversity of indicators without trying to aggregate them at the portfolio level. This approach may surprise some investors, but we cannot aggregate such varied indicators, as it is an impact fund, with impact occurring at each company’s level.

What’s particularly interesting about biodiversity is that the localised dimension of the impact takes on its full meaning. In which geographies do you operate? How do you incorporate a territorial dimension into your strategies?

We invest exclusively in Europe, but companies can have a broader reach. So it was essential for us to include value chain analysis and to rely on scientific expertise. To this end, we collaborate with the Canadian firm Habitat, which specialises in biodiversity. Habitat assesses, through a twenty-question questionnaire, the company’s intentionality, additionality, sustainability, impact, and capacity to measure progress. They also integrate multiple sources of information, including the geographical scope of financing. What’s particularly interesting with their analysis is that it is forward-looking. At the end of this study, Habitat provides us with a thorough assessment and the company’s score from 1 to 5 (the closer to 5, the stronger the biodiversity component), and suggests performance indicators to monitor.

How do you raise awareness within your ecosystem about biodiversity preservation?

The first people to educate are… our employees, particularly the investment teams. We started with them by providing training and organising internal events with biodiversity experts. Half of the world’s GDP is directly or indirectly linked to biodiversity quality. Our economies are fundamentally built on nature. If we do not take care of it, everything comes to a standstill. It is essential that our teams hear and integrate these messages.

Moreover, our fund is a ‘sharing fund’: we allocate a portion of our management fees to finance a research chair on biodiversity, and the experience and expertise of the companies we invest in will contribute to knowledge development. This approach is very dear to us as it aims to advance research and improve access to scientific knowledge.

Do you have a message or recommendation for investors looking to address biodiversity issues?

Our biodiversity fund is still very young, and we want to remain humble. However, my conviction is that relying on scientific knowledge and integrating within a scientific framework is key. Surrounding oneself with the right partners is also fundamental; our LPs, Malakoff Humanis and La France Mutualiste, played a crucial role in launching the fund. Their support is vital, and now the responsibility is ours: to deploy the fund and prove that our thesis works.

What does the term "vitality" evoke for you?

Two ideas immediately come to my mind: dynamism, life — especially life in full bloom.