Drivers of Nature‐Related Investment Strategies Among Institutional Investors

ABSTRACT Institutional investors are increasingly responding to biodiversity loss through nature‐related investment strategies. Using survey data from 557 institutional investors, this study examines the drivers of strategy selection and how biodiversity risk is integrated across investor types, sizes, and regions. Financial motivations, especially risk reduction and return opportunities, are most strongly associated with divestment and portfolio biodiversity risk analysis, while shareholder engagement remains comparatively limited. Pressure from clients and activists steers institutional investors toward visible, low‐burden measures (risk analysis, divestment, and target‐setting) rather than resource‐intensive stewardship. US‐based investors report stronger commitments to nature‐related investments, whereas larger institutions do not exhibit higher engagement. The findings suggest targeted policy support for nature‐related investment practices: clearer recognition of biodiversity loss as a financially material risk within fiduciary frameworks, integration of nature objectives into stewardship codes and proxy‐voting norms, and harmonized biodiversity disclosure standards to reduce data uncertainty and enable more effective investor responses.