Quantifying Companies’ Biodiversity Footprint

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    Stockholm (NordSIP) – Despite growing awareness among institutional investors about the importance of preserving biodiversity, many are finding it challenging to take concrete action. Measuring and quantifying the biodiversity impacts and dependencies of the companies in their portfolios appears to be a major hurdle. An announcement issued by the Finance for Biodiversity (FfB) Foundation on 26 February should, therefore, be welcome news as it promises to alleviate some of these growing pains.

    FfB Foundation has just initiated a collaborative study to calculate the biodiversity footprint of all the companies included in the MSCI All Country World Index (MSCI ACWI) universe. Once the project is finalised, members of the FfB Foundation and investors who are part of the global collaborative engagement initiative Nature Action 100 (NA100) will have access to a subset of normalised biodiversity indicators for nearly 3,000 companies from both developed and developing markets. Analysing this data should help them identify potentially significant impacts and dependencies and the part of the value chain in which these exposures lie, empowering them in their efforts to engage with companies on biodiversity issues.

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    Apart from directly benefitting members of FfB Foundation and NA100, the study will provide useful information to the wider investment community as well. A public report will be generated that explores dependencies and impacts at the sector, pressure, and scope levels. The report will include normalised, aggregated figures by sector, pressure and scope, albeit not by company. The study is expected to be completed by the second quarter of 2024.

    The new project, funded by Global Commons Alliance´s Accountability Accelerator (GCAAA), builds upon a similar pilot study conducted in 2023, expanding dramatically its scope and incorporating the latest updated data. Led by the FfB Foundation in partnership with consultancy Global Balance and with the support of the consultant Wildcap, the study brings together expertise from various sectors. Four of the most sofisticated biodiversity footprinting tools are employed in the project: Biodiversity Impact Analytics – Global Biodiversity Score (BIA-GBS) tool, co-owned by Carbon4 Finance and CDC Biodiversité; Corporate Biodiversity Footprint (CBF) tool, developed by Iceberg Data Lab in cooperation with I Care; Biodiversity Footprint for Financial Institutions (BFFI) tool, developed by ASN Bank, PRé Sustainability and CREM; and Global Impact Database (GID) tool, developed by Impact Institute, a social enterprise and spin-off of True Price.

    The tools calculate biodiversity footprints of corporations based on life cycle analysis (LCA), using a biodiversity model to estimate a company’s impact on biodiversity loss. Two of the tools —BIA-GBS and CBF— have developed approaches to assessing corporate and sector dependencies on ecosystem services based on the tool ENCORE (Exploring Natural Capital Opportunities and Exposure).

    “By exploring the biodiversity impacts and dependencies of investments in developed and developing markets, the multi-tool study approach establishes a robust foundation for informed and sustainable investment choices,” comments Arthur Campredon, Footprint Measurement Director at CDC Biodiversité. “Not only does it overcome known biases inherent in existing tools, but it also provides a comprehensive framework on the drivers of biodiversity loss, empowers investors with nuanced insights on priority sectors and guides their decisions towards biodiversity preservation”.

    Image courtesy of chezbeate from Pixabay
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
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