25 May, 2023 / Analysis
Four biodiversity tools helping investors manage risk
Indices, guidance and risk management tools all launch this month
With biodiversity firmly on the agenda for investors this year, many organisations seem to have jumped at the chance to launch tools and guidance for how to assess and manage risk and impacts on nature. Here are four that have been unveiled this month.
The latest is set of eight indices from the Institutional Shareholder Services (ISS) and index creator Qontigo. The ISS STOXX Biodiversity Index Suite screen companies deemed to inflict significant harm to biodiversity or that reduce its footprint, with seven of them tracking companies with high biodiversity and climate-related Sustainable Development Goals (SDGs) and one including only companies that earn at least 20% of their revenues from activities that are deemed to make a positive net contribution to the UN’s SDGs.
Investor guidance for assessing biodiversity risk
The International Corporate Governance Network has launched a toolkit of investors to assess biodiversity risk. It provides guidance enabling investors to assess biodiversity risks and impacts, and identify opportunities to participate in relevant global stewardship initiatives in this rapidly changing landscape.
The toolkit comprises a glossary of technical terms, information about the TFND framework, and open-source and paid for biodiversity tools. It also outlines stewardship opportunities, such as the Finance for Biodiversity Pledge, Nature Action 100 and the Finance Sector Deforestation Action Initiative.
TNFD-aligned nature risk management tool
S&P Global Sustainable1 has launched a Taskforce on Nature-related Financial Disclosures (TNFD)-aligned dataset that assesses a company’s impact and dependence on nature across its operations with the aim of helping investors manage biodiversity risk.
The Nature & Biodiversity Risk dataset can be accessed through S&P Capital IQ Pro and covers more than 17,000 companies and 1.6 million assets. It uses nature-related risk metrics such as a dependency score and ecosystem footprint to create a nature risk profile.
Biodiversity risk exposure tool
Clarity AI and impact data provider Gist Impact have developed a tool that shows investors their exposure to companies that have a negative impact on biodiversity.
The biodiversity impact assessment product uses biodiversity data that is company-specific, geographically accurate, and provides a holistic coverage of biodiversity impact drivers. It also aims to align with upcoming regulatory developments such as the Sustainable Finance Disclosure Regulation and the TNFD.
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