The Natural Capital Alliance has launched a new tool intended to show investors the biodiversity dependencies and impact of their portfolios.
UN-backed ENCORE biodiversity module allows investors to experiment with different scenarios, assessing the biodiversity impact of each one. It is focused on the agriculture and mining sectors as it says half the mining sector’s potential for reducing species extinction exists within just 2% of mines and more than 60% global potential within cropland.
[See also: May 2021 issue of ESG Clarity digital magazine – a biodiversity special]
The Natural Capital Alliance is a collaboration between the UN Environment Programme World Conservation Monitoring Centre, the UN Environment Programme Finance Initiative and Global Canopy.
Corli Pretorius, deputy director, UN Environment Programme World Conservation Monitoring Centre, said: “Financial institutions are increasingly aware that biodiversity loss is an urgent issue they must tackle. The challenge has been to gain a more granular understanding of how biodiversity risks and opportunities show up in specific portfolios.
“Now, financial institutions can use the new module to understand the biodiversity risks and opportunities in their portfolios; they can prevent or account for the negative impacts on nature, while directing investments to better outcomes for people and planet.”
The ENCORE biodiversity module complements the Alliance’s online tool, where investors can click through and assess certain factors such as ‘animal-based energy’ and see the materiality rating of things involved in its production processes.
Niki Mardas, executive director of Global Canopy, said: “Data is key to unlocking finance sector action on biodiversity loss, and the missing link that financial institutions tell us they urgently need to shift their financing and investment away from nature-negative activities and towards nature-positive ones.
“The ENCORE tool has already been used by key finance sector players, like the Dutch Central Bank, to explore nature-related risks across entire markets. Now the new ENCORE biodiversity module enables individual financial institutions to take further targeted action.”
