A new tool has been launched that allows investors to explore the potential impact of their investment activities in agriculture and mining on biodiversity loss, in particular species extinction and the loss of “ecological integrity”.
Eric Usher, head of the UN Environment Programme Finance Initiative (UNEP FI), said the tool “allows financial institutions to take material action to pivot the real economy towards a nature-positive future”.
The ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) biodiversity module is an extension of the already existing online tool of the same name. Over 30 financial institutions participated in the development and testing of the module, including APG Asset Management, BNP Paribas Asset Management and EOS at Federated Hermes.
According to the organisations behind the tool, companies face increasing physical, market, regulatory and reputational threats associated with biodiversity loss.
They said the new module allowed investors to map their current exposure and identify pathways to increase their positive impact within agricultural and mining portfolios. It provided guidance on company engagement, enabling financial institutions to work with stakeholders in high-priority areas to adapt production practices with the aim of making them better for nature.
According to analysis done using the module, 50% of the mining sector’s potential for reducing species extinction risk lies with just over 2% of mines globally.
The world’s ecosystems have declined by 47% globally on average compared to their earliest estimated states, with 1 million species at risk of extinction, according to a 2019 report by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.
Usher added: “Replenishing and rebuilding biodiversity is an urgent global priority and those financial institutions which show market leadership by being early movers may have a considerable competitive advantage.”
More granular understanding
Biodiversity loss is rising up the global policy agenda and leading investors to increasingly take it into account. The Council on Ethics for Sweden’s big four national pension buffer funds has said it is planning to increase its involvement in biological diversity, and some asset managers have signed up to biodiversity initiatives.
Corli Pretorius, deputy director of the UN Environment Programme World Conservation Monitoring Centre, indicated the new ENCORE module was a response to the challenge investors faced of gaining a more granular understanding of how biodiversity risks and opportunities show up in specific portfolios.
The launch of the new ENCORE tool comes a day after the Green Finance Institute launched a set of recommendations for the financial sector and and public sector to embed nature within financial decision-making.
The ENCORE tool was launched by the Natural Capital Finance Alliance, which is a collaboration between the UN Environment Programme World Conservation Monitoring Centre, UNEP FI and Global Canopy. The Swiss Federal Office for the Environment funded the development of the biodiversity module.
The tool is a free online resource and available by signing up here.
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