Analysis firm S&P Global Sustainable1 on Wednesday launched a data set analysing nature and biodiversity risk for more than 17,000 companies, as it released research showing 85% of the world’s biggest companies depend significantly on nature for their operations.
The dataset includes dependency scores – the level of risk associated with a company’s reliance on 21 different ecosystem services – as well as company ecosystem footprints.
“Our research shows that 85% of the world’s largest companies have a significant dependency on nature, indicating the critical importance of greater transparency for market participants on nature-related risks and opportunities,” said Steve Bullock, S&P Global Sustainable1’s global head of research and methodology, in a press release.
“This new dataset signals a maturation of the conversation on nature and provides clear metrics quantifying the nature related dependency and impact of over 1.6 million global real assets.”
S&P has designed the dataset to help financials align with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), and applies the Nature Risk Profile – a methodology for analysing nature risk and dependencies developed by S&P in cooperation with UNEP.
Company dependency scores range from 0 to 1 based on identified ecosystem services, whereas the ecosystem footprint expresses company impacts on nature based on analysis of land area impacted, the degree to which ecosystems at facility locations have been degraded, and how significant the ecosystem is.
“In order to provide a decision-useful metric that enables comparison between business operations, land area, ecosystem integrity degradation, and ecosystem significance are brought together to calculate the equivalent impact on the most significant areas globally in terms of biodiversity conservation and ecosystem services provision. This produces an ecosystem footprint expressed as the equivalent number of hectares in the most globally significant ecosystems that would be fully degraded by the company’s operations,” S&P said.
When applying the dataset on the S&P 1200, a list of the world’s biggest public companies, the analysts found that 46% of them have at least one asset located in a key biodiversity area that could be exposed to future reputational and regulatory risks.
“S&P 1200 companies used an estimated 22 million hectares of land for their direct operations in 2021 to generate $28.9 trillion revenue,” the analysts found.
Using S&P’s ecosystem footprint methodology, that equates to fully degrading 2.2 million hectares of the most pristine and significant ecosystems globally.
Service providers are rapidly gearing up offers as demand from corporates on biodiversity-related products is rising amid increasing pressure on businesses to report and set targets on nature.
On Tuesday, sustainability tech platform Clarity AI and intelligence provider GIST Impact announced they have teamed up to launch a biodiversity assessment product to help clients identify and size their exposure to companies that have a negative impact on biodiversity.
“Together we’re providing access to credible biodiversity data that is company-specific, geographically accurate, and provides the most holistic coverage of biodiversity impact drivers. This data is critical for effective risk management, and to support action to curb further nature loss,” Pavan Sukhdev, founder and CEO at GIST Impact, said in a press release.
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