MSCI ESG Research has launched a nature framework with a checklist to help investors start identifying which metrics to consider when incorporating biodiversity into the investment process.
Over eight topics, starting with a familiarisation of nature definitions and ending with alignment with international standards, MSCI aims to help investors start identifying which questions to ask.
For example, the first three topics on the checklist are:
- Brief yourself on the basics of biodiversity and its connection to finance
- Follow biodiversity-related policy developments and market initiatives
- Assess your portfolio’s exposure to biodiversity- and nature-related risks and impacts
“Investors can start their biodiversity journey now, addressing both risks and impacts from investee companies with a comprehensive approach, and start tracking progress,” MSCI said in the framework, an investor guide to biodiversity risks.
“Despite data and model challenges, frameworks for management exist, regulatory pressure is growing and models are improving.”
For many investors, the “biggest challenge” is figuring out what type of data and metrics to use, MSCI said.
Sylvain Vanston, executive director of climate change investment research at MSCI, said he believed the framework “captures everything, and it should help understanding which metrics are to be used”, in a post on LinkedIn.
While the post had received over 400 likes at time of writing, Raviv Turner, founding member of the Nature Tech Collective, formerly the MRV Collective, questioned the initiative.
“While I appreciate the attempt to try and simplify things, nature is not climate, the simple truth is that all the biodiversity frameworks in the world can’t replace well traceable supply chains with high quality asset level data,” Turner said on LinkedIn on Wednesday.
“Until we close that data gap, we are left with outdated, proxy level input-output models on direct impact only which is maybe 10% of the impact on nature.”
Investors need to ask companies to use gather on-the-ground data instead of using models, otherwise they risk ‘greenwashing’, he added.
SCREENING TOOL
Investors can start tackling nature risks by identifying companies whose activities could be considered key drivers of biodiversity loss using the MSCI screening tools, MSCI said.
The screening tools are part of an MSCI nature and biodiversity metrics “data package” that aims to measure nature footprints, identify the capacity to mitigate impacts, and identify transition risks and growth opportunities.
Last year, MSCI ESG Research launched the tool to help investors screen for companies with assets in locations that have risks associated with biodiversity and deforestation.
The tools combine “thousands of asset data points, overlayed with our proprietary location-specific biodiversity metrics”, according to the MSCI website.
By Thomas Cox – t.cox@carbon-pulse.com
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