A tool for investors to measure the biodiversity impacts of investments, initially using the Potentially Disappeared Fraction of species metric (PDF), has been launched by New York-based investment research company MSCI.
The tool, released at the end of May, offers portfolio biodiversity footprints using PDF in absolute terms, relative to revenue, or compared with a global benchmark, an MSCI spokesperson told Carbon Pulse.
The PDF metric shows a company’s potential contribution to global species extinction due to land use, GHG emissions, water consumption, and pollution.
MSCI is working on adding to the tool the metric of Mean Species Abundance, which measures the abundance of species relative to their presence in undisturbed ecosystems from 300 years ago, it said.
The strength of MSCI’s initiative, compared with other existing biodiversity footprinting options, is that it has built data from asset level using MSCI Geospatial – a risk tool based on the locations of a company’s facilities, the spokesperson said. Most biodiversity footprints rely on modelled data.
“The new biodiversity footprinting tool … leverages MSCI’s geospatial capabilities as well as new models designed to evaluate GHG emissions, water, and land use-related impacts on nature at asset level, then aggregated at issuer level,” Sylvain Vanston, executive director of climate change investment research at the company, said in a post on LinkedIn.
“This tool, which required the development of entirely new models, helps investors and banks to assess the extent to which their investments may harm nature.”
MSCI clients will have access to all of the underlying data points behind outcomes, alongside methodology guides, he said. “Although the new tool is rather complex, and its output requires some familiarising with new concepts and scientific notations, it’s not a black box.”
The biodiversity footprint is available as part of the company’s Nature and Biodiversity Solutions package, which also offers nature-related tools for measuring portfolio exposure to sensitive areas, capacity to mitigate negative impacts, and corporate growth opportunities.
The launch from MSCI has arrived in an increasingly busy space of nature impact measuring initiatives. A study in April found the that Taskforce on Nature Related Financial Disclosures and the EU Business & Biodiversity Platform recommended 17 such tools.
Many of these tools required updates as they did not align well with the Kunming-Montreal Global Biodiversity Framework, the study found.
The most commonly used biodiversity footprinting tools are those from French companies CDC Biodiversite and Iceberg Data Lab.
MSCI did not respond to a question on whether it seeks to compete with these organisations.
By Thomas Cox – t.cox@carbon-pulse.com
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