The food products industry has the largest biodiversity footprint, followed by oil, gas, and chemicals, said a study of the impacts of 2,369 companies published on Wednesday.
Companies in the food sector have the largest negative impacts across absolute and intensity approaches, primarily due to the impacts of their supply chains on land, the Finance for Biodiversity (FfB) Foundation said.
FfB analysed the companies in the MSCI All Country World Index (MSCI ACWI), along with some firms from the Nature Action 100 initiative. This study, which expands on a 2023 pilot of 250 corporations, was conducted in collaboration with consultancy Global Balance.
A small number of companies had disproportionately high negative biodiversity impact scores, with around 67% of the total estimated impact coming from the top 250 highest-impact companies.
“Among the top 10 highest-impact companies, five are from the food products industry, and three from the oil, gas, and consumable fuels industry,” FfB said in the report.
Food products have the highest reliance on ecosystem services. Of the top 10 companies with the greatest dependencies, nine were from the food products industry.
Other industries with significant dependencies include beverages, tobacco, textiles, and water utilities.
“Dependencies on ecosystem services are not inherently a problem. They become a concern only when they translate into higher risks for companies and investors, such as when demand for an ecosystem service exceeds its supply,” said FfB.
Company size, value chain position, and industry all influence negative biodiversity impacts, the study said.
FOUR FOOTPRINTING TOOLS
The research drew from four leading biodiversity impact measurement tools:
- Biodiversity Impact Analytics – Global Biodiversity Score (BIA-GBS), co-owned by Carbon4 Finance and CDC Biodiversite
- Corporate Biodiversity Footprint (CBF), developed by Iceberg Data Lab
- Biodiversity Footprint for Financial Institutions (BFFI), developed by ASN Bank, PRe Sustainability and CREM
- Global Impact Database (GID) tool, developed by Impact Institute
Tool developers use Mean Species Abundance (MSA) and Potentially Disappeared Fraction of species (PDF) metrics.
Footprinting methodologies vary due to differences in the data they use. Some tools include the full value chain, while others do not. FfB calculated normalised impact and dependency scores, on a 0-100 scale, by averaging results from the four tools.
The end results in the report were estimates from scores representing potential values rather than actual measurements, the report stressed.
“The results should be interpreted with caution and used in conjunction with other assessment methods.”
Challenges in the study arose from gaps in the biodiversity and corporate data market. The assessment did not incorporate location-specific information.
Not enough companies linked to the agricultural supply chain have board-level expertise in biodiversity, despite the surge in nature commitments, an executive at Morningstar Sustainalytics said recently.
By Thomas Cox – t.cox@carbon-pulse.com
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