Morgan Stanley’s Institute for Sustainable Investing and the Stanford University-based Natural Capital (NatCap) Project announced the development of a new tool aimed at enabling companies and investors to assess the potential impacts of projects and activities on natural ecosystems.
The new ecosystem footprinting tool is open-source and free for use.
According to Morgan Stanley and Stanford, the launch of the new solution comes as companies and investors are increasingly looking to consider and measure the impacts of their activities on natural assets such air, water, soil, and biodiversity, and how impacts to ecosystem services create risks and opportunities. Additionally, companies are likely to increase reporting on nature-loss and biodiversity, following the recent release by the Taskforce on Nature-related Financial Disclosures (TNFD) final recommendations for nature-related risk management and disclosure. The TNFD is providing a case study by NatCap about the new tool as additional guidance for the assessment of nature-related impacts and dependencies.
Lisa Mandle, Director of Science-Software Integration and a Lead Scientist at the Natural Capital Project, said:
“There have been criticisms of ESG because where companies’ metrics come from can be a bit of a black box. This tool can help with some of that reporting in a way that is very open and science-based, including for those following the TNFD framework.”
The new tool calculates the impact of human-made structures on ecosystem services based on their physical footprint on the landscape. According to Mandle, the solution would allow companies choosing between locations to develop a new facility to compare impacts, such as water quality from loss of ecosystems, people’s ability to access nature, as well as exposure to coastal flooding and erosion. Mandle said:
“We looked, for example, at lithium mines, which are key to the renewable energy transition: we can use satellite imagery to look at their footprint – how much space they are taking up – and the geography of where it’s located to assess its consequences. This could help determine where this resource could be obtained for the lowest environmental – and human – impact.”
Matthew Slovik, Managing Director and Head of Global Sustainable Finance at Morgan Stanley, said:
“Natural capital is a relatively new field as it relates to finance, but we believe it will be increasingly relevant to our clients. Investors are becoming more interested in using data to make informed decisions about natural capital and ecosystem services impacts, and we hope this tool can now support the market in that regard.”
Click here to access the new tool.