S&P Global Sustainable1 and the UN Environment Programme (UNEP) announced today the launch of Nature Risk Profile, a new methodology aimed at enabling companies and investors to assess and analyze companies’ nature-related risks, including impacts and dependencies on biodiversity.
The new methodology comes as businesses and financial institutions increasingly focus on nature and biodiversity risk, and as global efforts to address nature-related issues begin to pick up pace. Last month, for example, global governments adopted the Kunming-Montreal Global Biodiversity Framework at the COP15 UN Biodiversity Conference, agreeing to a set of goals aimed at ending biodiversity loss, protecting natural ecosystems and ramping biodiversity-related financing.
Companies are also facing increasing pressure to assess and report on nature and biodiversity-related issues, with new disclosure systems emerging such as the Taskforce on Nature-related Financial Disclosures (TNFD), currently under development. In December, the International Sustainability Standards Board (ISSB) of the IFRS Foundation announced plans to add requirements for companies to provide transparency on impacts and risks related to natural ecosystems to its Climate-related Disclosure Standard, with a particular focus on the TNFD’s work.
S&P and UNEP said that the new methodology aligns with the TNFD’s emerging approach, and will support the implementation of its disclosure framework.
Dr Richard Mattison, President of S&P Global Sustainable1, said:
“Against the backdrop of net zero commitments from investors and companies, it is essential that net zero for climate should be net positive for nature in line with the important work of the TNFD. The development of this new methodology will be key to unlocking better understanding, analysis and action around nature-related risks for companies and investors.”
Developed by experts from across the conservation, business, and finance communities, the new methodology outlines metrics and data enabling the identification and quantification of companies’ nature-related exposure, covering areas including risks related to companies’ impacts and dependencies on biodiversity, as well as potential risks arising from proximity to biodiverse areas.
The methodology’s risk metrics are calculated by combining company-level information and best-practice nature-related data, using science-based impact and dependency measurement tools including the Exploring Natural Capital Opportunities, Risks and Exposure database and the developing Ecosystem Integrity Index.
Neville Ash, Director of UNEP World Conservation Monitoring Centre, said:
“The methodology provides a major step forward to deliver the actions required for transformative change and support the finance sector’s critical contribution to delivering the ambitions of the Kunming-Montreal Global Biodiversity Framework. This methodology links science, policy and finance to bring nature to the heart of financial decision-making.”