Biodiversity - intro copy

Why biodiversity matters

Biological diversity is rapidly declining — and becoming a material risk to investors. That means they need advanced tools to measure impact and manage risk.

The variety of the Earth’s living species is declining at an alarming rate due to human activity, from habitat destruction to the emission of greenhouse gases resulting in climate change. Biodiversity loss poses an existential threat to ecosystems, the global economy and, in turn, to investors.

At MSCI, we have spent decades developing metrics and data for global investors to measure risks and opportunities related to climate change and environmental, social and governance (ESG) factors. We have applied that experience to our Nature and Biodiversity Solutions—an accessible framework comprised of biodiversity data and screens complemented with practical guidance for investors.

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Biodiversity - A material risk

A material risk to businesses

Economic risk from biodiversity loss could emerge at the asset, company or portfolio level. Biodiversity and climate change are inextricably linked. Biodiversity loss reduces nature's ability to absorb greenhouse gases — forests, wetlands and oceans annually absorb 5.6 gigatons of carbon. Climate change, in turn, takes a bigger toll on nature.

Companies are coming under more scrutiny: Regulators are intensifying their focus on the destruction of ecosystems and the Taskforce on Nature-related Financial Disclosures (TNFD) has launched a standard framework to report related risks and opportunities. Investors are expected to be encouraged or mandated to integrate nature and biodiversity considerations into their investment decisions.

Biodiversity - Dependencies graphic

Dependencies of industries on natural capital

Sources: MSCI ESG Research, World Economic Forum and PwC. 2020. “Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy.”, Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). 2020. "The Global Assessment Report on Biodiversity and Ecosystem Services."

Biodiversity - A growing momentum to act

A growing momentum to act

With our ecological foundations deteriorating, we can no longer ignore how companies are impacting, and being impacted by, nature and biodiversity. As biodiversity loss intensifies, more regulators, investors and companies are taking action.

  • Regulatory momentum

    The European Union is taking steps to mandate that products sold in the EU be deforestation-free and has mapped out a comprehensive plan to protect nature that includes biodiversity-related disclosure requirements for companies and investors.

  • Investor action

    Investors are forming coalitions for action, including the Partnership for Biodiversity Accounting Financials, the Finance for Biodiversity Pledge, Nature Action 100 and the Coalition for Private Investment in Conservation.

  • Emerging frameworks

    Groups such as the TNFD, the Science Based Targets Network, and Exploring Natural Capital Opportunities, Risks and Exposure are developing new biodiversity risk accounting metrics and tools.

MSCI Nature and Biodiversity Solutions

MSCI Nature and Biodiversity Metrics

MSCI’s Nature and Biodiversity Metrics package and supporting guidance framework provides multifaceted Nature and Biodiversity Solutions:

Evaluate company and portfolio impact on nature and biodiversity

Assess impact of nature and biodiversity loss on companies and portfolios

Framework image - Biodiversity

Introducing MSCI's Nature & Biodiversity Metrics Framework

A framework to help you manage nature and biodiversity risks and opportunities. Selecting the appropriate set of metrics is relevant to adequately assess risks and impacts since criteria can differ significantly in scope, objectives and applicability.

Biodiversity - Measuring impact with Biodiversity Footprinting

Measuring impact with Biodiversity Footprinting

Investors seeking to quantify the impacts of their investments on biodiversity across sectors or portfolios are increasingly relying on biodiversity footprinting. This approach generally starts by identifying the direct drivers of biodiversity loss, known as pressures, caused by a company. Now, these metrics are integrated into our Nature and Biodiversity Solutions.


Measuring impact with Biodiversity Footprinting

Biodiversity - seeing biodiversity

Powerful screening metrics to assess nature and biodiversity risks

As part of our Nature and Biodiversity Metrics, the biodiversity-sensitive areas and deforestation screens capitalize on MSCI’s broad coverage universe, vast data repositories and rigorous methodology. They are designed to enable you to address impacts on nature in your portfolios, identify companies with operations in ecologically sensitive areas, or assess exposure to potential direct and indirect involvement in deforestation.

Biodiversity - video

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Seeing biodiversity risks more clearly

Learn how to integrate biodiversity into your investment decisions with our Biodiversity Screening Metrics.

Download Transcript (PDF, 100 KB) (opens in a new tab)

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