S&P Global Sustainable1 Introduces Nature & Biodiversity Risk Dataset for Enhanced Understanding of Corporate Impact on Nature

S&P Global Sustainable1, a leading provider of sustainable finance solutions, has unveiled its Nature & Biodiversity Risk, a new dataset assessing nature-related impacts and dependencies of companies accross their direct operations, offering valuable insights at the asset, company, and portfolio levels. Nature & Biodiversity Risk supports companies, investors, and entities in comprehending, managing, and mitigating their exposure and portfolios to nature-related risks and impacts.

Nature & Biodiversity Risk dataset covers over 17,000 companies and more than 1.6 million assets. It provides an array of nature-related risk metrics, including a dependency score and ecosystem footprint measure, enabling a deeper understanding of a company or asset’s dependancy on and impact on nature. To achieve this, the dataset leverages the Nature Risk Profile, uses a methodology jointly developed by S&P Global Sustainable1 and the UN Environment Programme (UNEP) launched earlier this year.

Thomas Yagel, Chief Operating and Product Officer at S&P Global Sustainable1, highlights the growing demand from companies and investors to quantify their dependence on nature and the impact of their operations on location-specific ecosystems.

“From the launch of the Taskforce on Nature Related Financial Disclosures (TNFD) in 2021 to the significant commitments made at COP15, there is an increasing demand from companies and investors to be able to quantify both their dependency on nature and the impact of their operations on location-specific ecosystems. »

Thomas Yagel, Chief Operating and Product Officer at S&P Global Sustainable1

The purpose  of Nature & Biodiversity Risk is to address this demand by providing companies and investors with the tools to comprehensively assess and manage nature-related risks and opportunities.

The dependency score, one of the key metrics in the Nature & Biodiversity Risk dataset, evaluates the level of reliance a business has on 21 different ecosystem services within the regions it operates. It also accounts for the expected resilience risk of the ecosystems providing those services where these businesses are operating around the world. The dependency score ranges from 0 to 1.0, where 0 indicates no dependency risk and 1.0 represents a very high dependency risk.

The dataset also includes the Ecosystem Footprint, which measures a company’s direct operational impact on nature and biodiversity. This metric combines three key areas of analysis:

  • the land area impacted by the company,
  • the degree to which the location-specific ecosystem integrity is reduced (ecosystem degradation) and
  • the significance of the ecosystem impacted (ecosystem significance).

Steve Bullock, Global Head of Research and Methodology at S&P Global Sustainable1, underlines critical importance of greater transparency for market participants on nature-related risks and opportunities. These findings highlight a maturation of the conversation on nature and provides clear metrics quantifying the nature related dependency and impact of over 1.6 million global real assets.

Analyzing the S&P 1200, which represents the largest public companies globally, the dataset revealed several noteworthy insights. It was found that :

  • 85% of these major companies have a significant dependency on nature across their direct operations.
  • 46% of these companies have at least one asset located in a Key Biodiversity Area (KBA), exposing them to potential future reputational and regulatory risks.
  • The S&P 1200 companies utilized an estimated 22 million hectares of land for their direct operations in 2021, generating a staggering USD 28.9 trillion in revenue.
  • To put this into perspective, the ecosystem footprint is equivalent to fully degrading 2.2 million hectares of the most pristine and significant ecosystems globally, such as the most intact and biodiverse parts of the Amazon or Sumatran rainforests.

The dataset is aligned with the LEAP risk and opportunity assessment approach, as advised by the TNFD.

Source: S&PGlobal Sustainable1 Nature & Biodiversity Risk dataset