Nature is increasingly valued as a material financial risk, says Matthieu Maurin, CEO and co-founder of Iceberg Data Lab.
This year’s Living Planet Report by WWF highlights a devastating 73% decline in wildlife since 1970, threatening ecosystems, human populations and communities, as well as posing risks to businesses.
Environmental damage (especially biodiversity loss) disrupts supply chains, harms agricultural productivity, and erodes financial stability.
However, in the wake of this discouraging news comes a glimmer of hope: the international community is co-operating better than ever before.
At COP29, for instance, biodiversity and nature-positive investments will take centre stage. This year’s conference is set to elevate the dialogue on nature loss, with countries and corporations aligning their sustainability efforts more closely with biodiversity goals.
It is incumbent on all key stakeholders with the power to minimise biodiversity loss, including corporates and their investors, to muster efforts, resources and innovation, and help stave off an environmental tipping point towards a sixth mass extinction.
Nature-positive investments
The growing recognition of nature as a material financial risk is reshaping the way investors approach portfolio management. Nature-related risks such as deforestation, water scarcity, and biodiversity loss can have direct impacts on business performance, particularly in sectors reliant on natural resources.
Yet, nature loss presents not only a risk, but also a significant opportunity. According to The World Economic Forum’s ‘New Nature Economy Report,’ transitioning to a nature-positive economy could unlock $10.1 trillion in business opportunities and create 395 million jobs by 2030.
There is enormous potential for innovation in areas such as sustainable agriculture, reforestation, and ecosystem restoration.
Investors who are equipped with the right data and tools can capitalise on these opportunities, while contributing to the preservation and restoration of natural systems. By closing the nature data gap, we can unlock new avenues for growth, ensure the sustainability of our portfolios, and contribute to the creation of a resilient, nature-positive future.
Closing the nature data gap
Carbon tracking has advanced, but the ability to measure investment impact on nature lags. Closing this gap is key to integrating nature-positive strategies and unlocking new opportunities.
The need for robust data on nature-related impacts is clear. Investors are increasingly seeking to align their portfolios with sustainability goals, but without comprehensive data on how their investments affect biodiversity, deforestation, and ecosystems, their ability to make informed and nature-positive decisions is hindered.
To date, great strides have been made in the measurement of carbon emissions and energy consumption; however, there is much catching up to be done in terms of data related to more nuanced and broader impacts on nature.
Take supply change and product usage, for example, where indirect effects often go unaccounted for. Such impacts—particularly those captured under Scope 3 emissions—can represent up to 85% of a company’s overall environmental footprint.
Bridging the data gap
Closing the nature data gap will require innovative approaches that leverage technologies like advanced data analytics, artificial intelligence (AI), and real-time monitoring.
AI enables investors to look beyond traditional metrics and understand the greater impact of their environmental footprint. Nevertheless, considering the need to curate raw data, I believe the human element still -and will – remain crucial to minimise bias and continually improve these technologies.
At Iceberg Data Lab, for example, our data solutions combine AI, big data, and machine learning to deliver comprehensive insights into biodiversity and natural resource impacts. By processing vast amounts of data from satellite imagery, field studies, and corporate disclosures, companies like ours can offer a more complete view of business interactions with the natural world. This, in turn, empowers investors to adjust their strategies, directing capital toward projects that prioritise biodiversity.
A need for standardisation
While tech is helping to shrink the nature data gap to some extent, the current array of methodologies supplied by data providers presents a challenge.
With varying approaches used to measure biodiversity and natural resource impacts, there is a parallel need for standardisation of reported data. It is imperative that investors and rating agencies are supported with access to clear, reliable, and comparable data, enabling them to assess risks and opportunities consistently.
This is particularly important when it comes to Scope 3 impacts, which encompass emissions and resource use across a company’s entire value chain. Appraisal of an environmental impact cannot be limited to direct impact or to the facilities operated by a company.
Standardised reporting and data collection protocols will help ensure that investors have a sincere understanding of how their portfolios contribute to nature loss or, optimally, to nature restoration. Investors can’t just disclose “what is available” when that falls short of having a sincere view of the reality.
Organisations like the Taskforce on Nature-related Financial Disclosures (TNFD) should set standards regarding comprehensive reporting, or face the risk of information being deemed incomplete. Furthermore, the private sector must do more to adopt these standards.
Today’s risk, tomorrow’s opportunity
Nature loss presents an undeniable risk to the global economy, but it also offers investors a chance to drive transformative change. By embracing the tools available to measure and manage nature-related risks, the investment community can play a pivotal role in transitioning the economy to a nature-positive one.
We have a choice: either we continue on the current path to long-term financial and ecological instability, or we seize the opportunity to invest in the preservation, restoration and regeneration of our natural systems.
