ESG data provider RepRisk has launched a new biodiversity impact tool for investors, the latest product that seeks to provide visibility into one of the fastest-growing parts of the green economy.
RepRisk Geospatial Analytics offers managers and owners of mining, oil and gas assets a detailed view of the proximity of their projects to natural resources and the potential impact that these will have on them. It maps those projects and assets over biodiversity risk data attached to more than a quarter of a million protected areas around the globe and around 16,000 internationally recognised Key Biodiversity Areas.
The company is utilizing “sensing data” generated by satellites and remote sensors to build a picture of the relationship between extractive industry assets – such as pipelines and mines – and the natural world. Such technology can help address some of the most pressing issues facing the planet, said RepRisk executive vice president Alexandra Mihailescu Cichon.
“If the conclusion of the work of the last few years is that climate change is a material financial risk, then by extension, biodiversity is also a financial risk,” Mihailescu Cichon told ESG Insight. “You can’t talk about climate change without talking about biodiversity – climate change has an effect on biodiversity and vice versa. Biodiversity loss then exacerbates climate change, and climate change can also destroy biodiversity.”
RepRisk joins financial services companies including ISSE ESG in providing data products that help investors link biodiversity risks to their investments, enabling them also to identify opportunities where their capital can do good while also generating healthy returns.
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Biodiversity data provision has grown with the emergence last year of the Taskforce for Nature-related Disclosures, an alliance of financial executives dedicated to improving risk reporting in order to shift investment towards protecting ecosystems. It has also benefited from the development of ever-more accurate geospatial modelling based largely on satellite imaging technology.
The swiftness with which the topic has gripped the financial services industry prompted FE Fundinfo’s head of ESG product Matthias Breier to tell a recent seminar that biodiversity loss had joined climate change among the chief concerns of investors. “It’s what everyone wants to report on,” he said.
The importance of the protection of nature to investors is likely to come under the spotlight at the COP15 biodiversity summit in Montreal, Canada, next month.
RepRisk’s service sources biodiversity data from United Nations-backed Integrated Biodiversity Assessment Tool (IBAT), which provides information on the vulnerability of land and habitats in any part of the world. GPS geospatial technology is then used to link that data to the locations of mining, gas and oil assets.
When integrated with RepRisk’s company-, sector- and country-level data amassed over 16 years, risk scores can be created that clients are able to incorporate into their risk-management models, portfolio due diligence strategies and quantitative analyses.
“Our clients take either our scores or the granular data below to see exactly what the risk incidents were, what the timing of those incidents were and what the links are to various ESG factors,” said Mihailescu Cichon. “A lot of our clients, as well as academics, use that data to then make a link between ESG risks and financial performance.”
Among the datapoints that RepRisk’s Geospatial Analytics tool has been able to identify is the fact that almost three-quarters of the world’s oil and gas projects are within 50km of environmentally sensitive sites including national parks and areas of special scientific significance.
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