Executive Summary
This white paper demonstrates how biodiversity impact assessment can be applied at the portfolio level and why it is relevant for financial institutions. For this white paper, biodiversity impact refers to the measurable pressure that a company’s activities and value chain place on ecosystems, quantified as the loss or degradation of species, habitats, and ecosystem services. By combining footprinting methodologies with impact monetisation, biodiversity loss can be expressed in financial terms and compared directly to investment returns. This provides portfolio managers with a practical tool to identify risks, prioritise engagement, and inform allocation decisions.
The analysis shows that for a USD 10 billion portfolio invested in global equities, the resulting attributed biodiversity impact is approximately USD 2.63 billion per year. This analysis highlights several key insights. Biodiversity impacts are heavily concentrated in a small number of holdings, meaning that focused engagement or reallocation can alter the overall portfolio impact and return profile. Most impacts arise in upstream and downstream value chains rather than in direct operations, underscoring the need for portfolio managers to seek greater transparency in sourcing and supply chains. Integrating biodiversity into return calculations shows that some assets with positive financial performance may become less attractive once ecological costs are taken into account.
For portfolio managers, these insights translate into four practical recommendations. First, monetise biodiversity impacts before allocating capital, to adjust for their most material effects on performance. Second, engage with investees both on operational practices and on supply chain transparency, as value chain impacts dominate. Third, develop sectoral policies and set time-bound targets, especially in high-impact industries where transition risks are growing. Fourth, leverage best-in-class profiles and practices from investees as benchmarks to encourage broader improvement.
Taken together, these findings show that biodiversity assessment can be a powerful tool for portfolio managers to implement strategies that balance financial returns and biodiversity impact. The authors demonstrate that integrating biodiversity impact assessment into portfolio management is not only feasible but necessary to manage long-term risks, strengthen engagement strategies, and align investment decisions with sustainability goals.
The infographic below highlights key findings from the research.
