Executive Summary
Nature risk is emerging as a concern for the financial industry, yet the quest for robust monitoring metrics remains a labyrinthine process. Financial institutions are increasingly aware of their dual relationship with biodiversity—both as dependents on ecosystem services and as contributors to biodiversity loss through their financing activities, yet despite growing guidance from bodies such as the TNFD, the sector faces a lack of clear direction – leaving many institutions uncertain about how best to measure and manage biodiversity risk. This report, supported by the Singapore Green Finance Centre, seeks to clarify the current state of biodiversity footprinting tools, and to encourage a more holistic and reflective approach to biodiversity risk management.
Biodiversity footprinting metrics, although imperfect, have moved the needle on biodiversity monitoring. Currently dominated by MSA-based approaches (mean species abundance), the modelled footprinting metrics are used to estimate the impact of corporations on biodiversity. However, the scientific and practical limitations inherent in these approaches, uncertainty surrounding estimations, and the risks of over-reliance on a single, imperfect indicator can potentially lead to unintended financial and ecological outcomes.
The infographic below highlights key findings from the research.
