NEW YORK (September 15, 2022) — ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today announced the launch of its Biodiversity Impact Assessment Tool, ahead of Climate Week NYC 2022 and UN Biodiversity Conference, COP15, to support investors seeking to align with rapidly evolving voluntary and statutory biodiversity disclosure frameworks across the globe, and to help investors measure the impact of their investment portfolios on biodiversity.
As well as helping investors to keep pace with evolving global frameworks, including the UN Convention on Biological Diversity and the Task Force on Nature-related Financial Disclosures, the ISS ESG Biodiversity Impact Assessment Tool also supports relevant, specific local-market and regional disclosure and reporting requirements. In Europe, these include Article 29 of the French Law on Energy and Climate, the EU Sustainable Finance Disclosure Regulations’ (SFDR) Principle Adverse Impact (PAI) indicators, such as PAI 7: activities negatively affecting biodiversity sensitive areas, plus the EU Taxonomy’s Environmental Objective 6: protection and restoration of biodiversity and ecosystems – Do No Significant Harm (DNSH) principle to ensure that economic activities are not detrimental to the ecosystem and status of protected habitats and species.
Developed by a team of biodiversity and modelling experts in partnership with Quantis, ISS ESG’s Biodiversity Impact Assessment Tool leverages a bottom-up assessment of a company’s business activities and supply chain to demonstrate the impact of operations on biodiversity. As part of the assessment, two main biodiversity indicators will be provided: 1) Potential Disappeared Fraction of species (PDF) – as part of the Life Cycle Assessment (LCA); and 2) Mean Species Abundance (MSA). As part of the assessment, ISS ESG considers 10 environmental (LCA) midpoint factors, including: Climate Change, Marine Acidification, Fresh Water Acidification, Terrestrial Acidification, Freshwater Eutrophication, Marine Eutrophication, Freshwater Ecotoxicity, Water Availability, Land Transformation, and Land Occupation. The Biodiversity Impact Assessment Tool coverage will include 7,400 issuers, the same as ISS ESG’s Corporate Rating Universe. The full solution will include approximately 600+ individual factors (including impact per region and activity) derived from millions of individual datapoints allowing for granular analysis and understanding.
To support those investors seeking to increase their impact, and comply with statutory and voluntary investment stewardship requirements such as SFDR, country-based stewardship codes, PRI reporting and SRD II, ISS ESG’s Biodiversity Thematic Engagement Solution facilitates engagement on behalf of participating investors seeking to improve transparency around biodiversity impact and strategies to manage nature-related risks. Using its proprietary Biodiversity Impact Assessment Tool to select companies for engagement, the solution focuses on two industries with a high impact and/or dependency on nature: Food Products and Mining & Integrated Production. Thirty companies have been identified for engagement on biodiversity issues in the next two-year engagement cycle.
Dr. Maximilian Horster, Head of ISS ESG said: “Navigating the various biodiversity-related transparency and regulatory frameworks across the globe has now been made easier by ISS ESG’s new tool. Its comprehensive package of biodiversity datapoints and robust impact assessment methodology helps investors to measure their portfolios’ biodiversity impact and address imminent and evolving regulatory reporting requirements globally.”
About ISS ESG
ISS ESG solutions enable investors to develop and integrate responsible investing policies and practices, engage on responsible investment issues, and monitor portfolio company practices through screening solutions. It also provides climate data, analytics, and advisory services to help financial market participants understand, measure, and act on climate-related risks across all asset classes. In addition, ESG solutions cover corporate and country ESG research and ratings enabling its clients to identify material social and environmental risks and opportunities. For more information, please visit us at: www.iss-esg.com
Executive Director, ISS