Posted on 16 January 2023
Davos, Switzerland, 16 January 2023: WWF is today launching a new tool, the Biodiversity Risk Filter (BRF) for companies and financial institutions at the World Economic Forum. The world's governments in December adopted a Global Biodiversity Framework, committing to act collectively and to immediately halt and reverse biodiversity loss by 2030. Business and financial institutions have a critical role to play in this, delivering the investment and business models needed to achieve the goals of the GBF. But many companies and investors are still struggling to understand the impacts and dependencies of their activities on nature and this tool aims to bridge that gap.
The BRF is a first-of-its-kind free online tool - available on the WWF Risk Filter Suite platform along with the Water Risk Filter tool - to help companies and financial institutions identify and take action on biodiversity-related risks across their operations, value chains, and investments. Produced in collaboration with Climate & Company, important methodological guidance demonstrates to users of the tool, particularly financial institutions, how the Biodiversity Risk Filter can be applied to a portfolio of companies. This is also illustrated by a case study on a representative investor portfolio.
Our global economy and financial system are deeply embedded in nature. With nature in crisis, companies and investors from all sectors are exposed to biodiversity-related risks. According to the World Economic Forum, more than 50% of global GDP, or US$44 trillion, is highly or moderately dependent on nature and its services.
In December 2022, more than 330 business and financial institutions from 52 countries with combined revenues of more than $1.5 trillion urged world leaders to adopt mandatory requirements for all large businesses and financial institutions to assess and disclose their impacts and dependencies on biodiversity by 2030. However, up to now, understanding biodiversity-related risks and opportunities along the value chain and across different locations, using a defensible science-based approach, has been one of the most challenging tasks for companies and financial institutions striving to develop nature-positive business models.
“Increasingly, companies and financial institutions recognize the business case for tackling biodiversity loss, but many simply do not know where to start. Understanding biodiversity-related business risks is the first step towards being able to tackle them and a prerequisite to setting relevant biodiversity targets, something many companies are likely to look at during this year following the adoption of the Global Biodiversity Framework. This tool helps them to map and assess biodiversity-related risks, enabling them to prioritise investments in areas that will make the most impact in mitigating their risks,” says Rebekah Church, WWF’s Global Biodiversity Stewardship Lead.
As a spatially explicit tool prioritising issues and locations from a nature and business perspective, the Biodiversity Risk Filter can assess biodiversity-related risk for all industries and in all countries. It is a free to use, web-based tool, which aims to break down complex biodiversity information and gives businesses practical, decision-useful information in a visually comprehensible way. At the basis of the BRF are over 50 biodiversity-relevant data layers that collectively provide a global, holistic picture of biodiversity-related risk. As such, it includes information on species and ecosystems, protected areas, and the most important pressures on biodiversity such as deforestation, habitat destruction, pollution, land use change for agriculture etc. The data has been provided by WWF, IBAT, IUCN, UNEP-WCMC, ENCORE, RepRisk, FAO, the World Bank, NASA, among many others. It is the first ever platform that brings together such a diverse range of data specifically for the purpose of analysing biodiversity-related risks to corporates and financial institutions.
The tool builds on the success of the long-standing WWF Water Risk Filter, both of which can be accessed on the online platform: WWF Risk Filter Suite. While the Biodiversity Risk Filter provides general high-level assessment of biodiversity-related risks, the Water Risk Filter provides a more in-depth assessment of water-related risks (including operational risk assessment, higher resolution datasets and scenario risk assessment). Both Risk Filter tools help the private sector to develop sustainable business operations and investments and support alignment of companies’ and financial institutions’ sustainability commitments and engagements to global frameworks including the Taskforce on Nature-related Financial Disclosures (TNFD), Science-Based Targets Network (SBTN) and the UN Sustainable Development Goals (SDGs).
Additionally, specific methodological guidance developed by WWF and Climate & Company support especially financial institutions in using the WWF Risk Filter Suite tools. It explains how financial institutions can use existing data to understand risk at operational and supply chain sites and highlights how they can apply the results of the tools to get an overview of threats at the company- and portfolio level. Using this guidance, WWF and Climate & Company conducted a test case study on a representative investor portfolio of listed companies. The results show that the vast majority of the portfolio companies have a medium or high exposure to biodiversity-related risks. The case study also demonstrates that with the help of the WWF Biodiversity Risk Filter tool and methodological guidance, companies and financial institutions can start to analyze and identify potential biodiversity-related risk hotspots and prioritise areas for actions.
The WWF Biodiversity Risk Filter tool launches at a time when there is a growing consensus that we not only need to halt the ongoing destruction of the natural world, but also shift our economies and societies towards ones that exist in harmony with nature.
About the WWF Risk Filter Suite:
- This is a free, single login, online platform for the WWF Biodiversity Risk Filter (BRF) and Water Risk Filter (WRF) tools that covers all industry sectors and uses global datasets for full geographic coverage.
- Companies and financial institutions can upload and manage their data in a central online platform and perform their biodiversity and water risk analyses from there.
- Easy to use and customized to companies' unique contexts.
- The WWF Risk Filter tools are in alignment with frameworks such as Science Based Targets Network for Nature (SBTN) and Taskforce on Nature-related Financial Disclosures (TNFD). More specifically, these tools complement the SBTN five-step process by helping companies understand location-specific risks and prioritise where and how to act, and TNFD by providing assessments for biodiversity- and water-related risks and opportunities in alignment with TNFD’s guiding principles and disclosure recommendations.
The WWF Risk Filter Suite can can be accessed at https://riskfilter.org
About the Biodiversity Risk Filter Methodology Documentation
This document describes the underlying methodology of the WWF BRF tool, including a description of the risk assessment framework, underlying structure, data and limitations. In addition, it includes three theoretical chapters that provide support for companies and financial institutions on collecting the required input data for the WWF BRF and WRF Assess Module. Guidance A supports financial institutions with collecting location-specific proxy data on companies’ operational sites. Guidance B supports companies and financial institutions with collecting location-specific proxy data on supply chains. Guidance C provides support for financial institutions on how the location-specific output data from the WWF BRF and WRF Assess Module can be further processed and aggregated to the company and portfolio-level.
The WWF BRF Methodology Documentation including its additional guidance can be accessed at https://riskfilter.org/biodiversity/explore/data-and-methods
About the report “Tackling Biodiversity Risk” (Case Study)
With the support of the methodological guidance, WWF and Climate & Company have applied the BRF methodology to more than 600 companies listed on the MSCI ACWI index, a global index of listed companies, covering 24 industry sectors. The results from the case study show that the vast majority of the portfolio companies have a medium or high exposure towards biodiversity-related risks. The case study also demonstrates that with the help of the WWF BRF tool and methodological guidance, financial institutions can start to analyse and identify potential biodiversity-related risk within a broad portfolio of companies and that sufficient company and biodiversity data is available to conduct a comprehensive biodiversity risk analysis.
The report “Tackling Biodiversity Risks” including its case study on the MSCI All Country World Index can be accessed at https://riskfilter.org/risk-reports
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