BioScope tool helps companies understand biodiversity impact of value chains

10 February 2017

The planet's rich biodiversity faces considerable burdens from human economic activity, from habitat destruction to climate change. While a host of companies are looking to clean up their acts, their often overlooked and opaque supply and value chains continue to pollute biodiversity at scale. In a bid to help companies better understand the ecological footprint of their operations, Arcadis, PRé Consultants and CODE have developed the 'BioScope' tool.

The planet’s rich biodiversity is under threat from a host of man-made externalities, largely from the effects of habitat destruction, invasive species, pollution, human over-population and over-harvesting. Estimates from the International Union for Conservation of Nature suggest that of the 79,800 species on The IUCN Red List, more than 23,000 are threatened with extinction.

Many of the destructive practices affecting global biodiversity are the consequences of commercial intent, from cost cutting to unsustainable production expansion. In many cases the effects happen as part of the wider supply or value chain of companies, that themselves claim to be responsible stewards of the environment due to their own limited impact.

BioScope tool helps companies understand biodiversity impact of value chains

As the reality of negative effects of a range of pollutants, from greenhouse gasses to persistent chemicals, and unsustainable practices, from habitat destruction to farming methods, on the world’s climate, habitats and ecology becomes apparent to world leaders, moves are being taken to safeguard the planet’s biodiversity, and human habitability, for posterity.

One of the latest initiatives originated in the Netherlands. Platform Biodiversity, Ecosystems and Economy (Platform BEE), which is a Dutch Ministry of Economic Affairs funded cooperation between the Dutch employers’ organisation (VNO-NCW) and the International Union for the Conservation of Nature The Netherlands (IUCN NL), recently commissioned a consortium of firms to develop BioScope. The new tool, developed by Arcadis, PRé Consultants and CODE, supports businesses assess the negative effects their respective supply and value chains have on the environment.

BioScope leverages data from the Exiobase database, which contains trade flows and the related environmental emissions and stressors from 170 sectors in 43 countries, covering the much of the world’s measured economic activity. The stressors are modelled in terms of their impacts on biodiversity using the ReCiPe characterisation method.

The tool includes a range of key drivers, including climate change, terrestrial acidification, freshwater eutrophication, terrestrial, marine and freshwater ecotoxicity, agricultural land occupation and water scarcity. Data can be modelled for businesses based on a variety of needs, which includes an indicative overview of the impacted countries or regions, plotted on a world map.



Private equity firms ramp up sustainability focus

19 April 2019

In line with business leaders across the industrial gamut, private equity firms are increasingly on board with sustainability projects. According to a new study, the investment arms for major funds are implementing a number of strategies aimed at supporting sustainable economic development in line with global goals.

While the business world has finally begun to acknowledge the danger of climate change, effective action plans remain difficult to achieve. The Paris Agreement has stipulated a clear target for the decades leading up to 2100, although massively reducing emissions while not crashing the economy could be a tall order.

Businesses that are able to acquire capital can use it to boost productivity and output, thereby creating a virtuous cycle of development. However, some businesses are better able to utilise resources than others, both in terms of their relative productivity, as well as the value of the respective outcomes relative to costs (including environmental harms). Financing can therefore provide an avenue to select businesses that are aligned with various global sustainability goals, while shunning those that drive little or unsustainable social value creation.

Top moves made by investment arms towards responsible investment

Profit has for the longest time been the central criterion for investment decisions. Yet profit at any cost is increasingly seen as creating considerable social harms, while often delivering only marginal value. As a result, the private equity sector, which was initially sluggish to change its ways with regards to sustainability, has started to see the topic as an opportunity as much as a challenge.

A new study from PwC has explored how far sustainability goals have become part of the wider investment strategy for private equity (PE) firms. The report is based on analysis of a survey of 162 firms and includes responses from 145 general partners and 38 limited partners.

Maturing sustainability

Top-line results show that responsible investment has become an issue for 91% of respondents. For 81% of respondents, ESG (environmental, social, and corporate governance) was a board matter at least once a year, while 60% said that they already have implemented measures to address human rights issues. Two-thirds have identified and prioritised Sustainable Development goals that are relevant to their investment segments.

Change in concern and action on climate-related topics over time

While there is increasing concern around key issues, from human rights protections to environmental and biodiversity protection, the study finds there are mismatches between concern and action. For instance, concern among investment vehicles around climate change has increased since 2016.

In terms of risks to the PE firm itself, concern has increased from 46% of respondents in 2016 to 58% in the latest survey. However, the number who have taken action remains far below those concerned, at 9% in 2016 and 20% in 2019. Given the relatively broader scope of investment opportunities, portfolio companies face higher risks – and more concern – from PE professionals, at 83% in the latest survey. However, action is less than half of those concerned, at 31%.

Changing climate

In terms of the climate footprint of the portfolio companies, 77% of respondents state concern in the latest survey. 28% of respondents are taking action through the implementation of measures to mitigate their concerns.

Concern and action taken on ESG issues

In terms of the more pressing issues for emerging responsible investment or ESG issues, governance concern of portfolio companies comes in at number one (92% of respondents), while 60% have taken action on it. Firms have focused on improving awareness – setting up policies and a range of training modules for their professionals around responsible investment decision making. Cybersecurity takes the number two spot, with 89% concerned and 41% implementing strategies to mitigate risks.

Climate risks take the number three spot in terms of concern for portfolio companies (83%), but falls behind in terms of action (31%). Health and safety track records are a key concern at 80% of businesses, with 49% implementing action. Gender imbalance within PE firms themselves ranks at 78%, which is being dealt with by 31%. A recent survey from Oliver Wyman showed that there is gender balance at 13% of GP teams in developed countries.

Biodiversity is also an increasingly pertinent topic, with risks from pollution and chemical use increasingly driving wider systematic risks around environmental outcomes. It featured at number eight on the ranking of most likely global risks for the coming decade, with its impact at number six. As it stands, biodiversity is noted as an issue at 57% of firms, with 15% implementing action.