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Case Study

Sectoral biodiversity analysis in two levels

2 min read


An institutional investor (£700+ billion AUM) with a commitment to becoming a nature-positive firm needed to assess the biodiversity impact and environmental materiality of their portfolio. Their goal was to inform strategic investment
decisions, including reallocation from high- to low-impact sectors and investees.

Conducting Biodiversity Footprinting

GIST Impact produced company-specific biodiversity footprints for portfolio investees using peer reviewed Life Cycle Impact Assessment methodologies. The biodiversity metric, Potentially Disappeared Fraction (PDF), indicates the impact on global species diversity from a company’s operations and value chain. As with other aspects of materiality assessment, biodiversity impacts can vary widely within a given sector, depending on the location and environmental pressures of a company’s operations. These granular insights empowered the firm to analyse the biodiversity implications for their portfolio and to productively engage with its investees.

Insights: While Food & Staples Retail represented the largest absolute impact on biodiversity by sector, both Industrials and Real Estate Services had a similar proportional impact per $ of investment value. The Materials sector has a high impact relative to the investment size, whereas Consumer Durables and Services and IT services have a comparably low impact per $ invested.


Materiality Assessment Using Company-Reported Data

GIST Impact’s proprietary database of environmental drivers for 14,500+ companies was used to generate a detailed Materiality Heatmap that clearly identified which aspects of the firm’s portfolio have the largest impact on ecosystems, resource usage, climate, and pollution. The use of company-level data, rather than sector averages typically employed by other methods, provided the firm with confidence that the insights were highly relevant and actionable.

Insights: In addition to the intensive land use expected of Materials and Real Estate Services companies, these sectors also produce high levels of air and solid waste pollution. Modifying portfolio composition reveals opportunities to reduce impact with or without re-balancing across sectors.

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