Geneva, 2 February 2023

Asteria, a Geneva-based independent asset manager dedicated to social and environmental impact investing now measures the biodiversity impact of its liquid portfolios, having developed a Python tool based on the Biodiversity Footprint for Financial Institutions (BFFI) methodology with Entreprise for Society (E4S).

Wildlife is disappearing worldwide, in the oceans, in the rivers, and on land. The main cause is simple: human activity. Financial institutions have a major influence on the economy and the effects businesses have on the environment. However, we cannot change what we cannot measure. For this reason, Asteria partnered with E4S through their Transformative Project, to develop a methodology to measure the biodiversity impact of the companies held inportfolio.

This project started with a a careful literature review. The selection of the Biodiversity Footprint for Financial Institutions (BFFI) methodology seemed the most appropriate. As Asteria’s methodology to identify impactful companies, BFFI starts from the revenue of each company in different economic activities and assesses the impact on the biodiversity inthree key areas: marine species, freshwater species, and terrestrial species.

To inform the framework, about revenues and environmental pressures (e.g., green gas emissions, land use, water usage) hey used the data from Trucost and EXIOBASE.

The third step consisted of plugging the ReCiPe2016 framework, a harmonised life cycle impact assessment method built on extensive scientific research to convert these environmental pressures into biodiversity impact.

Later on, the results are re-scaled from 0 to 1, where 0 represents the least harmful company in terms of biodiversity loss. . The analysis of the constituents of the MSCI ACWI Index have an overall scores that are below the median, indicating that the largest negative impact on biodiversity is not driven by the largest holdings in the index. This can be explained by a sectoral breakdown analysis, which finds that the utilities, energy, and materials sectors have the highest negative impact on biodiversity, while communication services, financials, information technology, and real estate sectors have a much lower impact.

By identifying the activities and companies with the greatest impact on biodiversity, investment managers can make informed decisions, mitigate the impact of their portfolios and reduce their exposure to biodiversity risks.

“Collaboration is key to creating a sustainable future. This transformative project on biodiversity exemplifies the power of industry perspective and scientific expertise coming together to generate a positive impact.“

Dries Cornilly, Investment Manager, Asteria