On Biodiversity, Investment, and Change

Why Biodiversity Must Be the Next Frontier in ESG Ratings 

For years, ESG ratings have focused heavily on climate-related risks, especially carbon emissions. But what about biodiversity?

We are in the midst of a global nature crisis. According to the IPBES, over 1 million species are at risk of extinction, driven by land-use change, pollution, overexploitation, and climate change. These pressures don’t just harm the environment, they pose material financial risks to companies and investors.

Yet biodiversity remains underrepresented in most ESG rating methodologies.

The disconnect is becoming clearer:

The World Economic Forum ranks biodiversity loss among the top 5 global risks by likelihood and impact.

Over half of global GDP, $58 trillion, is moderately or highly dependent on nature, according to the World Bank.

Financial institutions are increasingly exposed to risks linked to biodiversity degradation through agriculture, mining, real estate, and more.

So, why isn't biodiversity fully embedded into ESG ratings?

Largely because measuring nature-related risks is complex. But that’s changing.

Initiatives like the TNFD (Taskforce on Nature-related Financial Disclosures), the EU’s CSRD with new ESRS E4, and biodiversity footprinting tools (e.g. GBSFI, ENCORE) are rapidly maturing.

 Integrating biodiversity into ESG isn’t a nice-to-have, it’s a necessity.

Investors, rating agencies, and financial regulators must:

1. Push for standardized nature-related disclosures

2. Develop quantifiable biodiversity KPIs

3. Include ecosystem dependencies and impacts in credit and investment analysis

The future of ESG is not just low-carbon, it's nature-positive.

Let’s evolve the system to reflect the full spectrum of sustainability risks and opportunities.