Biodiversity impact assessment for finance

• DOI: 10.1111/jiec.13515
• Publication Date: 2024-08-13T11:26:18Z
• Authors: Viktoras Kulionis; Stephan Pfister; Jeanne Fernandez
• Keywords: Industrial Ecology

Abstract Biodiversity loss, driven by human activities, significantly affects the environment, societies, and economies. Using extended multi‐regional input–output (EEMRIO) life cycle assessment (LCA) techniques, we offer insights into how these methodologies can be used to inform financial decisions related biodiversity focusing on two key aspects: impacts ecosystem service dependencies. Our method combines spatially explicit characterization factors from LC‐IMPACT with Global Resource Input‐Output Assesment (GLORIA) database estimate impacts. As a case study assess impact of MSCI All Country World Index (MSCI ACWI) which consist about 3000 large‐ mid‐sized companies, 23 developed 24 emerging countries. The results demonstrate that most is caused in Americas, followed Asia, despite its low representation index's country weight (6%). Europe shows least impact. These emphasize need account for global supply chain linkages as products sold one might have significant elsewhere due sourcing production inputs. Second, our identify main determinants impact: land use, water stress climate change. Although localized few sectors, distinct characteristics sectors require industry‐specific mitigation approaches. Finally, double materiality show both, influence companies reciprocal effects. Companies neglecting risk setbacks, making it crucial concern investors.