By Marianne Haahr, Nature-related Finance Lead, Global Canopy

Marianne looks at how the ENCORE biodiversity module, a tool created in partnership with UNEP-FI and UNEP-WCMC, can help assess risks in the agricultural sector.

Why the sector matters for biodiversity

The loss of biodiversity, and society’s response to it, creates material risks and opportunities for banks, asset owners and asset managers.

While biodiversity risk goes beyond primary industries like agriculture, identifying and managing biodiversity risks in the agriculture sector, alongside the mining sector, is an important first step for financial institutions, as two primary industries that are particularly exposed to biodiversity risks.

60% of the global potential for reducing species extinction risk falls within cropland areas. Reducing all threats posed to species within these areas is crucial for achieving global biodiversity goals.

How the ENCORE biodiversity tool can help financial institutions assess risks in this sector
  • The module enables financial institutions to assess to what extent their financial activities in these industries are potentially driving species extinction risk and ecological integrity risk. The module then provides engagement guidance on the minimum level of biodiversity management practices required in order to be considered aligned with global biodiversity goals.
  • The ENCORE biodiversity module is an extension of the existing online ENCORE tool. A powerful database, the ENCORE tool already enables financial institutions to take the first steps towards identifying nature-related risks in their activities by setting out how economic sectors depend and impact on nature.
  • Biodiversity risk goes beyond primary industries like agriculture and mining. All industries are exposed: even those with little exposure to direct risks are indirectly exposed through their supply chains.

Challenge for agriculture: lack of asset level data

When developing the ENCORE biodiversity module, it was particularly tricky for us to develop a method for agriculture when we didn’t have an underlying asset level database to rely on. In comparison mining was much more straightforward. Financial institutions would benefit from working with companies to ensure production locations are mapped out and that data is made available. A lot of the data that currently exists is locked away behind paywalls, which also makes it difficult to develop open access methods like the one we have for ENCORE. Ideally this data should be accompanied by information on the management actions in place at each location to help determine actual impact instead of potential impact.

Next steps for biodiversity data and action in the agriculture sector
  • Use TNFD framework to increase corporate disclosures (final version due out in September 2023)
  • The ENCORE biodiversity module will be updated in line with the Global Biodiversity Framework agreed at COP15.
  • Biodiversity risk goes beyond primary industries like agriculture and mining. All industries are exposed: even those with little exposure to direct risks are indirectly exposed through their supply chains.

Explore the ENCORE biodiversity module