Biodiversity Footprint for Financial Institutions: Exploring Biodiversity Assessment in 4 cases

Economy has a direct impact on nature: Economic activities require use of land and water and in most cases they cause degradation of nature, emission of greenhouse gases and environmental pollution. Financial institutions play a key role in this field by financing economic activities. Thus, all financial instruments, including investments and loans, have an impact on biodiversity. However, these impacts don’t always have to be negative. Through investing in reforestation or nature restoration, financial instruments can also be used for creating positive impact on the nature. Therefore, it is important to be aware of the (potential) impacts of economic activities and their financing.

The Biodiversity Footprint Financial Institutions (BFFI) is a tool that is developed to measure the impact of financial institutions on biodiversity. In the report ‘Exploring Biodiversity Assessment’ (see the link below), the BFFI tool was applied to four different cases in the financial sector in collaboration with seven Dutch financial institutions, namely Achmea, APG, ASN Bank, ASR, ING, FMO and NWB.

The case studies allowed the participating financial institutions to gain insight over how the biodiversity impact assessment method works, what kind of data is needed for an accurate assessment of footprint and how the financial institutions can interpret and make use of the results. Main insights of the report are as the following:

  • The case studies show that climate change and land-use are by far the most important drivers of biodiversity loss.
  • Location specific context is valuable for measuring footprint of financial institutions, but it should be kept in mind that the specifics of a location varies from another one.
  • The case studies provide insight in the similarities and differences between a biodiversity footprint and a carbon footprint.
  • Scope 3 upstream plays an important role in a biodiversity impact assessment, i.e. due to the land use in primary production (e.g. in agriculture). However, several case studies showed that scope 3 downstream may also play an important role.
  • Insights from the footprint on the main drivers of biodiversity loss in specific sectors can be used as an input to a biodiversity policy, to develop or adjust investment criteria and to inform investment decisions
  • The BFFI tool can also be used to measure the impact of an index containing 1500 multinationals.