Identifying Nature-Related Risks in Financial Portfolios

This technical report presents a case study focused on identifying nature-related risks within financial portfolios, emphasizing the integration of the World Wildlife Fund Biodiversity Risk Filter (WWF BRF) indicators with MSCI GeoSpatial Asset Intelligence. It outlines the objective of providing a comprehensive dataset that allows investors to assess their exposure to nature-related risks at both global and local levels. The report details the methodology of the Biodiversity Risk Metrics, which aggregates nature-related risk information across operational assets of companies, facilitating a more nuanced understanding of risks that vary by location. The analysis begins at the portfolio level, identifying key risks such as water availability and pollution, before narrowing down to sectoral and individual company assessments. The findings highlight the importance of geospatially informed metrics in accurately gauging risk exposure and the potential misestimations that can occur when relying solely on country averages. The report concludes with recommendations for investors on engagement and stewardship priorities based on the identified risks.