Abstract:
Biodiversity loss and water scarcity are
occurring at an unprecedented pace. Environmental degradation caused by
economic activity induces long-lasting consequences affecting global health, food security
and quality, poverty, migration and armed conflicts. Private-sector investors
that follow sustainable finance principles represent an important lever to
address global environmental and social challenges, as they can contribute to
switching the production and consumption systems and counteract environmental
degradation. Sustainable financial operations rely on sensitive, harmonized and
objective environmental data, but as of today, even the most transparent
companies disclose almost no data on their environmental impact and exposures.
This project aims to develop a scientifically
robust approach for rating companies with regard to their contribution and exposure
to environmental degradation. The tremendous improvement and increased
availability of Earth observation and complementary geodata offer enormous yet
underused potential to assess biodiversity and water systems changes. Unlocking
this potential provides new avenues to globally monitor biodiversity losses and
water risks caused by company activities.
We develop and adopt geoprocessing workflows to
analyze and model the spatial footprints of companies representing company
venues, production sites, or in general areas where companies are active. We relate
Earth observation data to locations of company assets and develop methods to assess
the capacity of ecosystems to sustain biodiversity and water and to monitor
company caused risks for biodiversity loss and water degradation across sectors
of activity. Based on scoping analysis, we will evaluate the suitability of
spatial measures for sustainable finance covering biodiversity, water risk and
environmental integrity accessible from spaceborne operational data. We also
integrate indirect life cycle-based impacts for spatialized (subnational,
biome- and watershed-related) biodiversity loss and water risk covering the
entire life cycle of the involved industrial sectors. We combine the spatial environmental
assessments with LCA methods to transform non-spatialized into spatialized
sustainability indicators.
We investigate how to replace company ratings
based on the companies' self-disclosed data with a more systematic, objective,
transparent and science-based process. We test the developed workflows on
selected case studies. We facilitate our research and innovation process
through collaborations with specialized companies and an advisory board formed
by key stakeholders.
Based on the project, a spin-off company further develops the
proof-of-concept into products for the rating of companies and for quantifying
material financial burdens to companies' assets, revenues, and in a further
stage, to their traded stocks and bonds. These products help investors and
companies implement new regulation beyond the EU Taxonomy on Sustainable
Finance, especially from the EU Biodiversity strategy for 2030, and achieve the
sustainability goals set by UN PRI and UN EPFI.
Project consortium:
Peter
Schwendner
Jan-Alexander
Posth
Patrick Laube
René Itten
Alexander Damm
Maria Santos
Leon Hauser
Publications and preprints:
Hauser, Leon Tobias and Damm, Alexander and Santos, Maria J. Corporate Biodiversity and Water Impact and Risk: Seven Key Principles for Leveraging Insights From Satellite Remote Sensing (2025). Earth's Future Volume 13, Issue 3: https://doi.org/10.1029/2024EF005474
Posth, Jan-Alexander and Schwendner, Peter and Laube, Patrick and Orpiszewski, Tomasz. Bio-Value-at-Risk: A Concept to Assessing the Implications of Biodiversity Risks on Portfolio Management using Geospatial Analysis (2024). Available at SSRN: https://dx.doi.org/10.2139/ssrn.4784271
Wassénius, Emmy and Crona, Beatrice and Battiston, Stefano and Jwaideh, Mark and Mandel, Antoine and Monasterolo, Irene and Posth, Jan-Alexander and Ranger, Nicola and Schwendner, Peter. Guiding principles for designing robust environmental risk assessments for the financial sector (July 03, 2026). Available at SSRN: http://dx.doi.org/10.2139/ssrn.7050679
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