Morgan Stanley’s Institute for Sustainable Investing and Stanford University-based Natural Capital (NatCap) Project announced the development of a new tool aimed at enabling companies and investors to assess the potential impacts of projects and activities on natural ecosystems.
The new ecosystem footprinting tool is open-source and free for use.
According to Morgan Stanley and Stanford, the launch of the new solution comes as companies and investors are increasingly looking to consider and measure the impacts of their activities on natural assets such as air, water, soil, and biodiversity, and how impacts to ecosystem services create risks and opportunities. Additionally, companies are likely to increase reporting on nature-loss and biodiversity, following the recent release by the Taskforce on Nature-related Financial Disclosures (TNFD) final recommendations for nature-related risk management and disclosure. TNFD would provide a case study by NatCap about the new tool as additional guidance for the assessment of nature-related impacts and dependencies.
Lisa Mandle, Director of Science-Software Integration and a Lead Scientist at the Natural Capital Project, said:
“There have been criticisms of ESG because where companies’ metrics come from can be a bit of a black box. This tool can help with some of that reporting in a way that is very open and science-based, including for those following the TNFD framework.”
The new tool calculates the impact of human-made structures on ecosystem services based on their physical footprint on the landscape. According to Mandle, the solution would allow companies choosing between locations to develop a new facility to compare impacts, such as water quality from loss of ecosystems, people’s ability to access nature, as well as exposure to coastal flooding and erosion. Mandle said:
“We looked, for example, at lithium mines, which are key to the renewable energy transition: we can use satellite imagery to look at their footprint – how much space they are taking up – and the geography of where it’s located to assess its consequences. This could help determine where this resource could be obtained for the lowest environmental – and human – impact.”
Matthew Slovik, Managing Director and Head of Global Sustainable Finance at Morgan Stanley, said:
“Natural capital is a relatively new field as it relates to finance, but we believe it will be increasingly relevant to our clients. Investors are becoming more interested in using data to make informed decisions about natural capital and ecosystem services impacts, and we hope this tool can now support the market in that regard.”
About the Authors
Associate Director, Investment Banking
Prachurjya has over 16 years of experience in investment banking with Acuity Knowledge Partners. At Acuity, he has led sector and product-specialist pilot teams across Capital Markets, ESG, Debt Advisory, Loan Syndications, Metals & Mining and Real Estate. He has been actively involved in setting up and on-boarding new ESG Advisory, ESG DCM and Sustainable Finance teams for various bulge bracket investment banks. Within DCM and Rating Advisory, he has been instrumental in helping the clients achieve over 30% in annual savings on both regular and adhoc tasks through standardization of the outputs and deployment of our proprietary BEAT tools.
Delivery Manager, Investment Banking
Puja has 6 years of extensive experience in ESG, Climate Change & Sustainability and she is supervising the ESG team at Acuity. She also has diverse experience in conducting ESIA, EHS compliance audits, ESG Risks and Controls, EHS & ESG Due Diligence assessments. Prior to joining Acuity, she was working with companies like KPMG Global Services, EY India and ERM India. She has expertise in provisioning extensive research requirements for clients through preparation of Peer Benchmarking, Target Compilation, Sustainability report, Sustainable Finance Updates and Sectoral ESG Thematic Detailing Engagement.
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