Harnessing biodiversity impact assessment for strategic management of finance

Quantifiable data on organizations’ biodiversity impacts is essential for developing business models that support a nature-positive future. The financial sector, as an economic intermediary, holds significant potential to drive this transformation. By influencing capital allocation, actors such as asset managers and institutional investors can steer businesses toward reducing biodiversity loss. In recent years, the financial sector has developed and piloted various tools to assess biodiversity impacts and dependencies. However, these methods differ in accuracy, comparability, and scope, and no standardized approach has emerged. Moreover, it remains unclear if and how biodiversity impact assessment results translate into management and strategic decision-making, such as investment choices. Addressing this gap is critical for ensuring that conducting such assessments lead to meaningful change.

This study applies the Biodiversity Equivalent Impact Assessment (BIOVALENT) method to the investment portfolio of an institutional investor—the Finnish Academy of Science and Letters. The analysis focused on company stocks and other equity-based instruments. Beyond quantifying the portfolio’s biodiversity footprint, the project aimed to evaluate the suitability of the BIOVALENT method to the context of finance, and how it can be operationalized and further developed for financial decision-making. Our assessment successfully identified holdings with the greatest biodiversity impact, demonstrating the method’s potential for guiding portfolio construction and adjustments. Hence, the assessment can guide the designing of pathways towards reducing the biodiversity footprints. These findings suggest that biodiversity impact assessment can inform strategies for aligning investments with nature-positive objectives.

Building on these results, the next phase of the research will develop a conceptual model illustrating how biodiversity metrics can be integrated into financial strategy and management decisions. This model will address the practical challenge of translating biodiversity data into actionable investment policies, contributing to the broader goal of embedding biodiversity considerations into financial governance. By advancing both methodological and conceptual frameworks, this research supports the financial sector’s role in driving systemic change toward halting and reversing biodiversity loss.