Market Insight: Biodiversity And Nature Data Start With ESG Integration

Executive Summary

Nature and biodiversity risk is gaining traction in sustainable investment forums, particularly since the adoption of the 2022 Kunming-Montreal Global Biodiversity Framework. This was followed by the launch of the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations in 2023, aimed at standardizing how firms assess and disclose nature-related dependencies, impacts, risks and opportunities. Financial market data providers have subsequently introduced solutions to help investors operationalize the TNFD’s LEAP (Locate, Evaluate, Assess, Prepare) framework, often incorporating metrics such as mean species abundance (MSA) and potentially disappeared fraction of species (PDF). However, disclosures across some 250 US- and EU-listed ESG and sustainable funds, along with 20 EU biodiversity thematic funds, show limited uptake. Biodiversity considerations remain largely embedded in ESG screening, materiality assessments and stewardship, with more advanced integration still nascent. Vendors will need to lead with ESG and compliance-driven use cases, while enabling impact and engagement, to gain market traction.