The loss of biodiversity is a serious issue worldwide. The ESG rating agency Inrate’s ESG Impact Rating evaluates companies’ impact on biodiversity as an integral part of the rating process. INFRAS developed the approach used for this on behalf of Inrate.
Biodiversity is of vital importance for maintaining the ecosystem services that are crucial for society and the economy. Human activity is putting pressure on biodiversity across the globe. The primary driving forces behind this include climate change, environmental pollution, loss of habitat due to land use change, overuse of natural resources and invasive species.
Throughout their lifetime, companies’ products and services create an environmental impact that either directly or indirectly influences biodiversity. INFRAS developed an approach for Inrate that comprehensively incorporates a company’s impact on biodiversity into its ESG Impact Rating.
Improving biodiversity integration into all parts of the ESG Impact Rating
Inrate’s ESG Impact Rating evaluates the sustainability of a company’s products and services and its sustainability management. It also takes into account information from third-party sources regarding a company’s controversial business activities. The revised rating now incorporates a company’s impact on biodiversity into all parts of the rating, based on data and using the latest criteria:
- ‘Biodiversity impact’ has been added to the products and services assessment, which is based on standardised business activities within the ESG Impact Rating.
- The assessment of a company’s sustainability management has been supplemented with the latest criteria for biodiversity management. These evaluate how a company measures its impact on biodiversity, sets objectives and takes mitigating action.
- Controversies in the field of biodiversity are now more precisely assigned to specific issues, making them easier to accurately capture.
Quantitative basis combined with expert knowledge
INFRAS uses a semi-quantitative approach to evaluate biodiversity impact: first of all, quantitative data is analysed and weighted, before being supplemented with qualitative information from specialist literature. The results are then presented on a 12-point scale and incorporated into the ESG Impact Rating.
INFRAS is also using the expertise it has gained on biodiversity and the methodological implementation of sustainability assessments to establish a foundation for other services and products for the financial industry.
More information:
- Inrate: biodiversity data and solutions
- Overview of the topic of biodiversity (INFRAS article on LinkedIn)
Further information about INFRAS’s work on the ESG Impact Rating:
Project team
