Top ASX200 contributors to biodiversity loss revealed

A latest report by Biodiversity Council found energy, materials, industrials and consumer staples consistently emerged as the highest impact sectors for biodiversity loss.

Cracking the code: Using nature data to understand the impact of the ASX200 assessed the nature-related impacts and dependencies of Australia's ASX200 companies, drawing on data from three widely used assessment tools GIST Impact, MSCI, and S&P to provide a comparative view of nature-related impacts.

The impact by the sectors is driven primarily by greenhouse gas emissions, water consumption and land use pressures.

The report noted sectors that appear to have lower impact when assessed on direct operations alone such as financials, IT and consumer staples, often exert significant influence on nature.

This can be through capital allocation, energy and water demand, and global value chains that can create impacts on ecosystems far from the physical footprint of a company, the report said.

"These impacts are currently difficult to capture using existing datasets but represent a growing source of unpriced risk for investors," the report read.

However, the report noted while there are significant gaps in the data available to assess nature-related impacts, these gaps should not justify inaction.

"The direction of risk is clear, and evidence across multiple datasets supports consistent sector level conclusions," the report read.

"Differences between tools primarily reflect methodological limitations, particularly the partial treatment of supply chain and financed impacts, rather than disagreement about the sectors in which nature-related risks are concentrated."

Where data is limited in understanding the individual company impacts, the report encouraged engagement for better company-level understanding using the Taskforce on Nature-related Financial Disclosures (TNFD) framework.

"Investors can use capital allocation, system stewardship and company-specific engagement to address systemic and company-specific nature-related risks," the report read.

"Investors can use data from assessment tools and company reporting to identify drivers of nature loss, and the investors' points of leverage to address those key drivers."