Morgan Stanley in collaboration with Stanford University have jointly launched a unique tool to enhance sustainable business practices.
In response to the growing demand from companies and investors to understand the repercussions of their actions on natural assets, Morgan Stanley and Stanford introduced this tool.
The heightened interest in measuring impacts on elements like air, water, soil, and biodiversity, coupled with the recent nature-related financial disclosure recommendations, underscores the necessity of such a tool in today’s corporate landscape.
Morgan Stanley’s Institute for Sustainable Investing plays a pivotal role in promoting responsible investment strategies, aiming to mobilise capital towards global challenges, whereas the Stanford University-based Natural Capital (NatCap) Project conducts pioneering research to improve the well-being of both people and nature by pursuing science-based approaches.
The new ecosystem footprinting tool, which is open-source and freely accessible, is engineered to calculate the impact of human-made structures on ecosystem services. This is based on their tangible footprint on the landscape, allowing businesses to make informed decisions when selecting locations for new developments by weighing potential environmental impacts.
The TNFD, recognising the tool’s potential, is furnishing a case study by NatCap to guide further assessments of nature-associated repercussions and interdependencies.
There’s a palpable momentum in the business sector towards increased transparency regarding nature-loss and biodiversity. This is evident from the recommendations recently disseminated by the Taskforce on Nature-related Financial Disclosures (TNFD) to fortify nature-related risk management and disclosure.
Natural Capital Project director of science-software integration and lead scientist Lisa Mandle 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.”
She further added, “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.”
Morgan Stanley managing director and head of global sustainable finance Matthew Slovik remarked, “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.”
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