A new study reveals that most tools used by financial institutions to assess biodiversity risk fail to capture actual, on-the-ground impacts. – Without local impact data, most screening tools cannot fully mobilize investors to support biodiversity stewardship on the ground, says NINA researchers.
By including nature considerations into investments, risk assessments and business plans, companies can contribute to both profitability and reduced nature-related risks. Photo credits: Knut Andreas Eikland/NINA
Nature underpins all economic activity. Biodiversity loss poses, therefore, not only ecological, but also financial risks. This affects markets, investments, and long-term economic stability. As the financial sector begins to integrate nature-related risks into its decision-making, it faces challenges relating to data limitations, inconsistent metrics, and tools that fail to capture local realities.
Researchers from The Norwegian Institute for Nature Research (NINA) and international partners have evaluated biodiversity risk screening tools currently used by financial institutions. They have studied how these tools align with regulatory disclosure requirements such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and its European Sustainability Reporting Standard for Biodiversity and Ecosystems (ESRS E4), as well as voluntary frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) and Global Reporting Initiative (GRI).
Making biodiversity risk assessments fit for purpose
The results show that most existing tools used by financial institutions to assess biodiversity risk rely on estimated data instead of site-specific measurements. As a result, they tend to highlight potential rather than actual biodiversity impacts, limiting their value for regulatory reporting and reducing their effectiveness in supporting robust sustainability assessments.
The authors argue that improving biodiversity risk assessments will require open access to location-specific data on key drivers of biodiversity loss, such as land-use change, water use, and invasive species. Such data are essential for transparency, accountability, and to enable investors, regulators, and civil society to assess real-world impacts.
“Without robust, locally grounded data, assessments risk becoming a box-ticking exercise rather than a genuine tool for nature stewardship,” says Rafal Chudy, lead author and researcher at the Norwegian Institute for Nature Research (NINA).
The study further calls for standardized definitions and stronger alignment between the financial and biodiversity science communities, to ensure consistent and transparent measurement of impacts.
Addressing these gaps requires a systemic shift in how finance and biodiversity are linked—moving beyond compliance with disclosure requirements towards genuine accountability for nature’s role in sustaining the global economy.
Revised reporting standards raise concerns about biodiversity accountability
The timing of these findings is especially relevant in light of recent regulatory developments. Earlier this year, the European Financial Reporting Advisory Group (EFRAG) revised the ESRS, reducing the total number of required disclosures by almost 70 percent. For biodiversity and ecosystems (ESRS E4), the cuts reached almost 80 percent, removing all voluntary disclosures and making requirements less prescriptive.
While the revisions aim to simplify and align reporting with international standards such as the International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI), and Sustainability Accounting Standards Board (SASB), the authors caution that this could lower the bar at a critical moment.
“When biodiversity loss is accelerating globally, less detailed reporting risks weakening the incentives for financial institutions to collect and use the high-quality, location-specific data needed to drive real change”, concludes Chudy.
Read the paper here: Biodiversity risk screening tools in finance fail to meet the need for local project risk screening
Contact:
Rafal P. Chudy
David Barton