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WWF’s 2020 Living Planet report estimated a 68% loss in population sizes of mammals, birds, fishand amphibians occurred between 1970 and 2016, driven by anthropogenic factors such aschanges in land use, species exploitation, pollution and climate change. At the same time, muchof the global economy is dependent on ecosystem services provided by nature, according toa 2020 WEF-PWC study.
The depletion of natural resources and biodiversity poses a risk to the parts of the economy that
depend on them. Companies are increasingly facing nature-related risks, in terms of potential
impacts on nature and dependencies on ecosystem services. Yet, interactions between companies
and nature are both challenging to measure and difficult to bring into a single all-encompassing
metric – such as in the way that carbon emissions are currently used to assess climate impact.
For example, companies that rely on natural resources – such as water or timber -- foroperations and/or product development may be at risk of disruption if those resources are
depleted or polluted. Measuring a company’s impacts and/or dependencies on nature takes
into account multiple factors, including:
1. The type of activities in which the company is engaged.
2. The sensitivities of operational locations.
3. The extent to which raw materials used in production processes are sustainably
produced/sourced.

Figure 1: Taskforce on Nature-Related Financial Disclosures (TNFD) LEAP Framework.

ESG

Climate change and biodiversity loss are two of the most pressing issues facing the planet today.
They are also inextricably linked. These can have a significant impact on corporate resiliency
in terms of financial performance and reputational risk, as well as on the ability of investors toadequately assess portfolio risk.

Bloomberg Terminal

Nature and Biodiversity:
How Bloomberg provides insights
to assess nature-related impacts

Nature and Biodiversity

How Bloomberg combines data and analytical tools to measure impact
Only with a clear view into nature-related and biodiversity risks can financial market participants
take steps to assess the impacts on their portfolios and investment strategies, and set appropriate
risk tolerances. To facilitate this transparency, Bloomberg brings together comprehensive data
and analytical tools to help clients understand the nature-related impacts and dependencies,risks and opportunities of portfolio companies, in alignment with the requirements of theTNFD “LEAP” Framework.
Driven by international agreements such as the Global Biodiversity Framework signed by 196 nations
at COP15, the development of risk and reporting frameworks such as the TNFD as well as regulations
such as EU Taxonomy and SFDR, financial market participants are starting to assess how nature andbiodiversity risks impact their portfolios and take positive steps to address these risks.
Bloomberg supports investors in uncovering and assessing nature-related risks in a single
workflow on the Bloomberg Terminal. This 4-step process enables users to:
1. U
 nderstand the segments in which a company operates.
2. Identify whether a company operates in locations of high-impact or dependency risks.
3. Reference supply chain data to understand the flow of commodities.
4. Capture data reported by companies on their nature-related exposures.

1) Understand the segments in which a company operates
Bloomberg collects revenue from over 50,000 public and private companies and allocates it toover 2,000 business segments, down to 7 levels of granularity.
Using Bloomberg’s Industry Classification System (BICS), investors can see that Company A in
figure 2, generates all of its revenue from Palm Oil Farming and Palm Oil Processing sectors.
Bloomberg has also reviewed all segments, in line with the EU Deforestation-Free Products
regulation, to determine which segments carry the greatest sensitivity to deforestation.
Company A is therefore flagged as being involved in the production and processing of a commodity
which is linked to deforestation and biodiversity loss.
Figure 2: Company A
revenue segmentation.

In the example of Company A, Bloomberg’s Forest Risk Commodities Exposure data fields
show the amount and percentage of revenue generated from involvement in the production
and processing of commodities linked to deforestation.

2) Identify whether a company operates in locations of high-impact
or dependency risks
When assessing a company’s location, it’s important to ascertain:• The geolocation of a company’s operating assets.
• The proximity of those assets to areas of biodiverse sensitivity, for example forest land.
• T he environmental performance of those areas and trending performance over time.
• The proximity of those assets to nature-related dependency risks such as areas where wateris scarce.
Using geospatial asset location data, Bloomberg enables users to identify company locations that havehigh impact or dependency risks.
Once it has been established that Company A is involved in the production of forest risk commodities,
investors can look at its asset locations, overlaid with tree cover loss, which shows whether there issignificant loss near its assets.
Bloomberg’s asset location database covers over a million assets for 30,000 global companies.
It also integrates the Nature and Biodiversity related geospatial data layers such as water risk andtree cover loss, providing a comprehensive view to ascertain risk.
When combined, these datasets help investors understand the impact companies have on nature
and whether companies have dependency risks.
Figure 3: Company
A assets overlaid withGlobal Forest Watch
Tree Cover Loss.

KPI Comparison
Automobile Industry3) Reference supply chain data to understand the flow of commodities
Investors cannot hope to fully understand nature-related risks by just looking at the companies
which are producing and extracting raw materials. Investors need to look at the flow ofcommodities through supply chains and into consumer facing goods.

Company B: packaged foodCompany A: palm oil producer

Company C: biofuels

Figure 4: Company A is
supplying Companies B,
C and D with the palm oilthey produce. Bloomberg
Supply Chain data uncovers
such relationships.

Company D: commodity trader

Bloomberg Supply Chain data covers 23,000 public and 90,000 private companies around the world,comprising more than 1 million relationships. This Supply Chain data is crucial to understanding therelationships between companies producing commodities that directly drive biodiversity loss, andthose companies further downstream that turn such commodities into consumer facing goods driving loss indirectly.

4) Capture data reported by companies on their nature-related risks
Whilst both industry activity and geospatial overlays can find risk exposures, company-reported dataalso plays a key role in giving the investor insight into the extent to which the company acknowledges
and manages their nature-related risks.
For example, Company A may only produce Roundtable on Sustainable Palm Oil (RSPO) certified palmoil. The downstream value chain (Companies B, C and D) may ensure that their senior management
have oversight on Biodiversity issues affecting the company and have adopted sustainable supply
chain management practices. This dataset is an important differentiating factor when selecting
companies in industries with high-risk potential and helps reduce the nature-related risks in theinvestment portfolio.
Bloomberg is capturing company-reported Nature and Biodiversity data with full transparency
to source, from over 15,000 global companies, representing over 88% of global market capitalization.

Summary: Delivering insights that make a difference.
With guidance from frameworks such as the TNFD’s LEAP, paired with Bloomberg’s comprehensive
datasets and analytics, investors can now review and risk-assess how companies around the world
impact nature as well as depend on it.
Making informed investment decisions with Nature and Biodiversity in mind is achievable withBloomberg, helping companies protect their financial performance and contribute to a moresustainable future.

Learn MoreTo learn more about Bloomberg Nature and Biodiversity content, please reach out to yourBloomberg account manager or email us at biodiversity@bloomberg.net

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