Paris-based environmental advisory firm I Care & Consult (IC&C) and data provider Iceberg Data Lab have won a mandate to develop a biodiversity assessment methodology and tool for asset manager quartet AXA Investment Management, BNP Paribas Asset Management, Mirova and Sycomore.
The pair beat 13 other applications from a total of 30 entities in a competitive tendering process kicked off by the four asset managers back in January, when they announced a shared hunt for a biodiversity data provider.
In May, the investors put out an interim statement calling for more applications, signalling they had not yet found what they were looking for.
The work will see Iceberg and IC&C expand their existing Corporate Biodiversity Footprint metrics to cover more companies and sectors. Once a quantitative biodiversity impact assessment methodology has been finalised, the provider will expand the tool to be used for portfolio-level analysis.
“We’re not starting from scratch, but they need to expand the methodology to other sectors,” said Robert-Alexandre Poujade, ESG Analyst at BNP Paribas AM and one of the four-strong team heading up the asset manager collaboration. “There are big technical decisions to make because, on the one hand, you have the purity of the tool and on the other hand, you have the usability of the tool, so you need to find a good balance between those two elements.”
He said that the Iceberg-IC&C consortium stood out for its IT capabilities, including its quantitative and modelling techniques, its visual offering, and its asset-level data. “Our subject is very localised, so we want to see the impact as granularly as possible,” he told RI, adding that the asset managers also want qualitative elements to be included in the work.
“It's a very technical topic. When you talk about biodiversity, you have to talk about water quality, climate change, land use, all that. So in order to explain that to clients, you need to have some written explanation and split up the pressures affecting biodiversity loss at the company-level. Clients need to understand what we do.”
The medium-term contract is yet to be signed and will include further details on the exact scope of the work, including index coverage, and the yearly fee the provider will receive for the work.
Poujade said, after the methodology and data is secured, the asset managers will focus on integrating it into their ESG capabilities. “There will be a period of education internally with portfolio managers to explain beyond reporting what we can achieve with the data, so we will have time to adapt and play with the data before we can really steer our portfolios towards less harmful investments, which is obviously the direction we want to go in.”
He told RI that stewardship will play a key role in improving disclosure from companies, saying that current data “is not very satisfactory from companies on how they affect biodiversity or depend on nature”.
The underlying metric used by the provider is the “means species abundance” (MSA).
“The metric is good enough to work with,” said Poujade. “But there are challenges regarding the absence of marine biodiversity, the absence of biodiversity in the soil. This is because the databases are not there. You have to start somewhere, but we have to be modest about how to use the data [and] recognise that challenges remain.”
Poujade said the asset managers and data providers are in talks regarding how the biodiversity initiative will be governed.