Leveraging impact investing in nature-positive transitions: How investors can assess biodiversity impact potential
School of Business | Master's thesis
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AbstractTransformative changes across societal systems are urgently needed to address the anthropogenic drivers of biodiversity loss. Technology, innovation and investment have been identified as one leverage point in societal transformation and impact investing as a way to promote nature-positive transitions towards more sustainable production systems. For allocating capital effectively to the most impactful interventions, impact investors must be able to evaluate and prioritize the investment opportunities based on their potential for beneficial biodiversity outcomes. In a lack of a generally established, quantitative method for assessing biodiversity impacts, this study aims to address the threshold for biodiversity impact finance by analyzing available assessment approaches and their applicability to the objectives of impact investing. The inquiry is conducted by analyzing approaches currently deployed in the business domain from secondary data and conceptualizing them based on the cause-effect relationships between economic activities and impacts on biodiversity. Six expert interviews enrich the emerging theory of the phenomenon’s current state and the methods’ suitability toward different assessment aims. The results provide theoretical propositions on how impact investors may use existing methods to assess beneficial biodiversity outcomes of investments: using (1) state of biodiversity approaches to evaluate and measure the actual impacts of site-based actions aimed to improve biodiversity directly, and (2) pressure-impact approaches for estimating the potential impacts of interventions reducing the pressures contributing into the global drivers of biodiversity loss. A working theory of an approach for quantitative and comparable ex-ante estimation of the biodiversity pressure/loss reduction potential of individual solutions (e.g., technologies, products, or services) is presented, with proposed applicability for investment target-specific assessments by impact investors. The findings introduce a call to action for utilizing currently existing methods to initiate assessment of economic activities’ impacts on biodiversity, while life cycle assessment (LCA) methods emerge as a promising tool for providing insights relevant to impact investing. More investigation is needed on the practical challenges identified, and further multidisciplinary research is required to establish a sound scientific basis for biodiversity impact assessment that can inform investment decision-making for positive change.
Thesis advisorPatala, Samuli
impact investing, impact measurement, biodiversity finance, biodiversity impact assessment, biodiversity handprint, nature-positive