Good data is the foundation for nature-positive investment – here’s why

The global decline in biodiversity has reached a critical juncture. The soaring temperatures and fires that spread across the northern hemisphere this summer served as yet another reminder of the irrevocable damage we’ve caused to climate and nature – and the interlinkages of these dual crises. 

The consequences of biodiversity loss are not limited to ecological devastation and loss of life. A staggering $44 trillion worth of economic activities – over half the world’s total GDP – is moderately or highly dependent on nature and its associated services. Yet, the true value of nature – its intricate ecosystems, biodiversity, and the services it provides – remains unaccounted for in the global economy. 

The recent surge in work and interest around nature finance and nature-positive investments offers hope. Nature-positive investments not only promise financial returns but also hold the potential to restore ecosystems, combat climate change, and protect biodiversity. The ratification of the Global Biodiversity Framework at COP15 in Montreal in December 2022 and the launch of the Taskforce on Nature-Related Financial Disclosures final recommendations in September are important springboards for building consensus around collective action. 

While these milestones are worth celebrating, the success of nature-positive investments will hinge on a crucial, slightly less glamorous foundation: good data. In this article, we explore five reasons why good data matters for effective nature-positive investments. 

1. Accounting for all of nature, not just some

If we are going to shape markets to promote nature, they must reflect the complexity of nature. In the past, biodiversity metrics have measured one or a few measures of biodiversity, for example, the number of species, the variety of habitats or ecosystem services functioning within a specific area. 

This oversimplification of nature has led to economic models that place value on one specific aspect of nature at the expense of countless others. 

Comprehensive indices, like the SEED Index, account for all scales of nature’s complexity at the genetic, species, functional and ecosystem levels. The SEED Index incorporates a wide variety of data and will continue to expand as technology evolves to ensure the most holistic measure of biodiversity on the planet. 

2. Bridging local and global 

One of the major challenges of nature-positive investing is striking a balance between data that reflects local realities while remaining comparable across time and space. Investors need both. 

At present, a lack of localised biodiversity data makes it difficult for investors to assess project opportunities and answer the question: are we achieving what we set out to do? Both public and private institutions struggle with the capacity and resources required to accurately reflect dynamics on the ground. 

At the same time, standardised data at the global level is needed to assess and prioritise opportunities and benchmark progress in a consistent and comparable way.  

The SEED methodology provides a great example of how advances in technology have made it possible to do both. Drawing on millions of data points and extrapolating patterns using machine learning, the SEED Index can be applied to any pixel on the planet without the need for additional ground data. Where ground data exists, SEED updates and refines this information. This approach is rapid and cost-effective without sacrificing accuracy and complexity. 

3. Reducing risk

Good data enables investors to make informed decisions. It can help direct money towards projects and companies that are restoring and conserving nature and away from those that are further degrading ecosystems. 

One of the primary means of redirecting the flow of investment is by incorporating nature-related risks into decision-making. By relying on data-backed insights, investors can assess the exposure of investments or activities to nature-related risks and either formulate strategies to address those risks or redirect funds towards less risky investments. 

But better data is only part of the answer. Greater transparency on the dependency of investments on nature, the impacts of business activities on nature, and the associated risks is needed. Businesses and financial institutions must disclose this information publicly for there to be any meaningful change in the way nature is priced into investments. 

The publication of the Task Force for Nature-related Financial Disclosures recommendations for risk management and disclosure at New York Climate Week in September is a key step in encouraging a shift towards transparency. 

4. Putting an end to greenwashing 

In the absence of reliable data, it becomes challenging to identify projects that genuinely contribute to nature-positive goals. The rapid growth in consumer demand for green products, services and financial instruments has led to a surge in ‘greenwashing’, or misleading consumers to believe a product, service or company is more environmentally friendly than it actually is. In some instances, this is deliberate; in others, it’s a case of using inaccurate or incomplete data. 

Quality data can curb greenwashing by helping companies accurately measure the impact of a product or service on the environment. By comparing claims to verified data, regulators can more easily identify inconsistencies and exaggerations, and investors can choose projects that align with their environmental objectives. 

Standardised, comprehensive metrics, like the SEED Index, will be critical in communicating this information to investors and consumers alike. SEED collapses into a single number between 0 and 1; the closer a location is to 1, the more regenerative and resilient it is likely to be. An easy-to-communicate measure that doesn’t compromise on complexity can help prevent misguided investments and hold companies accountable for delivering on their promises and driving positive change.

5. Building investor confidence

Innovations in nature-positive financial mechanisms and instruments are accelerating at a rapid pace. Debt-for-nature swaps, sovereign sustainability-linked bonds, conservation easements and inclusion of biodiversity into carbon markets are all examples of where finance and nature are converging around shared objectives.

Yet these examples remain small-scale and are not easy to replicate across geographies and political systems. To scale these solutions, we need standardisation, monitoring and benchmarking. We need to signal to investors that nature-positive investments are achieving what they set out to do: provide financial returns while also conserving nature. 

Robust data attracts investors. By showcasing the solid data foundation of their projects, governments, businesses, and financial institutions can foster trust and credibility. They can prove that positive outcomes are genuine and lasting.

The path forward: Strengthening the data ecosystem 

These discussions around nature-positive investments are happening at a time of rapid advancements in technology that are revolutionising the way biodiversity data is collected and analysed. Satellite technology and remote sensing enable the monitoring of large-scale environmental changes, while AI and machine learning enhance the accuracy of predictions. 

Technological advancements will translate to better, faster and more cost-effective data. Investing in data infrastructure and accessibility will pave the way for informed decision-making and drive positive change at an unprecedented scale.

To keep up with the pace of change, collaboration between financial experts and scientists will be essential. Both perspectives are needed to build consensus around the best way to incorporate the value of nature and all its services in the global economy.