Understanding nature-related risks is an essential first step for businesses and financial institutions in paving the way towards sustainability for the private sector. ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) can support this. ENCORE is a tool designed to support organisations with identifying their potential dependencies and impacts on nature.
These dependencies range from reliance on water supply to pollination services, and if they are not managed, they can pose risks to these ecosystem services. ENCORE provides a comprehensive overview of how different sectors interact with nature, helping companies and financial institutions to assess and manage nature-related risk.
ENCORE’s new value chain functionality
ENCORE has supported users with identifying direct potential dependencies and impacts on nature since its launch in 2018. It provides key risk exposure data related to a range of economic activities, from accommodation and food services to construction. Companies in these sectors, and financial institutions assessing their investment and lending portfolios can use this data to make better decisions for nature.
To gain greater insights into dependencies and impacts within a company’s value chain, ENCORE’s functions have now expanded to include data covering two value chain stages. This allows companies and financial institutions to access information two tiers upstream and downstream in their value chain. This new functionality is available on the website and covers all 271 economic activities within ENCORE’s knowledge base.
What insights does this functionality provide for companies and financial institutions?
This data provides a range of benefits to companies working across the economic activities covered in ENCORE. For example, a business operating in the agricultural sector could assess value chain links for activities it sources from or supplies to. This would help it to understand the potential material dependencies and impacts of its suppliers and customers, painting a clearer picture of exposure to nature-related risks, which were previously hidden in its value chain.
The Taskforce on Nature-Related Financial Disclosures’ (TNFD) LEAP (Locate, Evaluate, Assess, Prepare) approach guides organisations in understanding, managing and disclosing relevant nature-related dependencies, impacts, risks and opportunities. The new ENCORE value chain insights can support companies along this path, helping them to conduct high-level preliminary scans to consider their nature-related risks. Companies can also download the ENCORE knowledge base to assess value chain insights in greater depth, which can support them with the LEAP process, particularly with the ‘Locate’ and ‘Evaluate’ components.
Better data leads to clearer action. Organisations can now test these new updates for greater data insights.
What are the sources behind this data?
Data behind these value chain updates is sourced from the Environmentally-Extended Multi-Regional Input-Output database, developed by ETH Zürich, which is based on EXIOBASE (version 3.6).
These updates were developed under the SUSTAIN Horizon Europe project. The updates were led by the United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC), in partnership with UNEP Finance Initiative and Global Canopy, and in collaboration with the SUSTAIN consortium partners: Capitals Coalition, Oxford Sustainable Finance Group, WBCSD, ShareAction, PBL Netherlands Environmental Assessment Agency, ETH Zurich, IUCN (Headquarters and the European Regional office) and Fundación Biodiversidad. SUSTAIN is funded by the EU’s research and innovation program Horizon Europe, by the Swiss State Secretariat for Education, Research and Innovation (SERI), and by UK Research and Innovation (UKRI).
Main image: Aerial view of Amazon rainforest in Brazil, South America, Adobe Stock_280363678