ENCORE is a web-based tool that will help global banks, investors and insurance firms assess the risks that environmental degradation poses for financial institutions.
Its database covers 167 economic sectors and 21 ecosystem services.
ENCORE’s assessment of the FTSE 100, one of the world’s most high-profile indices, found that in 13 of the 18 sectors that make up the index, totaling US$1.6 trillion in net market capitalization, are associated with production processes that have high or very high material dependence on nature.
26 November 2018: The Natural Capital Finance Alliance (NCFA) launched “the world’s first comprehensive tool” linking environmental change with its consequences for the economy. ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) is a web-based tool that will help global banks, investors and insurance firms assess the risks that environmental degradation, such as the pollution of oceans or destruction of forests, poses for financial institutions.
ENCORE was launched at the UN Environment Programme Finance Initiative (UNEP FI) Global Roundtable on 26 November 2018, in Paris, France. The tool is managed by the NCFA, which is a partnership between UNEP FI and Global Canopy, in collaboration with UNEP World Conservation Monitoring Centre (UNEP-WCMC).
ENCORE’s database covers 167 economic sectors and 21 ecosystem services. The tool enables users to visualize how the economy depends on nature and how environmental change creates risks for businesses. These natural capital risks can then be explored further to understand location-specific risks through maps of natural capital assets and drivers of environmental change.
The three most important ecosystem services for the global economy are water provision, climate regulation, and flood protection.
As an illustration, an assessment of the FTSE 100, one of the world’s most high-profile indices, using information in ENCORE, found that in 13 of the 18 sectors that make up the index, totaling US$1.6 trillion in net market capitalization, are associated with production processes that have high or very high material dependence on nature. Examples include the harvesting of cereals and its reliance on pollination, or metal processing and its reliance on ground water provision.
The tool identified three sectors that are most materially dependent on nature to be agriculture, aquaculture and fisheries, and forest products. Sectors such as utilities, oil and gas, and mining were also found to have a very high dependence on ecosystem services.
The three most important ecosystem services for the global economy were identified as water provision, climate regulation, and flood protection.
The creation of ENCORE was supported by funding from the Swiss State Secretariat for Economic Affairs (SECO) and the MAVA Foundation. YES Bank, First Rand, and VicSuper are among the financial institutions that supported the tool at the launch. Other NCFA signatories or institutions involved in the creation of ENCORE include the International Finance Corporation (IFC), UBS, National Australia Bank, Citi, UniCredit, and CDC Biodiversité. [UNEP-WCMC Press Release] [ENCORE Website] [NCFA Website]