Bio-value-at-risk : a concept to assessing the implications of biodiversity risks on portfolio management using geospatial analysis

Posth, Jan-Alexander; Schwendner, Peter; Laube, Patrick; Orpiszewski, Tomasz

doi:10.2139/ssrn.4784271

Publication type:	Working paper – expertise – study
Title:	Bio-value-at-risk : a concept to assessing the implications of biodiversity risks on portfolio management using geospatial analysis
Authors:	Posth, Jan-Alexander Schwendner, Peter Laube, Patrick Orpiszewski, Tomasz
et. al:	No
DOI:	10.2139/ssrn.4784271
Extent:	13
Issue Date:	16-Apr-2024
Publisher / Ed. Institution:	SSRN
Language:	English
Subjects:	Nature risk; Biodiversity loss; Scenario; Bio-value-at-risk; Asset-level data; Geospatial data; Remote sensing data; Risk management; Spatial finance; Sustainable finance
Subject (DDC):	332: Financial economics 333: Economics of land and resources
Abstract:	Finally, nature risks like biodiversity and carbon footprints have been recognised as important business risks. Beyond immediate physical risks, transition risks include scenarios with disruptive consequences. Sustainable finance regulation calls for a transparent reporting of these risks. However, the full integration into the corporate risk framework, company valuations, and portfolio management needs a consistent quantitative treatment with discriminating precision down to company level. The crucial point is the objective of enabling allocation decisions between two competing companies from the same industry. This paper proposes a bottom-up scenario-based aggregation of company impacts measured by geospatial analysis rather than a top-down breakdown from global exposures. We overlay geospatial ESG variables mainly from global remote sensing products with the spatial footprints of asset-level data. In contrast to other approaches, the footprints of local operations are translated into a financial loss quantity for each single operational site before they are aggregated across the company. As the scenarios can be defined consistent across companies, statistically justified portfolio risk measures can be evaluated that enable portfolio risk management by a selection of individual investments and credit decisions rather than an exclusion of whole industry sectors. We illustrate our approach for the case of biodiversity risks and choose the mining sector as there is significant scientific literature on its environmental impacts and on remote sensing to detect these impacts.
URI:	https://digitalcollection.zhaw.ch/handle/11475/30533
License (according to publishing contract):	Licence according to publishing contract
Departement:	Life Sciences and Facility Management School of Management and Law
Organisational Unit:	Institute of Natural Resource Sciences (IUNR) Institute of Wealth & Asset Management (IWA)
Appears in collections:	Publikationen School of Management and Law

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Posth, J.-A., Schwendner, P., Laube, P., & Orpiszewski, T. (2024). Bio-value-at-risk : a concept to assessing the implications of biodiversity risks on portfolio management using geospatial analysis. SSRN. https://doi.org/10.2139/ssrn.4784271

Posth, J.-A. et al. (2024) Bio-value-at-risk : a concept to assessing the implications of biodiversity risks on portfolio management using geospatial analysis. SSRN. Available at: https://doi.org/10.2139/ssrn.4784271.

J.-A. Posth, P. Schwendner, P. Laube, and T. Orpiszewski, “Bio-value-at-risk : a concept to assessing the implications of biodiversity risks on portfolio management using geospatial analysis,” SSRN, Apr. 2024. doi: 10.2139/ssrn.4784271.

POSTH, Jan-Alexander, Peter SCHWENDNER, Patrick LAUBE und Tomasz ORPISZEWSKI, 2024. Bio-value-at-risk : a concept to assessing the implications of biodiversity risks on portfolio management using geospatial analysis. SSRN

Posth, Jan-Alexander, Peter Schwendner, Patrick Laube, and Tomasz Orpiszewski. 2024. “Bio-Value-at-Risk : A Concept to Assessing the Implications of Biodiversity Risks on Portfolio Management Using Geospatial Analysis.” SSRN. https://doi.org/10.2139/ssrn.4784271.

Posth, Jan-Alexander, et al. Bio-Value-at-Risk : A Concept to Assessing the Implications of Biodiversity Risks on Portfolio Management Using Geospatial Analysis. SSRN, 16 Apr. 2024, https://doi.org/10.2139/ssrn.4784271.