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Biodiversity impact: understanding how investments affect nature

Biodiversity impact: understanding how investments affect nature

As biodiversity loss accelerates globally, investors are increasingly being asked not only about the financial performance of their portfolios but also about their impact on the natural systems that economies rely on. Biodiversity impact assessment aims to shed light on this question by estimating how economic activities contribute to ecosystem degradation or restoration.

Compared to climate impact assessment, biodiversity impact measurement is still a relatively young and evolving field. Data availability is limited, methodologies differ, and results often rely on modelling and assumptions. Nevertheless, biodiversity footprinting can provide valuable directional insights into where impacts are most concentrated and where engagement and action may be most relevant.

At VP Capital, biodiversity is one of the three pillars of our impact-first strategy. To better understand the potential impact of our investments on nature, we conducted a biodiversity footprint assessment across our portfolio.

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How we assessed biodiversity impact

For this assessment, VP Capital partnered with PRé Sustainability using the Biodiversity Footprinting for Financials (BFFI) methodology, a biodiversity footprinting approach that maps investments by geography, sector, and revenue. The analysis evaluates a wide range of inputs, outputs, and environmental pressures – based on statistical and economic data – to estimate if and where investments may contribute to biodiversity loss.

To reflect financial relevance, we combined the biodiversity impact results with investment size, allowing us to identify relative hotspots within the portfolio. This resulted in a prioritised overview of impact drivers and key areas of attention, rather than precise, site-level measurements.

Figure1 - The backbone of the calculation is the Biodiversity Footprinting for Financials (BFFI) methodology
Figure1 - The backbone of the calculation is the Biodiversity Footprinting for Financials (BFFI) methodology

What the results show at portfolio level

The assessment indicates that VP Capital’s portfolio has an estimated biodiversity footprint of 26,470 PDF·ha·yr. To put this into perspective, this is roughly equivalent to 57% of the total land area of Andorra or approximately 37,000 football pitches.

The main drivers of this footprint are:

  • Land use (53%)

  • Global warming (25%)

These impacts are largely linked to the portfolio’s exposure to agricultural and forestry activities, where land use and emissions play a central role.

From an investment category perspective, the largest shares of the biodiversity footprint stem from direct investments (34%) and investment funds (34%), which is consistent with their relative weight in the portfolio.

Fig 1 - Relative financed biodiversity footprint in VP Capital’s portfolio, split per driver
Fig 1 - Relative financed biodiversity footprint in VP Capital’s portfolio, split per driver

Interpreting the results with care

While the footprinting exercise provides useful insights, it also comes with important limitations.

Biodiversity impact assessment at portfolio scale relies on average sector classifications and estimated revenue data. Many of VP Capital’s investments – particularly in innovative, bio-based, or regenerative business models – do not fit neatly into standard sector definitions. As a result, their specific practices and positive contributions may not be fully reflected.

In addition, the underlying economic database used in this assessment (EXIOBASE) is based on data from 2011. While still widely applied, it does not encompassmore recent technological developments or emerging sectors. This means the results should be interpreted as indicative rather than definitive.

This is particularly relevant for land use. A reduction in land-use footprint, for example, may reflect intensification rather than ecological improvement, whereas several of VP Capital’s investments actively support regenerative models that prioritise soil health, biodiversity, and ecosystem restoration.

Understanding the metric: PDF·ha·yr

Biodiversity impact is expressed using the metric PDF·ha·yr, where PDF stands for Potentially Disappeared Fraction of species. Conceptually, PDF represents the probability that a species will disappear locally due to human pressures. The footprint combines:

  • The intensity of biodiversity loss. (PDF)

  • The area affected (hectares)

  • The duration of impact (years)

This reflects the fact that biodiversity impacts are spatially distributed and unfold over time, rather than occurring at a single point.

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Deep dives into direct participations

In addition to the portfolio-wide assessment, VP Capital conducted in-depth biodiversity footprint analyses for two direct participations: VP Textile and VP Landbouw, using primary data and life cycle analysis.

For VP Textile, key biodiversity impact hotspots were identified in fibre production, fabric pre-processing, and product use. Fibre production — particularly conventional cotton – showed a relatively high impact due to land use and agrochemical inputs. Ongoing efforts therefore focus on increasing the use of responsibly sourced cotton and reducing the use of primary raw materials by incorporating recycled fibres.

For VP Landbouw, the main contributors to biodiversity impact were land use, methane emissions from enteric fermentation, manure management, and fertiliser application. These pressures primarily affect biodiversity through land use and climate-related pathways. At the same time, certain practices – such as targeted and selective crop protection – showed comparatively lower impacts, supporting broader biodiversity preservation.

From insight to action

Biodiversity impact assessment does not deliver perfect answers. What it does provide is a structured way to identify hotspots, ask better questions, and prioritise engagement.

VP Capital will use these insights to:

  • Monitor key impact drivers within portfolio companies

  • Deepen dialogue on biodiversity-related risks and improvement opportunities

  • Inform the development of policies and actions aimed at reducing our contribution to biodiversity loss

As methodologies, data quality, and standards evolve, we expect biodiversity impact assessment to become increasingly robust. Until then, it is essential to be transparent about assumptions and limitations.

Understanding biodiversity impact is a necessary step in aligning capital with a more resilient, nature-positive future – and an important complement to understanding how investments depend on the natural world.

Biodiversity impact: understanding how investments affect nature

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