Why we invested in Iceberg Data Lab: A tipping point for biodiversity
Piotr Bukański takes a look at the thesis behind our recent investment in Iceberg Data Lab, a leading provider of climate and biodiversity data solutions for financial institutions.
The climate crisis is often framed as a series of tipping points. Notably, a 1.5°C rise in global temperatures is now viewed as a tipping point that itself could trigger a series of — in the words of the World Economic Forum — ‘cascading tipping points that propel further warming.’
There are, however, moments of positive change that represent a tipping point for global policy on climate and the environment. The Paris Agreement, struck at COP21 in 2015, marked the start of a new phase of climate policy underpinned by a legally binding international treaty on climate change. In turn, this triggered a global shift in economic policy and financial markets.
We believe that we have reached a similar positive tipping point for biodiversity, ushered in by COP15 — the UN Biodiversity Conference — in December 2022. This conference saw the creation of the first global targets for tackling biodiversity loss, which is such a critical part of addressing the climate crisis.
Against this backdrop, we were excited to announce our recent investment in Iceberg Data Lab (“IDL”), a business that is playing a pivotal role in shaping how financial institutions mitigate biodiversity loss and climate change. This article shares more detail on why we invested.
1. Harnessing the momentum of biodiversity policy
2022 and 2023 were pivotal years for biodiversity. Catalysed by the agreements struck at COP15, financial markets — from corporate reporting to investment allocations and strategies — began to analyse and respond to the growing threat of biodiversity loss.
For asset owners and asset managers, it has become clear that biodiversity loss has significant implications for the long-term returns of their portfolios — both as a source of potential inflows and as a critical part of their risk management.
To put this into real terms: the World Economic Forum estimates that over half [1] of the world’s GDP depends on nature and its services, and a partial collapse of biodiversity could reduce global growth by 2.3% annually by 2030. [2]
There has, therefore, been a notable increase in the number of investor-led initiatives, supporting the integration of natural capital into investment decisions. At COP15, for example, 150 financial institutions signed a statement urging governments to adopt a post-2020 Global Biodiversity Framework.
Regulatory frameworks have followed suit, introducing specific guidelines on biodiversity data that should be disclosed by corporates and financial institutions. These range from the voluntary disclosures recommended by the Taskforce for Nature Disclosure (TNFD) through to the mandatory requirements of the European Union’s Corporate Sustainability Reporting Directive (CSRD).
Specifically, France is seen as the most advanced market for biodiversity risks, following the introduction ‘Article 29’ in 2021. This legislation requires financial institutions to disclose biodiversity risks, as well as their targets and strategy for reducing their impacts on biodiversity.
2. Reliable, granular data and a scalable model
Having reflected on the trends and tailwinds shaping this sector, we began to unpick how we expected corporates to adapt to evolving regulation and how financial institutions might harmonise their data across portfolio construction, risk management, and investment strategy.
Historically, a lot of work on climate and nature risks has been conducted by consultancies, many of whom relied on patchy data, which is not viable long-term with the required scale. It was clear, therefore, that the financial sector would require granular, reliable, high-quality data across a broad range of issues and products, and it would also require a technology platform that could remove the manual input of consultants over time to support the scale.
First, we were struck by the breadth and detail of the methodologies that underpin the data available on the IDL platform. IDL integrates analysis of scopes 1, 2, and 3 of emissions. Likewise, it analyses upstream and downstream impact across all of its products, providing enhanced granularity on the physical flows of products and services.
Moreover, IDL computes both the negative and positive impacts on biodiversity through its proprietary methodology — the Corporate Biodiversity Footprint (“CBF”). It also considers the positive contribution as well as dependency scores, providing a comprehensive assessment of nature-related impacts and dependencies. IDL’s biodiversity methodology is, therefore, seen as the most mature and comprehensive solution available in the market for asset managers and financial institutions today.
Second, IDL’s proprietary models were built from the ground up with scalability in mind, utilising AI tools to automate data collection from structured and unstructured sources, meaningfully reducing the amount of manual input required.
In contrast, most solutions that we encountered that could provider a similar depth of granularity were using consultants and servicing clients through one-off projects — ultimately, the scale and complexity of challenges faced by financial institutions when it comes to climate and biodiversity require the model offered by IDL.
3. An expert team building a blue-chip network of global clients
As with any investment, the team will be paramount to the success of IDL, and we were hugely impressed by the leadership team shaping the future of this business.
Matthieu Maurin, co-founder and CEO of IDL, is a true industry expert, bringing a unique combination of relevant experience across sustainability, data, energy, and financial markets.
Matthieu’s track record has enabled IDL to cultivate a roster of blue-chip clients, with a growing presence around the world. Some of its notable clients include Natixis, HSBC and Amundi. He also attracted strategic investment from AXA Investment Managers, Sienna Investment Managers, Mirova, Nitaxis and Solactive.
We are particularly excited to work with Matthieu and his experienced team to build IDL’s presence in London and leverage the city’s role as a global hub for sustainable finance.
4. Leveraging our expertise in ESG, sustainability, and climate tech
We are happy to be able to build on Beringea’s notable track record in ESG, climate tech, and data. Over recent years, we have backed pioneers in environmental and social impact including Gorilla — the leading energy data applications provider, — and Social Value Portal, whose solutions for measuring and improving social value are now pivotal to the role of the ‘S’ in ESG.
Earlier this year, we also announced our investment in EVIOS, a rapidly growing provider of home charging points for electric vehicles (EVs). This built on our experience with the EVIOS founder, David Martell, who led Chargemaster — a public charging network for EVs that was also backed by Beringea — through to its exit to bp in 2018.
Further, Beringea has successfully invested in analytics and data platforms for more than two decades. This spans our early success with Mergermarket, the ground-breaking M&A market intelligence and data platform, which was ultimately acquired by the Financial Times, through to our recent work with Dealroom, the data platform for start-ups and VC. These companies provide us with valuable insights into scaling companies that sell into financial institutions.
Finally, we look forward to collaborating with Matthieu and the team on our work with ESG_VC, where we continue to play a leadership role. ESG_VC’s measurement framework for ESG within start-ups is rapidly becoming an industry standard used by leading VC firms across the UK, Europe, Australia, and North America, so we look forward to working with IDL to drive the harmonisation of standards and reporting on ESG and sustainability in financial markets.
IDL is, therefore, a business that sits neatly within a growing market, coupling an experienced team with a substantial area of focus at Beringea — we look forward to harnessing the vast potential that can be driven through our partnership.
[1]https://www.weforum.org/press/2020/01/half-of-world-s-gdp-moderately-or-highly-dependent-on-nature-says-new-report/
[2]https://thedocs.worldbank.org/en/doc/81385f4e89ae1c1e2278e404728bc1d4-0320072021/original/GEEM-2pg-Jun28.pdf
