A Life Cycle Assessment on the Biodiversity impact of SDG equity funds

Sammanfattning: Sustainability, a multidimensional concept, consist of various environmental, social, and economic factors. Its fundamental principle is to fulfill the needs of the present without compromising the ability of future generations to meet their own needs. One popular approach to measure sustainability is the Environmental, Social, and Governance (ESG) measurement. However, a global standardized ESG rating system is currently lacking, leading to variations in scores and methodologies used by different agencies to evaluate a companies' ESG performance. Recognizing the need for a standardized approach, the Sustainable Development Goals (SDGs) has emerged as a framework for evaluating sustainability. By adopting the SDGs as a standardized framework, investors, companies, and financial institutions can align their effort and process towards a sustainable future.  Although previous research has explored the relationship between ESG and financial performances, little research has been conducted on the standardized framework of SDGs and its relationship with biodiversity impact. This while it has been proven that biodiversity is the primary driver of sustainability. The objective of the study is to fill the research gap by examining the relationship between SDG commitments and their impact on biodiversity. To achieve this, eight equity funds with varying commitments to SDGs were selected as a sample. The sample comprises 396 companies allocated to 42 countries and 87 industries, with data collected of the year 2022. To align with biodiversity data availability, the time frame was adjusted to match the biodiversity data from the year of 2011.  The study focuses on assessing the annual species loss as an indicator of biodiversity impact for four different levels of SDG commitments. The primary findings indicates that there is no significant relationship between the amount of SDG commitments and the annual species loss. Furthermore, a weak relationship was observed between the cost of goods sold (excluding depreciation) and annual species loss. The secondary findings suggests that the factors of country of operation and industries contributes to biodiversity impact, this while it revealed a high variation of the effecting ecosystem. In conclusion, this study sheds light on the relationship between SDG commitments and biodiversity impact, providing insights into the complex dynamics between sustainability efforts and their environmental consequences.