ENCORE

 

4.4/5 - (16 votes)

 

ENCORE – MAPPING NATURAL CAPITAL DEPENDENCIES IN PORTFOLIOS


 

EXTERNAL ARTICLE

Estimated reading time: 2 min.

 

For asset managers, asset owners and financial institutions, the pressure to assess not only financial but also environmental risks has never been higher. Regulatory frameworks such as SFDR, CSRD or Solvency II demand that portfolios disclose their dependencies and impacts on nature. At the same time, market participants face growing demand from clients for sustainable and resilient investment strategies. In this context, the ENCORE tool (Exploring Natural Capital Opportunities, Risks and Exposure) has become a key reference.


Developed by the Natural Capital Finance Alliance (NCFA) in partnership with UNEP-WCMC, ENCORE provides a structured way to map the links between economic activities and natural capital assets (water, soil, biodiversity, atmosphere). It identifies which sectors are most dependent on ecosystem services and where financial exposures are vulnerable to environmental degradation.

 

For portfolio managers, ENCORE offers three main benefits:
1.    Risk identification – highlighting activities sensitive to natural capital loss (e.g., water-intensive industries).
2.    Strategic alignment – supporting integration of nature-related risk management in line with frameworks like TNFD.
3.    Regulatory reporting – helping institutions meet disclosure obligations by mapping activities against environmental dependencies.


In practice, ENCORE is accessible via an interactive online platform where users can search by sector or ecosystem service. The database can be exported and linked to internal financial datasets, allowing integration into portfolio management systems (PMS). This opens the door to automated ESG reporting, stress-testing of portfolios under different environmental scenarios, and improved communication with investors.
 

At AMINDIS, we see ENCORE as a bridge between environmental science and financial practice. Our role is to make this data actionable: building data pipelines, embedding the information into performance and risk dashboards, and ensuring clients can turn environmental dependencies into tangible investment insights.

 

USEFUL SOURCES

 

EXPLORE MORE ARTICLES

COMMON QUESTIONS ABOUT THIS TOPIC


ENCORE is a tool developed by Natural Capital Finance Alliance (in partnership with UNEP-WCMC) that helps financial institutions map how sectors depend on natural capital (ecosystems, biodiversity, ecosystem services) and identify where impacts and risks arise. 


Because dependencies reveal how a company's operations rely on ecosystem services—such as pollination, water purification or sea-ice protection—which means environmental degradation can translate into financial risks or lost value for investors. 


It helps investors classify portfolio holdings by sectors and ecosystem-service dependencies, identify high risk activities, build engagement strategies or exclusions, and support biodiversity-related risk disclosures. 


ENCORE provides sector-based dependency scores (e.g., low, medium, high) linked to ecosystem services, mapped with NACE codes or other industry classifications. This allows segmentation of portfolios by natural-capital risk. 


They should first map holdings against ENCORE dependency categories, overlay biodiversity and ecosystem-service risk metrics, integrate findings into risk-management, stewardship, and disclosure processes (e.g., under Corporate Sustainability Reporting Directive (CSRD), and monitor changes over time.