Interview

Biodiversity Disclosures to Become “Business Norm”

Sue Armstrong-Brown, Global Director of Environmental Impact at CDP, expects nature-related reporting to surge despite the lack of a firm mandate in Montreal.

2022 finished with more than 200 countries adopting the Kunming-Montreal Global Biodiversity Framework (GBF) which promises to protect at least 30% the planet’s lands, inland waters, coastal areas and oceans by 2030 – known as the ‘30×30’ target.

The landmark agreement was the culmination of the UN Convention on Biological Diversity’s COP15 Summit held in Canada last December. It establishes  a fund of US$20 billion a year by 2025 – rising to US$30 billion a year by 2030 – paid for by the existing United Nations Global Environmental Facility (GEF), which will be ringfenced for biodiversity conservation.

The framework contains 23 targets and replaces the Aichi Biodiversity Targets which were established in 2010 and that missed their 2020 deadline on every front.

Immature understanding

According to CDP – the non-profit charity that runs a global environmental disclosure platform for investors, companies and other-non-state actors – one of the reasons Aichi failed was “the lack of mobilisation of financial resources globally”, with annual funding needed to meet the [pre-2020] targets stretching to as much as US$440 billion.

These funding gaps, according to the CDP, demonstrate “an immature understanding of the materiality of biodiversity and its subsequent loss for financial institutions”, and demand a greater appreciation of the importance of nature to all organisations right across their supply chains.

It is for this reason that CDP campaigned for mandatory disclosure in the GBF; a demand that was ultimately rejected, with the wording of Target 15 falling just short of expectations.

However, Sue Armstrong-Brown, CDP’s Global Director for Environmental Standards and Thought Leadership, admits compulsory disclosure was always an ambitious target.

“I don’t think anyone other than the most starry-eyed idealist thought we were going to get [mandatory disclosure]. In fact, there was a big fear we would get nothing at all, so [COP15] is a success in that it’s the first time world leaders have managed to set out any kind of concrete ambition for biodiversity.”

She continues: “Obviously, it would have been better to have had mandatory disclosure and complete clarity around the actions and deliverables for the goals and targets in the framework, but we had two weeks to get this done, and a lack of political alignment meant we didn’t quite get that over the line. But it is by no means disastrous and it’s really important to have achieved so much.”

Voluntary disclosure

One reason Armstrong-Brown can afford to be pragmatic over the exclusion of compulsory nature-related reporting is CDP’s expanding role in gathering voluntary biodiversity data.

Having been formed in 2000 to collect climate data, CDP has also compiled disclosures on water and forest risks for over a decade. But the organisations marked a step change with its 2021-2025 strategy, which marked its intention to “cover the full range of planetary boundaries and earth systems”.

For the first time, last year CDP asked the 8,850 companies on its database about their willingness to answer biodiversity-related questions; a request garnering an 87% response rate.

“We are already seeing organisations be more willing to disclosure biodiversity data. And one of the most interesting things about COP15 was the level of presence and ambition coming from investors and corporates, which hasn’t been typical in previous biodiversity negotiations,” says Armstrong-Brown, formerly Head of Policy at the Royal Society for the Protection of Birds and a Higher Scientific Officer at the UK’s Ministry of Agriculture.

She adds: “The reason for their interest is the same reason that we’ve got sort of skyrocketing corporate disclosure numbers going on in climate; they recognise the level of exposure that they have to natural capital, and once they realise the risks, it’s very difficult to be complacent about them.”

This growing private-sector inclination towards biodiversity transparency is, according to Armstrong-Brown, an important motivator for governments to implement  legislation in line with their GBF commitments.

“The more we get corporate leadership and financial institution leadership being demonstrated through mechanisms like CDP and through direct advocacy, the more that opens up a mandate for even the most cautious governments to act. However, we know that voluntary corporate engagement with [biodiversity disclosure] is not in scope for every organisation or financial institution, so governments do need to set the baselines.”

Failure to act

The results from CDP’s first fact-finding exercise – not to mention the limited success from the Aichi targets – indicate that legislation may well be necessary if organisations are to make any real progress on managing biodiversity impact.

Less than a third (31%) of companies reported that they have made a public commitment and/or endorsed biodiversity-related initiatives. A quarter say they plan to do so within the next two years.

Further, when asked what actions the company has taken in the reporting year to progress its biodiversity-related commitments, more than half (55%) said they had done nothing.

Armstrong-Brown welcomes the European Union’s Corporate Sustainability Reporting Directive which demands businesses assess their impacts on biodiversity, and have plans in place that guide a transition towards being nature positive by 2050, in alignment with the GBF.

She also supports the progress of the Taskforce on Nature-Related Disclosures (TNFD) framework which she believes will help companies and financial institutions to integrate nature into decision making.

“There is already mandatory disclosure in Europe and the major economies are embedding [biodiversity] as a key disclosure principle. We have seen some good advancement around the biodiversity disclosures that didn’t depend on the outcome of COP15. It’s going to become a business norm just like it did for climate disclosure.”

While there are clear parallels and linkages between climate and nature risks, the latter involve greater complexity and dependencies. Armstrong-Brown concedes there are challenges with understanding the impact on biodiversity across complex supply chains, and then with ensuring finance is directed to the right areas.

“There is a whole lot in supply chains that needs to be worked out and we don’t have very good mechanisms to transfer the capital back down to where action is most needed. That’s an area that [CDP is] extremely interested in, but we need to get the supply chain disclosure right to be able to understand more clearly how to direct the finance.”

Expanding the remit

CDP will continue to develop its biodiversity-related questions potentially expanding the remit, but Armstrong-Brown says the organisation also wants to better integrate its disclosure process to make collation and analysis more efficient.

“The first climate questionnaire began 20 years ago and since then we’ve added more environmental disclosures including water, deforestation and biodiversity. We have ended up with multiple additional separate questionnaires, but it would be preferable to have an integrated disclosure framework,” she says.

Armstrong-Brown adds there needs to be greater emphasis on how corporates move beyond disclosure and into action.

“Disclosure and accounting are very important but we aren’t doing this to find out which companies are the best at auditing. We are doing this for a bigger purpose which is to manage climate and environmental risks.”

The Kunming-Montreal Global Diversity Framework: key targets

  • Restore 30% degraded ecosystems globally (on land and sea) by 2030
  • Conserve and manage 30% areas (terrestrial, inland water, and coastal and marine) by 2030
  • Stop the extinction of known species, and by 2050 reduce tenfold the extinction risk and rate of all species (including unknown)
  • Reduce risk from pesticides by at least 50% by 2030
  • Reduce nutrients lost to the environment by at least 50% by 2030
  • Reduce pollution risks and negative impacts of pollution from all sources by 2030 to levels that are not harmful to biodiversity and ecosystem functions
  • Reduce global footprint of consumption by 2030, including through significantly reducing overconsumption and waste generation and halving food waste
  • Sustainably manage areas under agriculture, aquaculture, fisheries, and forestry and substantially increase agroecology and other biodiversity-friendly practices
  • Tackle climate change through nature-based solutions
  • Reduce the rate of introduction and establishment of invasive alien species by at least 50% by 2030
  • Secure the safe, legal and sustainable use and trade of wild species by 2030
  • Green up urban spaces.

Source: European Commission

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