Biodiversity is declining faster now than at any other time in human history. The current rate of extinction is tens to hundreds of times higher than the average over the past 10 million years – and it's accelerating. Although the world’s 7.6 billion people represent only 0.01% of all living things, humanity has already caused the loss of 83% of all wild animals and half of the plants. Eighty-three per cent. Let that sink in.
This severe decline in biodiversity means we are fast approaching irreversible tipping points with far-reaching consequences for the economy and society. These tipping points occur when the earth’s systems leave what scientists call the ‘safe operating space for humanity’. Biodiversity and climate change are the two earth systems considered to be core indicators of planetary health. They are deeply connected to each other and to other earth systems, but due to increased pressure from human activity, they are both on the brink of irreversible change with catastrophic consequences.
The inextricable link between them means they must be tackled together. But while business action on climate change has become a top priority, the same cannot be said for action on biodiversity. Its decline presents obvious risks for businesses – we know that more than half of the world’s GDP - $44 trillion – is highly or moderately dependent on nature. Despite this, corporate action and disclosure around biodiversity are limited. Part of the problem is businesses don’t know where to start. It’s a hugely complex undertaking to develop a comprehensive biodiversity strategy, and there is currently limited guidance available to help. While we wait for business guidance and support to emerge, we’ve put together five key considerations for businesses, to get a head start:
1. Understand your biodiversity-related impacts and dependencies.
Investors are starting to take note of the imperative to conserve nature, and the risks to their investments if we fail. The same influential investor groups that helped normalise climate-related risk disclosures are now also pushing for nature-related financial disclosures. Launched on 4th June 2021, the Task Force for Nature-related Financial Disclosures (TNFD) builds on the work of TCFD (Task Force for Climate-related Financial Disclosures). It will provide a framework for organisations to report and act on evolving nature-related risks, to support a shift in global financing away from outcomes detrimental to nature and towards positive nature-related outcomes. We hope the initial investor-led momentum will follow the climate trend, transitioning from voluntary towards mandatory disclosure and governmental regulation.
Biodiversity is complicated. If the work required to align with TCFD is anything to go by, organisations would do well to get ahead and start now to identify and understand their nature-related risks ahead of time. It’s also possible that market or social sentiment on this topic could shift more rapidly than regulatory timelines, so businesses must be prepared. Companies can get ahead of potential regulations by using existing tools like Natural Capital Protocol to understand their risks.
2. Set science-based targets for the climate.
The Science-Based Target Network (SBTN) is working to equip companies with guidance to set science-based targets (SBTs) for all aspects of nature, including biodiversity, climate, freshwater, land and ocean. It builds on the scope of the Science-Based Target initiative (SBTi) which spurred thousands of companies to commit to emission reduction targets in line with climate science and extends this scope with an initial emphasis on nature. In 2020 the SBTN published its initial guidance for businesses and it plans to finalise a fully verified target-setting methodology by the end of 2022. In the meantime, it’s encouraging companies to start gathering data on their nature impacts and dependencies across their full value chain. Laying the foundations through the development of science-based targets for emissions reduction will also help prepare organisations for the SBTN target-setting process.
3. Ensure nature-based solutions are credible and certified.
Nature-based solutions are broadly defined as ‘actions that involve working with nature to address societal goals’. An example of this is restoring and protecting forests and wetlands to increase the amount of carbon they store. They’re widely hailed as a win-win for tackling biodiversity loss and climate change together. While many nature-based solutions are highly successful, such as Costa Rica’s highly effective government-led initiative that pays locals to help restore and reforest the country’s natural ecosystems, this win-win scenario is not guaranteed. If implemented poorly, they can have negative outcomes for biodiversity, local people and the climate. There has been an explosion of corporate net-zero commitments released in recent months that heavily rely on poorly planned nature-based solutions. For example, using just one non-native species in a tree-planting climate mitigation project can create poor soils, degrade biodiversity and make it more costly to sustain the forest in future. Quite rightly, this has led to increased scrutiny surrounding nature-based solutions. It’s therefore crucial that, if your business chooses to invest in this route, you take responsibility for only supporting credible and certified projects.
4. Talk to your stakeholders.
A materiality refresh or a full materiality assessment can be a great way to gain valuable insights from stakeholders – both internal and external – on how to identify and manage biodiversity risks and opportunities for your business. Despite its rising importance, only 10 of the top 20 companies in the UK (by market capitalisation) mention biodiversity in their materiality assessments. Even considering the granularity of topics that fall within the biodiversity umbrella – such as land use or water stewardship – the findings are still underwhelming. The topic of biodiversity just isn’t yet recognised or prioritised as an issue for businesses. This is underlined by the recent WBCSD Reporting matters research which found that only 42% of member companies reference SDG 15 ‘Life on land’ in their reporting. Given the increasing prominence of biodiversity and its impact on business, organisations must start demonstrating rigorous consideration of biodiversity as part of their materiality assessments and in their strategy development. If you’d like to learn more about Radley Yeldar’s unique approach to delivering robust materiality assessments, we’d love to talk.
5. Communicate your position on biodiversity.
Currently, disclosure on biodiversity is patchy. Communicating your businesses’ position on biodiversity and the steps you’re taking to understand nature-related risks will be essential, particularly as public awareness around biodiversity increases. Adopting and implementing voluntary corporate policies and good practices regarding your business’ impact and dependencies on nature – and promoting these amongst your suppliers – is a step in the right direction.
We can and we must turn the tide of biodiversity loss. Nature is our biggest ally in solving the climate crisis. The transformational change required will take a global, collective effort: we’ll need to increase conservation and make changes to the way we produce and consume food and energy. Individual citizens, governments and business leaders across the globe will need to be part of a movement for change with a scale, urgency and ambition never seen before. It’ll require a transformation of business models, to live within the limits of the planet and align with a climate and nature-safe trajectory. The five points outlined above are just the start.