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The Aligning Biodiversity Measures for Business collaboration has recently published a review paper on the drivers and current practice around business measurement, reporting and disclosure and the role of these approaches in future business disclosure for informing global policy targets. It is entitled Biodiversity measures for business: Corporate biodiversity measurement, reporting and disclosure within the current and future global policy context.
In addition, the review paper provides recommendations for policy makers to create a step change in business action to measure biodiversity impacts, dependencies and performance.
Authors of the review paper highlight that:
Drivers for biodiversity measurement, reporting and disclosure by business are strengthening
- There are increasing drivers for businesses to measure and report on impacts and dependencies on biodiversity with rising awareness of the material risks that biodiversity loss presents to business performance. These include regulations, market forces (consumer pressure), physical risk, reputational risk, transition risk, securing operational efficiencies and ability to access finance.
- International agreements, policies and related goals, particularly in the context of the CBD’s developing post-2020 global biodiversity framework, can provide a framework to report against. However, business responsiveness to the Aichi targets has been limited.
- The number of national or regional regulations for business measurement and biodiversity reporting is expected to increase and measurement and reporting obligations will likely become stricter. In France, for example corporate biodiversity footprints will soon become mandatory.
- Voluntary measurement and disclosure mechanisms exist that address biodiversity and have achieved widespread uptake by businesses (for example the Global Reporting Initiative or CDP). To scale these up, supportive regulations and policies are required, especially to stimulate nonlisted companies to increase their public reporting efforts.
Current and future practice of business biodiversity reporting and disclosure needs improvement
- The quality of biodiversity information disclosed by business is poor and gives little insight into business risk or performance, focusing on management narratives with little quantitative, and non-monetary information. Changes in biodiversity status (extent and condition) due to business activities and those of others must be measured and disclosed for effective reporting.
- Biodiversity measurement approaches have been developed that address a range of business needs and are already being used by leading businesses. At least twelve different biodiversity measurement approaches have been developed to answer different business needs or applications (e.g. to assess current or past performance, or compare products), which are analysed in this paper. They have the potential to support improved disclosure of biodiversity impacts and risks in different ways and may also help companies communicate their contributions to the Sustainable Development Goals (SDGs) and the post-2020 global biodiversity framework.
- A broadly agreed accounting framework that builds on the goals and targets in the post-2020 global biodiversity framework could support business disclosure by providing an assessment of net biodiversity impacts over time. The soon to be released Biological Diversity Protocol4 could help to address this.
RECOMMENDATIONS
The engagement of the private sector will be essential to the successful implementation of the post2020 global biodiversity framework. Determining the scope, scale and success of such engagement will require a step change in business action to measure their biodiversity impacts and dependencies and performance. To enable this, government policy makers are collectively encouraged to undertake the following:
Build business awareness of the value of biodiversity and how to measure impacts and dependencies
- Investigate emerging biodiversity measurement and disclosure approaches and support their uptake by business through guidance and outreach via business associations and business and biodiversity/natural capital platforms.
- Highlight the importance of good reporting practices, for instance through sector guidance on common issues and risks that should be reported on. Even reporting on climate impacts – a more advanced area of environmental reporting – shows that the depth and strategic level of reporting is not well developed, although broadly accepted standards are available.
- Build business and financial institution awareness of their impacts, dependencies, risks and opportunities associated with biodiversity to drive action, measurement and disclosure on biodiversity. In addition, building an understanding of how this relates to other aspects of business environmental strategies, for example climate change mitigation and adaptation, can also drive business measurement, action and disclosure on biodiversity.
Ensure a business-relevant post-2020 global biodiversity framework
- Consider how the proposed goals, targets and indicators for the post-2020 global biodiversity framework apply to the private sector as policy responses are formulated. This could start by determining those sectors with the most significant impacts and dependencies on biodiversity and availability of indicators and data to ensure uptake.
- Formally acknowledge in the development of the post-2020 global biodiversity framework that businesses and financial institutions are key actors to mainstream biodiversity into policies and actions of financial, economic, planning, sectoral units within business, financial institutes and governments organizations. This could be done in coordination with the CBD’s Long-Term Approach to Mainstreaming (LTAM) biodiversity.
- Facilitate the engagement of business in the development and implementation of the post2020 global biodiversity framework and ensure the development of credible, business supported biodiversity measurement approaches and science-based targets.
- Commission an independent review of business-focused targets, measures and datasets as part of the process to develop and implement the post-2020 global biodiversity framework.
Require mandatory corporate biodiversity performance disclosure
- Engage in existing initiatives to develop an internationally agreed natural capital accounting framework. Engagement will promote harmonisation of business and government natural capital accounting and integration of this into financial accounting. This must ensure adequate inclusion of biodiversity in natural capital accounting through requiring that businesses measure impacts and dependencies on natural capital (and as a part of that biodiversity) and associated values. This would also address key data gaps in national natural capital accounting.
- Provide explicit guidance on biodiversity measurement and valuation in addition to reporting within existing mandatory and voluntary reporting requirements.
- Address both listed and non-listed companies through mandatory requirements – for instance based on the EU Directive on non-financial reporting. They work under different accountability structures, and mandatory reporting can be used to publicly inform both shareholders and societal stakeholders.
- Support voluntary biodiversity measurement and reporting for businesses that meet certain criteria as a precursor to a mandatory requirement to disclose company biodiversity performance. This should require disclosure of biodiversity-related impacts and dependencies of direct operations and supply chains, risks and opportunities associated with these, as well Page 7 as biodiversity footprints, overall net impact on biodiversity and response to calls for a Task Force on Nature-related Financial Disclosure (TNFD). Small and medium sized businesses could be subject to less onerous requirements
- Establish mechanisms for inter-governmental working and business-finance-government collaboration on business measurement and reporting of biodiversity performance.
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