Companies should be legally required to disclose their impact on biodiversity rather than focusing only on emissions, argues Stacey Cougill, director and owner of sustainability consultancy Eight Versa.
- Biodiversity is having its ‘Paris moment’ and more people are realising that fighting its loss is just as important as cutting carbon emissions.
- Damaging the environment also makes bad business sense – companies risk reputational damage, legal action and financial losses.
- By making biodiversity reporting mandatory by law, we can ensure that businesses flourish on models that protect the delicate balance of the environment, instead of destroying it.
Biodiversity is certainly having its moment in the sun. Off the back of what many are calling biodiversity’s ‘Paris Moment’, the international community has finally given the fight against biodiversity breakdown some teeth. At COP15, the historic ‘peace pact with nature’ was signed, including some of the most muscular commitments to protecting nature.
Companies must take note. Most commercial sectors rely on the natural world for their survival. However, if one were to analyse the splashy carbon-reduction commitments made by the world’s biggest and most influential companies, one might be led to believe that once the world hits net zero, the climate crisis will be solved. It won’t.
Just as large companies are legally required to disclose their carbon footprint in the UK, it’s time that British firms were legally compelled to report and disclose their biodiversity footprint too. That’s the only way that British companies will be able to leave their isolated ‘carbon-vision’ in 2022, and understand the full scope of their business’s impact on the world around them.
Biodiversity loss and carbon emissions are inextricably linked. The climate crisis, driven by greenhouse gas emissions, is one of the main drivers of biodiversity loss. Biodiversity loss alters the distribution of biomes, as well as the phenology of both plants and animals. Biodiversity is the fabric that holds the natural world together, and is being torn apart.
The destruction of ecosystems undermines nature’s ability to regulate greenhouse gasses and extreme weather conditions. Ecosystems such as mangroves, marshes and coral reefs all operate as carbon sinks, buffering us against the impact of global warming.
Biodiversity sustains the quality of our air, provides pollination, reduces the impact of natural hazards and underpins the world’s food supply. In fact, the IPBES predicts that more than 75% of the world’s food supply relies on animal pollination. In short, biodiversity is humanity’s life support system.
There is a key difference between the two; biodiversity loss is harder to reverse and is location-specific. Carbon emissions end up in the same atmosphere, regardless of whether they are created in Shanghai or New York. However, if a rainforest is lost by deforestation, it doesn’t matter how many trees you plant elsewhere, the damage to the ecosystem is done.
Similarly, species extinction is largely irreversible; no number of conferences, funding, or pledges will bring the Western Black Rhinoceros back to life.
Unlike many of its kind, COP15 was a watershed moment for biodiversity. COP15 saw some key developments that could allow businesses to live in harmony with nature by 2030. These include the oft-repeated ‘30×30’ targets, to protect 30% of the world’s lands and oceans by 2030, to reform $500 billion per year of environmentally damaging subsidies, and to restore 30% of the planet’s degraded terrestrial, inland water, coastal and marine systems.
While the conversation around biodiversity has been described as being 10 years behind carbon commitments, it appears to be moving 10 times as fast, which may help us avoid moving dangerously closer to several ecological cliff edges.
Political leaders have finally stepped up to protect biodiversity. However, it is now the turn of business leaders to sit up and listen. According to the World Economic Forum, more than half of the world’s GDP depends on nature, and 13 of 18 of the sectors that comprise the FTSE 100, representing some $1.6 trillion, are associated with production processes that rely directly on nature.
Simply put, ecosystem collapse results in business collapse as well. Beverage companies rely on a safe supply of water, food companies rely on the stability of crops, and biopharma companies rely on ecosystems to derive novel sources of medicines. Without a flourishing ecosystem, we cannot have a flourishing economy.
Damaging the environment also makes bad business sense. If a business is publicly damaging the environment, it can rightly expect reputational damage, legal action and financial losses. It’s no wonder then that the Bank of England’s governor Mark Carney has warned that firms that ignore the climate crisis will go bankrupt.
Even though it is in its comparatively nascent phase, biodiversity reporting frameworks must be central to every commercial strategy in 2023. First, companies must ensure that they are familiar with frameworks such as the Task Force for Nature Disclosure Framework. In essence, this is the framework that aims to support a shift of finance away from activities that harm nature, and towards activities that are nature-positive. This stretches far beyond carbon and covers water contamination, land degradation and air pollution.
Yet policymakers have their role to play. As the biodiversity question has finally been asked, companies must be compelled to answer. In the UK, large and publicly listed companies must report their energy use and carbon emissions each year. Protecting biodiversity is just as important as cutting carbon emissions. It follows that large companies should be legally required to disclose their impact on biodiversity too.
Such a framework will be crucial for identifying the finance that flows, through both private investment and government subsidy, towards economic activities that are actively damaging the environment. Currently, the world spends some $1.8 trillion a year on subsidies that harm the environment, which is 2% of the global GDP. These include tax breaks for beef production in the Amazon, to unsustainable groundwater pumping in the Middle East.
The biodiversity credit market, which is set to emerge and should not be confused with compensatory biodiversity offsets, will be used to finance actions that result in nature-positive outcomes. It is critical that we learn from the carbon market and ensure that biodiversity credits have high standards from the start and credits are credible, transparent, and accessible to ensure they contribute to nature conservation and restoration.
COP15 saw the historic landmark commitment for harmful subsidies to be “substantially and progressively” reduced by $500 billion per year by 2030. Yet, we will only truly be able to understand which subsidies are nature-positive or negative if we view them within the wider framework.
Momentum has been created, it must now be sustained. By making biodiversity reporting mandatory by law, we can ensure that businesses flourish on models that protect the delicate balance of the environment, instead of destroying it.