Biodiversity Disclosures May Be Coming

Two business people sitting at a table across from one another engaged in conversation--one is holding a pen and papers

October 7, 2021

Is your business prepared to measure & report material impacts to biodiversity?

The Convention on Biological Diversity (CBD) will meet virtually next week, followed by an in-person meeting in Kunming, China, in April 2022 to ratify a post-2020 global biodiversity framework. Ahead of this meeting the Climate Disclosure Standard Board (CDSB) released a draft biodiversity disclosure guidance document for public comment. The purpose for such guidance documents is to help businesses report material biodiversity-related financial information, such as the impact to business operations if natural resources or ecosystem services are degraded or lost or the financial risk of fines or penalties if business operations adversely affect endangered species or habitats.

A draft version of the CBD's post-2020 global biodiversity framework lists proposed targets to conserve biodiversity. Most relevant to business is Target 15, which reads:

"All businesses (public and private, large, medium, and small) assess and report on their dependencies and impacts on biodiversity, from local to global, and progressively reduce negative impacts, by at least half and increase positive impacts, reducing biodiversity-related risks to businesses and moving towards the full sustainability of extraction and production practices, sourcing and supply chains, and use and disposal."

Though non-binding to businesses, if the final framework is approved by the CBD's 196 parties, there will be increased pressure on companies to align corporate social responsibility policies with its goals, similar to the pressure to align greenhouse gas reduction objectives with targets in the Paris Agreement.

Concurrently, the push for companies to include quantitative rankings of biodiversity dependency and impacts in environmental, social, and governance (ESG) reporting is growing. The challenge is to determine which metrics are most appropriate. Unlike GHG reporting where one metric (e.g., tons of carbon dioxide equivalents released) can feasibly capture a company's impact globally, biodiversity impacts are local to where operations occur and cannot be easily quantified by a single metric.

Several organizations are developing methods for businesses to measure and disclose biodiversity impacts (e.g., CSDB, the Science Based Targets Network, the Align Project, and the Taskforce on Nature-related Financial Disclosures). Whether these methods converge on relevant metrics remains to be seen, as does the determination of which methodology is most appropriate for various types of businesses. Despite the current uncertainty, financial disclosure of biodiversity impacts is coming, and businesses would be well advised to prepare by assessing their reliance on and effects to biodiversity, examining suitable metrics for reporting purposes, and collecting baseline data if they have not already done so.

How Exponent Can Help

With more than 50 years of experience and a large body of industry experts in ecological, environmental, and data sciences, Exponent can assist clients in the successful development and implementation of metrics to measure and report on biodiversity dependency and impacts. Our interdisciplinary expertise is ideally suited to rigorously evaluating different reporting options and developing strategies to best implement those options. As companies transform operations and corporate culture to meet the higher sustainability targets set by international standards, our holistic vision and integrated approaches can help minimize environmental, transitional, and reputational risk. By facilitating compliance with national and international standards, we can also help improve corporate reputation and ESG ratings.