January 2, 2023
The Kunming-Montreal Global Biodiversity Framework could have significant impacts on corporate disclosures & ESG reporting
On December 19, after more than four years of negotiations and repeated delays due to the COVID-19 pandemic, nearly 200 countries signed an agreement to protect nature and stop biodiversity loss. The agreement lays out the Kunming-Montreal Global Biodiversity Framework (GBF), which recognizes that urgent policy action is required to reverse biodiversity loss by 2030 and allow for the recovery of all ecosystems by 2050. The framework also emphasizes recognizing and respecting the rights of indigenous peoples and local communities.
The approved GBF comprises 4 major goals and 23 targets to be achieved by 2030. These include:
- Conserve 30% of the world's terrestrial and aquatic ecosystems
- Restore at least 30% of the world's degraded ecosystems
- Reduce to near zero the loss of areas of high biodiversity importance
- Reduce by half excess nutrient releases and risks from pesticides and hazardous chemicals
- Redirect at least $500 billion per year in subsidies that harm biodiversity to incentives for biodiversity conservation and sustainable use
- Mobilize $200 billion per year in biodiversity-related funding from public and private sources
- Raise international financial flows from developed to developing countries to at least $30 billion per year
- Reduce or mitigate the impact of invasive alien species on biodiversity and ecosystem services
- Cut global food waste by half and reduce overconsumption and waste generation
Of particular interest for business is target 15, which specifically calls for measures to ensure large, transnational companies and financial institutions regularly monitor, assess, and transparently disclose risks, dependencies, and impacts on biodiversity associated with their operations, supply and value chains, and portfolios.
Different approaches to assessing biodiversity risks are currently converging in a unified cross-sector framework to manage and disclose nature-related risks. Represented by financial institutions, corporations, and market service providers with over $20 trillion in assets, the Taskforce on Nature-related Financial Disclosures (TNFD) aims to develop and deliver a risk management and disclosure framework to help companies report and act on natural capital risks.
Building on the approach taken by the Taskforce on Climate-related Financial Disclosures, TNFD has already released three beta-versions of its framework for testing and consultation, and a final version is expected to be available in September 2023. As companies prepare to meet the new GBF target requirements, understanding how to use such frameworks to assess and disclose biodiversity risks is likely to become an increasingly important component of ESG reporting.
How Exponent Can Help
With decades of experience and a team of industry experts in ecological, environmental, and data sciences, Exponent can assist clients in navigating the complex landscape of biodiversity data and metrics and help businesses better prepare to meet disclosure requirements. Exponent's interdisciplinary expertise allows clients to rigorously evaluate impacts and dependencies on nature, develop risk management strategies, and systematically implement reporting frameworks. As companies transform operations and corporate culture to meet sustainability targets set by international standards, Exponent can help minimize environmental, transitional, and reputational risk and support long-term sustainable performance.