Corporate disclosures need a biodiversity outcome focus and regulatory backing to deliver global conservation goals

Abstract

To achieve the goals of the Kunming–Montreal Global Biodiversity Framework (KMGBF), agreed by Parties to the Convention on Biological Diversity, there is an urgent need to address the economic drivers of biodiversity loss. The KMGBF includes a target to encourage businesses and financial institutions to disclose their impacts and dependences on biodiversity. While transparent biodiversity disclosures could help shift business operations away from activities that harm biodiversity, the weak target wording implies voluntary and unstandardized disclosures, which tend to be low quality and ineffective. Moreover, examination of scientific and practical insights strongly indicates that the evolving strategy of disclosures led by businesses may prioritize short‐term business and investment interests while neglecting biodiversity outcomes and the wider systemic risks they pose. We argue that there is a risk of limited if not altogether perverse outcomes from the target, where businesses provide ambiguous disclosures that fail to reduce impacts on biodiversity, yet an increase in volume and frequency of disclosures suggests progress toward the target. Consequently, we advocate for a regulatory approach, supported by scientific engagement in the development of disclosure standards and associated policy indicators, to ensure that the emerging response to the KMGBF target on disclosures avoids perverse outcomes and instead results in positive impacts on biodiversity.

How will better data (and better use of data) enable us to save the planet?

“…One concern expressed by many reviewers was that reporting companies are not required to justify what they consider to be material risk, and could therefore simply exclude impacts for which they have no detailed information, for instance, those generated through complex value chains. focused on KMGBF target 15, improving compliance with reporting on risks, dependencies, and impacts, and not on a mechanism that allows the impact of the actions that companies take, in particular through mitigating impacts, on KMGBF targets 1 to 4 [33]. While the EU ESRS is explicitly focused on "double materiality," requiring companies to report on both impacts and dependencies, the regulation is currently not well developed in terms of guidance to understand impacts on underlying biodiversity.…”

“…If we want to ensure that corporate disclosure really relates to impacts on biodiversity, it is essential that this placeholder is replaced with a metric that genuinely reflects risk and impact to threatened species in particular places, such as STAR. In a similar way, the KMGBF currently only includes a target to “encourage” businesses and financial institutions to disclose their impacts and dependencies on biodiversity, and the weak wording implies voluntary and inconsistent disclosure that does not link directly to underlying biodiversity [ 33 ].…”

“…An additional key component of making disclosure generate significant reductions on biodiversity impacts is to ensure it is backed by regulation [ 33 ]. In some places, particularly the European Union, this regulatory framework is developing.…”

“…While evaluation for dependency risk is still incomplete and reliant on models that are variably robust, there is a great deal of existing work and toolkits that help understanding of ecosystem flows and their interaction with corporate value [ 39 , 40 , 41 ]. Similarly, TNFD, for example, is focused on KMGBF target 15, improving compliance with reporting on risks, dependencies, and impacts, and not on a mechanism that allows the impact of the actions that companies take, in particular through mitigating impacts, on KMGBF targets 1 to 4 [ 33 ]. While the EU ESRS is explicitly focused on “double materiality,” requiring companies to report on both impacts and dependencies, the regulation is currently not well developed in terms of guidance to understand impacts on underlying biodiversity.…”

“…Even in the KMGBF, Target 15 only requires companies to improve reporting and disclosure actions, and has no connection to delivery of Goal A or Targets 1 to 4 that refer to the underlying biodiversity. This seems likely to encourage companies not to quantify or act on their impacts on biodiversity, as reporting and disclosure actions may be seen to be sufficient [ 33 ].…”