Self-reported data from over 7,700 companies that responded to questions on biodiversity through CDP’s climate change questionnaire shows they are ready to disclose on biodiversity, sending a powerful signal to negotiators ahead of COP15.
A majority of companies worldwide have yet to translate commitments on biodiversity to action, according to new data released this week by CDP — the not-for-profit that runs the world’s environmental disclosure system for companies. This is despite promising findings that show corporate readiness to disclose on biodiversity, as governments prepare to negotiate mandatory environmental disclosure next week at the highly anticipated COP15 summit in Montreal.
Recent losses of biodiversity and associated ecosystem services already cost an estimated at US$4-20 trillion per year and are likely to increase exponentially. Biodiversity data reported through CDP for the first time in 2022 shows that:
31 percent of companies have made a public commitment and/or endorsed biodiversity-related initiatives, with another 25 percent planning to do so within the next two years.
If these companies follow through, by the end of 2024 over 56 percent will have voluntarily made commitments and/or endorsed initiatives related to biodiversity.
While commitments are a necessary starting point, CDP’s data indicates that companies are not yet translating them into tangible action:
More than half (55 percent) of companies have not taken actions to progress their biodiversity-related commitments in the last year.
Nearly three-quarters (70 percent) of companies do not assess the impact of their value chain on biodiversity.
The results are even more stark when looking at sectors known to have the most damaging impacts on nature, such as 74 percent of those in the apparel sector and 73 percent of those in manufacturing who do not assess the impact of their value chain on biodiversity. This suggests that many of the companies with the opportunity to make the greatest positive impact are still failing to take meaningful action to stop biodiversity loss and environmental degradation.
These findings make the outcomes of the UN Convention on Biological Diversity’s COP15 summit even more critical. Target 15 of the Global Biodiversity Framework, to be negotiated at COP15, includes a proposal for mandatory requirements for all large businesses and financial institutions to assess and disclose their impacts and dependencies on nature. This has the potential to underpin an economic transformation: Not only will it drive more and faster action from companies to reduce biodiversity loss and ecosystem degradation, but it will help investors to understand the biodiversity-related risks and opportunities of their portfolios and redirect capital toward sustainable activities.
“As CDP collects data from companies on biodiversity for the first time, it is positive to see their willingness to disclose this information,” says Sue Armstrong Brown, Global Director for Environmental Standards at CDP. “This is reflective of an uptick in corporate interest in nature more generally, with significant increases in forests and water disclosure in 2022. Many leading companies have for years recognized the absolute need to understand their relationship to the natural world: the material and systemic risks they face, the opportunities available to them and the impacts they have on the environment. This is also clearly reflected in the nearly 8,000 companies engaging with CDP on biodiversity.
“But our findings also point to the challenges facing companies who want to take action: Even when some companies are ahead of the curve and recognizing these risks, commitments are not turning into action at the pace we need to boost resilience, and to halt and reverse biodiversity loss. COP15 must close the loop and turn interest into action.”
There is clearly appetite for mandatory disclosure from the global economy, with business and investors recognizing the tangible benefits more standardization and guidance can bring. Just last month, more than 330 businesses with more than US$1.5 trillion in combined revenues called on heads of state to make nature-related disclosure mandatory at COP15.
“The unravelling of nature is underway; and investors need to act now — starting with a better understanding of how our investments impact nature and how nature loss may translate into financial risks,” says Jane Ambachtsheer, Global Head of Sustainability at BNP Paribas Asset Management. “To achieve this, we need better and more consistent disclosure from the private sector, which is why we provided funding to CDP to introduce new questions linked to nature loss and biodiversity. It is also why we actively participate in the TNFD and support Business for Nature’s "Make It Mandatory" campaign. Ultimately, sunlight is the best disinfectant. Enhanced disclosures enable us to allocate capital in a way that can help protect our clients from risk, while contributing towards a better future for society and the planet.”
“COP15 is often referred to as a ‘once in a decade’ opportunity, but it’s actually once in a generation. In ten years’ time, with little intervention, it is likely our biodiversity and ecosystems will be damaged beyond repair,” Armstrong Brown says. “CDP’s new data show that the voluntary progress already made should be all policymakers need to finally make biodiversity disclosure mandatory. Governments must seize this chance and create the enabling environment companies need to drive forward their commitments by agreeing a clear and ambitious Global Biodiversity Framework. This must include mandatory environmental disclosure through Target 15.
“Once agreed, CDP stands ready to leverage our global environmental disclosure system, through which nearly 20,000 entities disclosed in 2022, to accelerate implementation of the new Global Biodiversity Framework and track progress against its targets. This will in turn drive action to protect and restore biodiversity across the global economy.”