The Climate Disclosure Standards Board (CDSB) has released new guidance for disclosure loss of biodiversity. The non-profit organisation's Biodiversity Application Guidance aims to support organisations in preparing "high-quality disclosures" that mainstream the assessment of biodiversity-related financial information.
It is made to complement the CDSB Framework, one of the main resources from which the 2017 recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) were drawn.
More than 50% of global gross domestic product ($44 trillion) is moderately or highly dependent on nature and over 2.1 billion jobs rely on effective management and sustainability of ecosystems, CDSB said.
However, less than half of Europe's largest companies including reference to the topic in their reports, CDSB said, citing its own research.
Its guidance is designed around the first six reporting requirements of the CDSB Framework. Some of its recommendations include:
- Governance
- Management's environmental policies, strategies and targets
- This step recommends using a 'biodiversity footprint assessment'. This involves cross-linking a form of product life cycle and/or value chain analysis to the physical locations of business activities and the various biodiversity drivers involved.
- This step supports the identification of species, ecosystems, geographical areas and products/services that are priorities to the organisation from a biodiversity management perspective.
- CDSB said that, where relevant, organisations should provide details of the mitigation hierarchy (see below) approach taken
- REQ-03 Risks and opportunities
- This step includes guidance on risks related to: physical, policy and legal, market, technology and reputational.
- It includes guidance on opportunities related to: resource efficiency, 'products, services and market', financial incentives, resilience and reputation and relationship with stake-holders.
- Sources of environmental impact
- This step includes guidance on: typologies of biodiversity metrics and indicators; impact drivers e.g. resource exploitation, and example metrics and direct measurement techniques.
The mitigation hierarchy refers to the following sequence of actions:
- Avoid impacts on biodiversity;
- Reduce biodiversity impacts as far as possible;
- Restore/remediate impacts that are immediately reversible; and
- Offset residual impacts to achieve a desired net outcome (e.g. no net loss or net gain).
Under each disclosure requirement is a disclosure checklist and a list of resources, as well as assessment tools and examples.
CDSB said the intended users are organisations, both single companies and corporate groups, and those responsible for financial, governance and sustainability reporting.
The first version of CDSB's Framework, released in 2010, focused on the risks and opportunities that climate change presents to an organisation's strategy, financial performance, and condition.
CDSB has previously released application guidance for climate-related disclosures and water-related disclosures.
Business drivers of biodiversity loss outlined by the CDSB
CDSB said that, "aligned with the pressures on nature identified by the Science-Based Targets Network and the direct drivers identified by IPBES, the main causes of biodiversity loss include, but are not limited to":
- Land-, freshwater- and sea-use change causes habitat and ecosystem loss, degradation and fragmentation, and can lead to the extinction of species and the loss of ecosystem functions and related ecosystem services. Land-use change is the leading driver of terrestrial and freshwater biodiversity loss, with agricultural expansion being the most widespread form of land-use change. The planetary boundary of land-system change has been deemed to be crossed.
- Resource exploitation refers to the exploitation of animals, plants and other organisms, as well as natural resources such as timber, soil and water (mainly through harvesting, logging, hunting and fishing). The rate of resources exploitation often exceeds their capacity for regeneration with ecological consequences including extinction of species, genetic drift (a change in the gene pool of a population) and habitat degradation. Resource exploitation is the leading driver of marine biodiversity loss.
- Climate change and its related effects have direct and indirect effects on the distribution of species, their physiology and behaviour and on modification of habitats. Climate change increasingly exacerbates the impact of other drivers due to compounding effects.
- Pollution, including agricultural pollutants (e.g. fertilisers and pesticides), industrial emissions and marine plastic pollution, cause environmental change, such as modifying the physical and chemical state of soil, air and water, resulting in the degradation of ecosystem quality and threats to plant and animal species. Light and noise pollution, which can result from business operations, also impacts biodiversity through modifying species behaviour and distribution.
- Invasive species, which may be introduced deliberately or accidentally by organisations, pose a threat to ecosystems, habitats and native species, as well as human health and the economy through their establishment and propagation.
From: Environmental Finance