Biodiversity Reporting and the Private Sector: It's Time for a New Paradigm

By Julia Kostin

Biodiversity is often considered too immaterial, complex or expensive to integrate into private-sector monitoring programs, often leaving it sidelined next to mainstream carbon reporting. A 2020 KPMG report found that less than a quarter of large businesses posing a high risk to biodiversity reported on their impacts. With 55% of the planet’s GDP dependent on biodiverse ecosystems, it is clear that businesses cannot survive on a dead planet, and time is running out to save what is left. Global leaders recently convened at the virtual UN Biodiversity Conference to define the post-2021 biodiversity framework. The deliberations will be finalized at the in-person Conference to be held in spring 2022 in Kunming, China – the private sector should pay close attention to the outcomes of these discussions.

Amid the ongoing climate crisis, the 21st century has been marked by the rapid decline of global biodiversity – a silent phenomenon, hailed as the “sixth mass extinction”, that has been fuelled by decades of intensive resource consumption and ecosystem degradation. A recent progress report by the UN Convention on Biological Diversity paints a grim picture: The global community failed to meet any of the 20 Aichi Biodiversity Targets set out in the Strategic Plan for Biodiversity 2011-2020 and only made partial progress on a handful. Yet there is reason for optimism, as national leaders are beginning to tackle this crisis head-on. January 2021 saw the launch of the High Ambition Coalition for Nature and People, an intergovernmental initiative spanning 45 countries that has committed to preserve 30% of Earth’s nature by 2030. This ambitious goal will require close collaboration between businesses, governments and local communities, and sets the trajectory for biodiversity to become a hot topic for the private sector over the coming years.

The Current Landscape of Biodiversity Reporting

To create effective biodiversity action plans, the business-led monitoring and disclosure of impacts needs to be rapidly expanded at a global scale. The complexity of biodiversity means that its tremendous value cannot be captured by any single metric – a targeted approach involving a portfolio of indicators is required. For the private sector, this means developing monitoring strategies that balance costs and coverage. Businesses will need to identify the primary biodiversity risks and dependencies in their supply chains, select effective indicators that can capture biodiversity impacts in these high-risk areas and engage with suppliers, stakeholders and dedicated teams to encourage adoption and implementation.

Publicly compiled databases can be used as a starting point and valuable source of information: the Biodiversity Indicators Partnership, an initiative that aims to strengthen and coordinate global biodiversity reporting, has developed an extensive overview of biodiversity indicators that have been developed for different industry sectors, targets and locations. Alternatively, businesses may choose to adopt and disclose on Voluntary Sustainability Standards (VSS) for high-risk commodities and countries (see this breakdown by the FAO for examples of VSS used in the banana industry). While VSS can provide market-based tools to incentivize biodiversity conservation, many such tools still lack credibility or fail to ensure compliance and traceability, making it difficult to effectively quantify biodiversity impact. To address this, the UN Conference on Trade and Development recommends using high-quality and widely adopted VSS that are already aligned with robust systems for monitoring, assurance and transparency (i.e. certifications).

Businesses can also align their biodiversity monitoring with international reporting standards, a handful of which already include comprehensive biodiversity metrics. Most notably, the GRI’s Biodiversity Standard (GRI 304) includes metrics on land management, location, changes to species and ecosystem functions, polluting activities and habitat protection. The GRI also recently secured the funding needed to overhaul and release a new Biodiversity Standard in 2022, which will reflect the latest scientific findings and urgency of the crisis. Other reporting standards, including SASB and CDP’s Forests and Water reports, cover some aspects of sector-specific biodiversity impacts, though both fail to capture impacts to other at-risk ecosystems. Efforts to develop and implement more comprehensive biodiversity standards will only be intensified in the coming years, as exemplified by the European Commission’s mandate to develop EU-wide non-financial reporting standards. In fact, a recent technical report by the European Financial Reporting Advisory Group states that biodiversity will be prioritized in the development of these standards.

Data-Driven Solutions For Quantifying Biodiversity Impacts

The availability of global datasets compiled by non-governmental organizations, governments and research institutions also opens the door for location-based benchmarking and estimation of biodiversity impacts. For example, the Agrobiodiversity Index, launched in 2019, showcases the status and progress of biodiversity conservation across multiple countries. The index focuses on the impact of the food system on biodiversity and, thus, is only applicable to specific commodity types. Nonetheless, it could be useful for integration in private-sector monitoring programs. Global datasets have also paved the way for more comprehensive and scalable biodiversity metrics akin to the measurement of Scope 3 emissions in carbon accounting. The Global Biodiversity Score, developed in 2017 by the Business for Positive Biodiversity Club, can be used to quantify impacts on biodiversity across entire supply chains by integrating data on land use, ecological surveys and purchases by location, sector and commodity. Much of the data for this metric is derived from life cycle analysis databases such as the Local Biodiversity Intactness Index, Ecological Footprints, IUCN Red List and the WWF Living Planet Index.

A newer metric introduced in 2020 uses a more simplified and thus scalable approach: the private-public organization Natural Capital Impact Group, through the University of Cambridge Institute for Sustainability Leadership (CISL), recently launched the comprehensive Biodiversity Impact Metric (BIM). The BIM quantifies the impact of a business’s sourcing decisions on local biodiversity and can be compared across locations and commodities. The metric calls for a simple multiplication of three values: the amount of land needed to produce the commodity, the proportion of biodiversity lost due to land conversion for producing that commodity and the relative global importance of that biodiversity.

BIM comes with certain limitations, given that it does not assess impacts on individual species or locally protected areas, and it produces an evenly weighted score that does not account for relative differences or trade-offs across the three values. Similarly, it reflects impacts resulting directly from production areas, thus not accounting for indirect effects occurring outside the production zone. However, its scalability, comparability and flexibility make it especially appealing for businesses with limited access to data. Furthermore, it allows businesses to identify high-risk locations and develop tailored action plans that can be aligned with global initiatives such as Science Based Targets.

A Paradigm-Shift for Biodiversity Reporting

The rapidly evolving landscape of biodiversity standards, metrics and indices signals a much-needed paradigm shift, sense of urgency and willingness to tackle this crisis. The timing could not be better given that a new set of Aichi Targets will be finalized this coming spring at the in-person UN Biodiversity Conference in Kunming, China. This time, the private sector will undoubtedly face growing pressure to increase transparency and disclosure on progress on biodiversity impact. Doing so is in the best interests of businesses, as those that act now to monitor and reduce their biodiversity impacts will gain a competitive advantage, increase their resilience and make significant contributions toward ensuring a livable planet.