Biodiversity was a hot topic at the COP26 and the COP15 biodiversity summits, with more than 100 global leaders committing to stop deforestation by 2030 and begin restoring the world’s forests. Following this, biodiversity has been systematically introduced to the corporate sector with the likes of the Taskforce on Nature-related Financial Disclosures (TNFD) and a biodiversity section within the CDP.
TNFD released a beta framework, which will undergo modifications over the next 18 months, to be released in late 2023. The TNFD framework is set to mirror the existing Task Force on Climate-related Financial Disclosures recommendations, and will offer guidance incorporating nature into a company’s enterprise risk and portfolio management process. Similarly, this year’s CDP and some industries’ DJSI questionnaires include biodiversity-focused questions. This increase in biodiversity reporting requirements will no doubt act as the catalyst to promote the companies’ accountability, and reduce their impact on biodiversity in the years to follow.
While the TNFD and CDP questions have been welcomed by large investor organisations, corporates are not as warm. Just as climate reporting was initially met with some scepticism from companies, it is understandable that not all are excited by the additional reporting requirements adding to their already existing framework fatigue. As TNFD is a brand-new framework, compared to the new CDP questions, there are questions as to how compatible the recommendations will be against existing biodiversity-focused reporting, such as the additional CDP questions. Companies are craving a shift towards more standardised and aligned disclosure; however, this is likely a long way off.
As governments and large organisations promote biodiversity investments, companies will experience large pressures to comply. And until the wish of a universal framework is granted, companies must comply with each new biodiversity reporting standard in collaboration with other ESG regulations.
Author: Lucy Dugdale-Moore