Biodiversity and Nature-related Disclosures

BIODIVERSITY AND NATURE-RELATED DISCLOSURES

1. INTRODUCTION

B iodiversity loss is a current crisis of global repercussions, similar and interrelated to that of climate change. By definition, biological diversity is the living component of natural capital, which is in turn defined by the stock of renewable and nonrenewable natural resources such as carbon, water, soil, species, communities, habitats, and landscapes. In terms of animal species, the global population ofmammals, birds, fish, reptiles, and amphibians, for example, declinedby 60% between 1970 and 2014. 1 In fact, on average, 69% of the relative abundance of monitored wildlife has declined from 1970 to 2018. 2 Land-use and land-use changes driven by consumption are the leading cause of ecosystem degradation that ends in the loss of biological diversity through species extinction. Food production around the world has caused 80% of deforestation and 70% of biodiversity loss on land. This has profound consequences that reverberate on how ecosystems and climate work holistically and, eventually, on human life. Soil degradation has cost 10% of annual global GDP in ecosystem services (ESS). This is important since more than half of global GDP (US$44 trillion) is dependent on healthy and well-functioning ecosystems and the services they provide. To halt and reverse this course, the UNestimates that nature and biodiversity protection need an injection of US$384 billion annually by 2025 3 —more than double the current level of investment. Despite of this, only 3% of actual global climate finance flows is spent on nature-based solutions. Meanwhile, governments and multi-national financial institutions are spending between US$500 billion-$1 trillion a year on potentially damaging subsidies to aquaculture, agriculture, and fossil fuels. For the private sector, assessing, disclosing, and reporting risks brought to their businesses and supply chains by the loss of biodiversity is the first step towards biodiversity protection. However, Environmental, Social, and Governance (ESG) frameworks do not currently cover and untangle the main intricacies to disclose biodiversity-related Key Performance Indicators (KPIs), let alone help set targets to prevent the further deterioration of ecosystems. That said, global initiatives led primarily by the UN and sustainable-conscious investors are creating the right tools and guidelines to standardize the data reported. These efforts will be reinforced by policies and regulations requiring the private sector both to disclose and to manage biodiversity loss risks.

1WWF, Living Planet Report (2018), Link. 2WWF, “69% average decline in wildlife populations since 1970, says newWWF report” (2022), Link 3Binnie I., “Nature needs $384 billion annually by 2025, U.N. says”, Reuters (2022), Link. February 2023

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