Biodiversity and Nature-related Disclosures

BIODIVERSITY AND NATURE-RELATED DISCLOSURES

3.1 MAIN CHALLENGES FOR INVESTORS AND COMPANIES ON BIODIVERSITY ACTION

S ome challenges may arise when analyzing, collecting, and managing biodiversity data. The two most relevant today are the following: Data collection and management. Because of the interdependency between climate and biodiversity as well as their interconnection with ecosystem services, one of the biggest challenges for investors and corporates is access to data. If data is available, it is often old, unrefined, and fragmented, thus creating a challenge to disclose and therefore manage risks. In addition to this, data is often generated with science and research purposes, rather than for reporting and managing risks. Corporates and investors still have a long way to understand how to integrate multiple databases for different species and ecosystems around the world. Furthermore, some companies are still catching up with the overall ESG disclosure trend, and may take time to get up to speed on biodiversity-specific disclosures. Furthermore, biodiversity (and other ESG) data points are more useful when collected more frequently—rather than on an annual basis—given that nature is not linear. This means that businesses need not only better but also more frequent data. Fortunately, technology has created tools that can help improve access to biodiversity data, including machine learning and artificial intelligence, sensor-detectors, satellite images, and Geographic Information Systems (GIS). All together, these tools will become more relevant as corporates and businesses begin to collect data on a regular basis to manage their exposure to climate and biodiversity. ESG framework alignment and data standardization. An additional reporting framework in the already-wide ESG‘alphabet soup’may represent an additional challenge for companies disclosing ESG risks. As companies keep aligning and standardizing their reporting with investors’ requirements, there is still a large gap between supply (what companies include in their ESG reports) and demand (i.e., what investors request). Data standardization is relevant by sector, to achieve comparability, yet it is important to keep in mind that it may take years to achieve this in biodiversity.

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February 2023