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July 3, 2023

A new perspective on sustainability reporting: Biodiversity

4 Min. Read
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The most powerful defense we have against climate change is biodiversity - the diversity of all living organisms in an ecosystem. Ecosystems with high biodiversity are not only more resilient to the climate crisis, they can also slow down its impact on the rest of the world. Biodiversity is declining for many reasons, including increased land use, destruction of forest ecosystems, and pollution of the oceans, and could become even more threatened in the coming decades, with one million species becoming extinct. It is therefore impossible to keep biodiversity off the sustainability agenda.

Loss of biodiversity also poses risks to the future of business and profitability. For example, an agricultural company may experience financial losses due to reduced natural pollination in the ecosystem. Another risk is that the effects of the climate crisis will increase as biodiversity declines, and companies may experience losses not only in rural areas but also in urban centers due to increased impacts. The floods that have crippled life in the Black Sea region in recent summers are a case in point. It is as important to report and track risks as it is to understand them, and this will also enable companies to keep up with global standards. Platforms such as the Taskforce on Nature-related Financial Disclosures (TNFD), which was established in 2021, are advising investors to invest with nature-related financial risks in mind. Reporting practices that start now can also lead to financial gains in the long run.

New guidance from GRI: Biodiversity 2024

Last January, the Global Reporting Initiative (GRI) released GRI 101: Biodiversity 2024, one of the most important global steps forward in biodiversity reporting. GRI will require biodiversity reporting in all sustainability reports published after January 2026, with only pilot companies benefiting from this framework for now. In the new framework offered by GRI, companies will not only have to report on the impacts on biodiversity in their operations, but also on the steps taken to minimize these impacts and the plans to protect biodiversity in the near future. Another interesting point in the guidelines is the emphasis on supply chain transparency, which shows the importance of publishing transparent and reliable data in future sustainability reporting.

Managing biodiversity impacts 

In addition to environmental measures, the GRI guidelines recommend taking urgent action on biodiversity in the G pillar of ESG; Governance. There are three steps to talking about biodiversity with internal teams, especially senior management:

  1. Training is essential to build the capacity of company leaders on biodiversity and ensure that some key concepts are internalized. Following the training, detailed plans should be developed together, taking into account the risks and opportunities associated with biodiversity.
  2. It is essential that biodiversity targets are discussed openly, both internally and in external reporting. It is also a good idea to discuss the extent to which the targets have been met and what can be done to improve where they have not been met.
  3. It is also possible to raise awareness of the issue by getting involved in various biodiversity initiatives. Participation in these initiatives not only builds capacity among company employees, but also gives you the opportunity to influence future policy. 

The importance of biodiversity in the near future

In short, at this point in the climate crisis, it is not enough for companies to manage only the risks associated with climate change. Biodiversity, which is declining as a result of climate change and pollution, should also be on the corporate agenda as soon as possible and companies should start new efforts to manage biodiversity risks. Some of the most commonly cited risk areas are managing reduced pollination in agriculture, diminishing clean water resources, preventing potential damage to water resources from company operations, etc. 

As part of the CSRD, companies working with the European Union will be required to include biodiversity in their sustainability reports by 2025. In 2026, the GRI will make biodiversity reporting mandatory. It will be valuable to prepare for this change and participate in working groups such as the TNFD. It is also important to establish data-driven systems at every step of the value chain, both to manage performance metrics and to monitor environmental impacts.