The biodiversity challenge - another call to action for the tech sector
Biodiversity is hitting the headlines as COP15 takes place in Montreal. It is a topic that tech companies are likely to be hearing much more about over the next few years.
Even though the problem of nature destruction and loss is mostly overshadowed by the much higher profile climate change debate, this vital, overlapping issue is slowly starting to rise up the corporate agenda.
In fact, a third of the 7,700 companies (31%) that responded to CDP’s latest survey said they had already publicly committed to, or endorsed, biological diversity-related initiatives. Another 25% indicated they planned to do so over the next two years. CDP (formerly known as the Carbon Disclosure Project) is a non-profit that runs a global environmental disclosure system for companies, cities, states and regions.
On the downside though, most of these public pledges have yet to yield any fruit. Some 55% of those committing to change admitted having failed to take any action over the last year. Seven out of 10 also acknowledged having failed to assess what impact their value chain was having on nature.
These disappointing findings came to light only a week before the start of the COP15 conference on biodiversity in Montreal (7-19 December). The aim of the meeting is to renegotiate the United Nations’ targets – called the Global Biodiversity Framework (GBF) – for the coming decade after the 196 nations that signed up to last decade’s goals made very little progress in achieving them. The US continues to remain notably absent from the line-up.
Importantly for the tech industry though, Target 15 of the GBF includes proposals mandating that all large companies and financial institutions assess and disclose their dependencies and impacts on nature. The aim here is to encourage faster and more effective action in order to prevent further habitat and species loss – and it appears to have some big backers.
More than 330 organizations, including large tech vendors, such as Fujitsu and Salesforce, publicly backed Target 15 last month by signing up to a COP15 Business Statement. In it, they urged heads of state to move beyond voluntary mechanisms in order to “transform the rules of the economic game and act now”.
A new report entitled ‘Make It Mandatory: the case for mandatory corporate assessment and disclosure on nature’ published by CDP, Business for Nature and Capitals Coalition, explains why. It attests that going down this route would help boost corporate accountability, engage investors and consumers, and make competition for business fairer.
But at the same time, the report also warned that a lack of pertinent data currently meant many businesses were making inefficient and ineffective nature-related decisions. As a result, many of them were damaging not just the natural world and the communities that rely on it but shareholder value too.
Sebastian Leape, Chief Executive of Natcap Research, put it rather more bluntly during a presentation at a Tech and Biodiversity conference hosted by British technology trade association TechUK at law firm Linklaters’ London offices last week. The world, he said, is “on the precipice of ecosystem collapse” - the so-called ‘sixth mass extinction’ - which will inevitably have a major impact not just on the natural world but on the global economy too. What this means is that:
Yes, there’ll be a cost to acting, but an even higher cost of inaction.
The benefits of taking action on biodiversity
One of the upsides of taking such action though is that it could present commercial opportunities. The Business Statement signatories believe, for example, that shifting to a nature-positive economy would lead not only to the creation of nearly 400 million jobs by 2030 but the production of $10 trillion-worth of annual business value at the same time.
This scenario is definitely one from which the tech sector could benefit. Craig Melson, TechUK’s Associate Director of Climate, Environment and Sustainability, may have described the industry as a “bit head-scratchy” about biodiversity, with most companies failing to see it as a “material issue”, leading to inevitable underinvestment.
But Clara Johnston, Marine Business Development Manager at NatureMetrics, a provider of biodiversity monitoring data, believes the tech sector has a key role to play in developing nature-focused products and services. For example, she explains:
Nature is inherently spatial and so, unlike the climate, it matters where things are located. This means there’s a huge drive for products, solutions and tools that have a geospatial, real-time data angle and that cover the entire supply chain.
Three other areas with potential, believes Isobel Ashbey, Tech for Good Lead at product development consultancy Cambridge Consultants, are measurement, direct intervention and helping businesses to transition:
Biodiversity has a problem with measurement as there’s no single sensing product that will provide everything – you need multiple sources of data and tools to manage it. In terms of direct intervention, you can use things like drones to measure forest biodiversity or locate people undertaking illegal activities. But with transition, the situation is similar to net zero in that it impacts all aspects of the business. So you have to do things in new ways, which will require tech innovation.
Demand for such offerings is only likely to build over the coming years too as regulatory - and customer - pressure on organizations and their supply chains starts mounting, even if much of the focus today is on sustainability reporting more broadly.
For instance, the International Sustainability Standards Board (ISSB) was set up about a year ago to create a global baseline of sustainability-related disclosure standards, and published its first draft in March. The aim of the initiative is to help investors make informed decisions regarding companies’ sustainability-related risks and opportunities.
The emerging disclosure landscape
Also in the works is the Taskforce on Nature-related Financial Disclosures’ (TNFD) proposed risk management and disclosure framework. The Taskforce currently consists of 40 members from corporates, financial institutions and market service providers.
The goal of its framework is to enable organisations to report, and take action, on mitigating nature-related risks, with the ultimate aim of ensuring global financial flows that create nature-positive, as opposed to nature-negative, outcomes. Currently in beta release, a final version is expected to be agreed early next year and adopted by the autumn. Kim Rybarczyk, Counsel at Linklaters, said:
TNFD is about factoring nature into financial-related decisions, but there’s a lot of confusion around it. It’s a framework for small and large companies to report on the risks for nature and the opportunities, but it’s not a standard. It’s intended to sit above other standards and is based on the work of the TCFD (Taskforce on Climate-related Financial Disclosures).
Such standards include the BS 8683:2001, a British Standard for designing and implementing Biodiversity Net Gain, and BS 8682 for natural capital accounting.
At a more regional level, meanwhile, the European Union (EU) is currently working on its new Corporate Sustainability Reporting Directive (CSRD). The legislation, which is due to be introduced in June 2023, will mandate that large public interest companies with more than 500 staff publish regular reports on their environmental and social impact activities. The aim is to make it easier for stakeholders to evaluate their performance, thereby encouraging more responsible behaviour.
Large companies will be required to submit their first report covering the 2024 financial year on 1 January 2025. Listed small-to-medium businesses (SMBs) will follow suit from 1 January 2027 and non-listed SMEs as of 1 January 2028.
In order to effectively address what Susanne Baker, Partner at sustainability consultancy ERM, describes as “a huge disclosure landscape emerging”, it is vital to “embed good biodiversity practices into your wider systems” rather than simply see it as an “add-on”, believes Melanie Worthy, Government Engagement Manager at the BSI standards body.
To this end, Amirah Kahn, Senior Consultant for Sustainability and Climate Change at Deloitte, advises companies to:
Have a good understanding of your business, its nature impact and industry regulations because you need to assess dependencies and risk and create a prioritised strategy to address them. You then need to set ambitious targets, mobilise funding and resources, and create a circular model to drive value across the value chain. But it’s also important to advocate across the business, community and government in order to generate wider change too.
Biodiversity and the widespread destruction of nature are all too frequently forgotten issues as companies focus on fulfilling their climate change commitments - despite the two crises being so intrinsically linked. But as the regulatory landscape begins to shift and safeguarding nature starts to receive the attention it both needs and deserves, the tech industry - if it is willing to pick up the gauntlet - could find itself at the forefront of supporting and generating immensely positive change here.