By Ayman Chowdhury, Director, Programs & Advisory at Competent Boards

The conversation around nature has changed significantly in recent years. Advancements in legislation, regulation, and initiatives like the Taskforce on Nature-related Financial Disclosures (TNFD) and Science-Based Targets for Nature (SBTN) have heightened the necessity for Boards to address nature-related concerns. These issues pose significant risks for companies, and stakeholders are increasingly demanding corporate responsibility in fostering a nature-positive future. As nature and climate are deeply interconnected, businesses cannot achieve climate goals without taking action on nature.

What does it mean to give nature a seat at the table?

According to the World Economic Forum (WEF), “giving nature a seat at the table” means integrating environmental considerations directly into decision-making processes. This concept involves recognizing the intrinsic value of nature and ensuring that ecological health is prioritized alongside economic and social factors. Several approaches could illustrate this concept:

– Nature-Based Solutions: They are a crucial part of addressing global challenges such as climate change, water scarcity, and biodiversity loss. By incorporating these solutions, decision-makers can create policies that harness the power of nature to provide sustainable and resilient outcomes.

– Corporate and Policy Integration: Integrating nature into corporate strategies and policies means setting measurable environmental goals, conducting regular impact assessments, and ensuring transparency in environmental reporting.

– Competent Board Representation: Upskill board members with the latest knowledge and understanding of climate and nature governance to provide valuable insights into emerging practices, risk management, and regulatory compliance while promoting transparency and stakeholder engagement.

– Legal Personhood for Nature: Some discussions around this concept also include granting legal rights to natural entities like rivers, forests, and ecosystems. This legal recognition would help protect these entities from harm and exploitation, ensuring they are considered stakeholders in governance and policy decisions.

Five fundamental questions Boards should ask to strengthen nature governance:

How does nature impact our business?

   – Understand the dependence and effect of your operations on natural ecosystems. Recognize the risks and opportunities related to biodiversity, ecosystem services, and natural resources.

How do our business activities impact nature?

   – Evaluate how your company’s activities contribute to environmental degradation or conservation. Assess your environmental footprint and identify areas for sustainability improvements.

How is our business preparing for nature-related risks and opportunities?

   – Ensure strategies are in place to mitigate environmental risks and capitalize on sustainability opportunities. Integrate nature-related risks into risk management and strategic planning.

How do we communicate our nature-related performance and goals?

   – Oversee the transparency and accuracy of your company’s environmental reporting. Keep stakeholders informed about your environmental impact, targets, and progress.

Do we have the necessary board competency for climate and nature governance?

   – Assess whether the board has the expertise and knowledge to address climate and nature-related issues. Ensure continuous learning and development to keep up with evolving environmental challenges and best practices.

Factors contributing to heightened importance:

Regulatory Pressure

Recent developments and regulations have significantly influenced corporate approaches to biodiversity, emphasizing the critical need to integrate environmental considerations into business models. Here are some of the most noteworthy:

– Taskforce on Nature-related Financial Disclosures (TNFD): The framework provides long-awaited guidance on how organizations should report on nature-related risks. TNFD guides organizations in identifying and assessing nature-related issues through the so-called LEAP (Locate, Evaluate, Assess, Prepare) approach.

EU Biodiversity Strategy for 2030: As part of the European Green Deal, the EU Biodiversity Strategy aims to address biodiversity loss within the EU and globally. It sets out specific commitments and actions, including establishing legally binding nature restoration targets and integrating ecological sustainability into all business and public sector decisions by 2030. This strategy emphasizes the necessity of biodiversity recovery and its integration into business practices to ensure resilience and economic sustainability.

– Corporate Sustainability Reporting Directive (CSRD): Enacted in 2023, this directive mandates companies to adhere to new binding standards across various sustainability domains. Within this framework, the European Sustainability Reporting Standards (ESRS) E4 delineates specific reporting requirements pertaining to biodiversity and ecosystems. It necessitates companies to not only assess their impacts on biodiversity but also formulate concrete action plans to contribute towards global biodiversity restoration goals.

– International Sustainability Standards Board (ISSB): The ISSB has made a significant move by announcing its intention to work on nature-related issues, as welcomed by the TNFD. This decision marks a crucial development in sustainability reporting, expanding the focus from primarily climate-related disclosures to broader environmental concerns, including biodiversity. By developing standards for nature-related disclosures, the ISSB aims to provide organizations with a clear and consistent methodology for reporting their impacts and dependencies on nature, helping stakeholders make more informed decisions.

– Global Reporting Initiative (GRI): Earlier this year, the GRI published GRI 101: Biodiversity 2024, an update to its earlier Biodiversity Standard, which is aligned with the recommendations of the TNFD. A TNFD-GRI interoperability mapping document will be published in Q2 2024, providing a detailed overview of alignment between the TNFD disclosure recommendations and metrics and the GRI Standards.

Economic Dependencies and Risks

The global economy is deeply intertwined with natural resources provided by biodiversity. These resources include food, fiber, clean water, and raw materials, all of which are foundational to industries ranging from agriculture and forestry to pharmaceuticals and cosmetics. The degradation of these resources through biodiversity loss can disrupt supply chains and increase costs, posing significant economic risks.

A recent report by the World Economic Forum emphasizes the severe economic risks posed by biodiversity loss, highlighting that $44 trillion of economic value generation – more than half of the world’s total GDP – is moderately or highly dependent on nature and its services. This staggering figure illustrates the profound interconnectedness between natural ecosystems and the global economy, where disruptions in natural services can lead to significant economic consequences. This dependency extends across various sectors, including food production, construction, and pharmaceuticals, impacting numerous aspects of production, regulation, and corporate risk management.

The Growing Trend of Nature-Positive Strategies

Nature-positive strategies are becoming a cornerstone of corporate sustainability agendas. These strategies involve actions that contribute positively to the local and global environment, moving beyond sustainability to regeneration. Such strategies include restoring natural habitats, developing green spaces within urban settings, or investing in sustainable supply chains that enhance biodiversity. The adoption of these practices not only helps companies mitigate their environmental risks but also aligns them with global sustainability goals and consumer expectations for ethical and environmental responsibility. Here are a few case studies to highlight how companies are approaching the integration of biodiversity strategies:

Unilever: One of the leaders in integrating biodiversity into their business strategy, Unilever has committed to a deforestation-free supply chain by 2023. Their efforts are particularly focused on key commodities like palm oil, soy, and paper, which are major drivers of biodiversity loss. Unilever collaborates with NGOs and local governments to support sustainable practices and restoration projects that contribute to habitat conservation and improved biodiversity.

Patagonia: Known for its active environmental stance, Patagonia invests in restoring natural habitats and using materials that are beneficial or neutral to the environment. They use organic cotton, which reduces pesticide use and promotes healthier ecosystems, and have invested in regenerative organic farming practices that improve soil health, enhance biodiversity, and increase carbon sequestration.

L’Oréal: The global cosmetics leader is committed to integrating biodiversity into its sustainability strategy. By 2030, the company aims to ensure 100% of its bio-based ingredients are traceable and sustainably sourced, with no negative impact on biodiversity. Recognizing that ingredients like palm oil and shea butter come from biodiversity-rich ecosystems, L’Oréal collaborates with suppliers to promote sustainable agricultural practices. The company also focuses on the biodegradability of its products and their impact on aquatic environments, aiming to improve the environmental profile of its formulas and enhance water sustainability.

A call to action:

Join over 1,400 companies calling on governments to adopt ambitious policies to reverse nature loss this decade. Healthy societies, resilient economies, and thriving businesses depend on nature. Your business can be part of a global movement advocating for the protection, restoration, and sustainable use of natural resources. Let’s unite to ensure a nature-positive future and drive transformative change. Show your commitment to reversing nature loss and promoting sustainability.

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