By mathew-loup

Biodiversity is taking its rightful place in the spotlight this month at COP15 in Montréal, Canada. Its growing importance to company governance was reflected by GRI publishing its Biodiversity Standard.

The draft standard aims to move companies to publicly disclose their most significant biodiversity impacts as well as how they are managing those impacts. It also aims to help stakeholders by improving the comparability and quality of biodiversity-related reporting. The standard is open for comment until February 28, 2023.

Biodiversity now commands its place as one of the many environmental, social and governance (ESG) issues that board directors and senior executives must confront. There is much to learn, but no better place to do that than our best-in-class ESG and Climate education programs. 

As always, please keep your news leads and comments coming to mathew.loup@competentboards.com or join the conversation on LinkedIn when we post this weekly digest. 

1. The S in ESG. More than 200 institutional investors have joined forces for a new social issues and human right initiative led by PRI. Advance so far represents US$30 trillion worth of assets under management, with 40 focus companies from the metals and mining as well as renewables sectors leading the way. For the first time, PRI has published the list of investors engaging with each of the focus companies, so as to ensure full transparency. Those investors have already agreed to develop and finalize their own human-rights due diligence processes and policies by the end of 2023. 

2. Investors seek climate clarity. Climate-related disclosures are a hot topic in the business world, but there is still much work to be done. A study conducted by Manifest Climate has revealed that much of the current voluntary report filings lack concrete information to make informed business decisions. The inaugural Disclosure Benchmark Review found that although two-thirds (66%) of companies assessed disclose some information related to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, less than half (49%) published disclosures that had “sufficient clarity, specificity, and comparability” to be useful for investors and stakeholders. The report also showed that a mere 12% of companies have included information aligned with the TCFD governance recommendations. Manifest Climate assessed the public filings of more than 3,000 companies in 65 countries based on their alignment with the TCFD recommendations.

3. More work needed on biodiversity. The importance of our planet’s shrinking biodiversity has gained prominence this year, but not at enough companies. According to new data published by CDP last week, less than a third (31%) have committed publicly to biodiversity-related initiatives. Another 25% aim to do so within the next two years. Of greater concern, more than two-thirds (70%) of companies surveyed do not currently assess the impact of their value chain on biodiversity. And more than half (55%) have taken no action to improve their biodiversity-related commitments in the past 12 months. CDP surveyed 7,790 companies via its climate change questionnaire. 

4. Empty-handed in southeast Asia. A new report from the World Bank has highlighted that sustainable finance is only trickling into the right business hands in the ASEAN region. Unleashing Sustainable Finance in Southeast Asia reveals that only 83 companies out of a possible 10,000 in Indonesia, Malaysia, Philippines, Thailand and Vietnam have got their hands on money via sustainable financing instruments. The report highlights three key areas that stopped sustainable financing getting to the right companies:

  • A shortage of high quality and widely available climate-related data
  • A limited expertise in gauging sustainable investments
  • A shortage of suitable investment opportunities in sustainable projects and activities 

Investors have also often placed greater importance on financial performance rather than sustainability. “Rather than being seen as a potential direct revenue stream, climate mitigation and adaptation measures are viewed as avoiding potential disasters or as corporate social responsibility efforts,” said Dr Tatiana Didier, co-author of the report, in a news release.

5. Getting ready for regulations. Change is coming to businesses in one part of southeast Asia. Hong Kong Exchanges and Clearing (HKEX) has “strongly” recommended that listed companies get familiar with the International Sustainability Standards Board (ISSB)’s new climate disclosure standards. This will help them plan and build a structure for imminent enhanced climate reporting requirements. This recommendation came as part of a review of 400 Hong-Kong-listed companies, based on their reporting in 2020. Of those, although more than 90% complied with 12 out of 15 ESG reporting requirements, only 5% ticked the box for climate-scenario analysis. 

Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.

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