More than 300 companies, including H&M, Sainsbury’s and Nestlé, have called on world leaders to make it mandatory for companies to assess and disclose their impact on nature by 2030.
Businesses and financial institutions in 56 countries – including the UK, Canada and China – are pushing for governments to agree to the revelations at Cop15, the UN’s biodiversity conference in Montreal in December.
In an open letter to heads of state, business leaders said the business and financial status quo was “economically short-sighted and will destroy value in the long term”.
If agreed, the pledge would apply to all major companies in the 196 countries that have signed the Convention on Biological Diversity, the global agreement to protect nature. It follows increases in the number of companies making pledges to cut emissions, with climate disclosures now mandatory in the UK, France and New Zealand, and pressure mounting for other countries to take action.
The companies, which have combined revenues of more than $1.5bn (£1.3bn) and also include BNP Paribas, Aviva Investors, Salesforce, Tata Steel and Unilever, have agreed to assess their impact on nature, reveal the the information and publicly commit to reducing their negative effects. If the parties do not agree to make these disclosures mandatory, they are voluntary.
Various tools are being developed to measure companies’ impact on nature, but the methods must be standardized and supported by science, says the group.
The open letter was released alongside a report published by Business for Nature, the Capitals Coalition and CDP, a non-profit organization specializing in environmental disclosure systems. “They know there can be no activity on a dead planet,” the report says. “They are ready to transform their businesses and are calling on governments to set the rules of the game through legislation that will create fair competition for businesses.”
Scientists say the biodiversity crisis is as serious as the climate crisis, with an estimated 1 million species at risk of extinction, but there is less information about how companies are affecting biodiversity because this data is not disclosed. More than 18,600 companies worldwide disclosed data on their impact on climate through CDP 2022, yet just over 1,000 companies disclosed data on forests – and 4,000 on water security – according to the report.
A landmark review published last year by Cambridge University economist Professor Partha Dasgupta found the world is at “extreme risk” because of the failure of economics to take into account the true value of the natural world.
The new report argues that mandatory disclosure would create fairer competition for companies, increase accountability and encourage more responsible sourcing of materials.
Eva Zabey, Executive Director of Business for Nature, said: “This is an important first step. Without this information, we are flying blind to extinction. Frameworks being developed now will support this transition, and companies are ready to transform their businesses.”
Leyla Ertur, head of sustainability at H&M, said: “We are exploring opportunities to change the materials we use towards 100% recycled or sustainably produced materials, which are less resource intensive – basically less land use, water, pesticides and chemicals.”
Ertur said this would include a focus on using more organic cotton and increasing existing services such as repair, rental and use of second-hand products. When asked if the company would encourage consumers to buy fewer clothes, she said the focus was on the quality of the products, not the quantity.
Katie Kedward, a sustainable finance economist at University College London, who was not involved in the report, said it was good to see the push for mandatory disclosures. “However, mandatory disclosure will only be effective in addressing biodiversity loss if it is quickly translated into transformation of nature-depleting business models, and there are good reasons why it may not deliver the pace of change needed in time,” she added.
Revealing impacts on nature is much more complicated than reporting climate impacts, which have one set of metrics – greenhouse gas emissions. Biodiversity is based on a number of different metrics and data sources, which even ecologists cannot agree on.
Kedward said: “It is much cheaper for these companies to spend the next eight years developing nature disclosure than it is for them to abandon their current business activities linked to nature destruction. Mandatory disclosure is an important solution, but an eight-year time horizon for implementation is akin to a gigantic box-ticking exercise that kicks the actual action down the road.”
Dr Sophus zu Ermgassen, an ecological economist at the University of Oxford, said disclosure cannot replace strong government action to stop investing in environmentally damaging activities.
He said: “Making nature disclosure mandatory would be a positive step, but we should recognize that providing investors with information about companies’ exposure to nature-related risks and hoping that this will change the way they invest is based on some very risky and dubious theories about change.”
This article was amended on 26 October 2022 after Business for Nature informed us that they had inadvertently listed a number of countries twice in their total of those driven by business and institutional change. The correct number is 52, not 56 as an earlier version indicated.
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