This article was first published in The Australian Financial Review on 4 April 2023.
2023 is set to be a watershed year in the evolution of biodiversity conservation, with an inescapable sharpened focus on impacts and dependencies on nature for the foreseeable future.
New biodiversity targets were announced under the Global Biodiversity Framework (GBF) in late 2022. One of the GBF targets includes restoring, conserving and managing 30% of terrestrial, inland water and coastal and marine areas by 2030.
These GBF targets will soon be as important for corporates and their Boards as the greenhouse gas emission targets agreed under the Paris Agreement.
We can all recall the immense stakeholder and shareholder pressure companies faced to publicly commit to net zero targets.
Nature positive, or biodiversity restoration and regeneration, is the new net zero.
The GBF now provides a clear, internationally-agreed baseline for targets expected to be adopted by governments internationally and will almost certainly infiltrate corporate biodiversity target setting.
Mirroring global developments, strong commitments have been made to federal environmental reform by the Australian Government with the release of its Nature Positive Plan in December last year.
The Plan will seek to integrate biodiversity protection into all aspects of policy and regulation. It will also influence business sustainability agendas, including ESG risk management and reporting frameworks. Following consultation, legislation supporting the Plan’s implementation is likely to be introduced at the end of 2023.
This will be supported by the imminent release of the final version of the biodiversity financial disclosures framework by the Taskforce on Nature-related Financial Disclosures (TNFD) in September 2023. The Australian Government is a strong supporter of the TNFD and has already indicated in its consultation paper on the climate-related financial disclosures framework (December 2022) that any mandatory Australian disclosures framework may, in the future, be expanded to capture biodiversity disclosures.
It is critical all industry sectors understand the level of granularity that will be applied to the assessment of impacts and dependencies on nature is changing rapidly. High-risk dependencies and high-impact risk will be matters that will become increasingly transparent and critical to understand to ensure economic and environmental prosperity.
Further supporting the proposed ‘common language’ that will underpin the TNFD to improve the availability of data and information in relation to biodiversity loss and ecosystem degradation, is the imminent release by the International Sustainability Standards Board of the final version of the sustainability standards. These standards, once finalised, are expected to address natural ecosystem considerations.
Australian organisations need to understand now how structural reforms to environmental policy will impact their business and operations. As a first step, corporate ESG frameworks must extend the ‘E’ in ESG to accommodate biodiversity risks, impacts, dependencies and opportunities.
Complex and costly though this exercise may be, it will be critical to start sooner rather than later.
While the GBF targets and the development of the disclosure frameworks and standards will assist, integrating biodiversity into corporate ESG frameworks is unlikely to be a simple task. Biodiversity is inherently more complex than climate change. It is multi-faceted, region specific and heavily data reliant. The related tools and frameworks are also still in the development and piloting phase.
However, initial steps can be made now to develop policies, set targets and carry out a preliminary risk assessment of biodiversity impacts and dependencies within divisions of the business using the TNFD framework. Key to preparation will also be building an organisation’s capabilities in biodiversity, including assigning responsibilities for the development and implementation of this new component into the ESG framework.
Organisations will undoubtedly benefit from first mover advantage and attract not only investor confidence, but improve their social licence with a variety of stakeholders.
Nature negative and nature neutral are relics of the past. Like the call to net zero emissions by 2050, the call to reverse harm to biodiversity and build a more sustainable future is firmly on the agenda.
The future is ‘nature positive’. Recognition of this in ESG frameworks is now. Corporate Australia cannot afford to be left behind.
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