Materiality: The five steps that will get you on track

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Companies are taking a variety of approaches to conducting materiality assessments for their annual reporting in terms of biodiversity and other #ESG topics – but how to be sure your approach is on the right track?

As we compare and contrast assessment approaches in the course of our research, we have noticed that some reports come across as somewhat lacking in focus and substance, while stakeholder engagement appears to vary from cursory at best, brief surveys targeted at a small cohort, to in-depth discussions over a large cross-section of interested groups and individuals. Some reports seem weighted toward the concerns of shareholders rather than matters that impact society at large, while some obfuscate negative environmental and social impacts via their report’s presentation style, veering dangerously close to greenwashing.  

Fortunately, a number of methods and frameworks have emerged to facilitate Environmental, Social and Governance reporting and, in terms of standardisation, the Global Reporting Initiative (GRI) framework provides a solid, comprehensive approach for businesses reporting on their ESG performance. 

The European Union’s Corporate Sustainability Reporting Directive (CSRD) requires the use of double materiality in sustainability disclosures, which acknowledges that materiality – what matters most to a business – can no longer be viewed from a purely financial perspective. Traditionally, a material issue is one that could significantly influence the financial decisions of investors. However, this approach has expanded in recent years, as stakeholders, including regulators and consumers, have increasingly called for businesses to consider their broader societal and environmental impacts. 

A double materiality assessment takes into account two perspectives: 

  1. Financial Materiality: How ESG issues could impact a company’s financial performance. For example, stricter environmental regulations could lead to increased compliance costs, or climate-related risks could lead to asset devaluation. 
  1. Impact Materiality: The external impacts that a company’s operations, products, or services have on society and the environment. For instance, a company’s carbon emissions, deforestation, or supply chain labour practices might negatively affect local communities or contribute to global environmental challenges. 

Both aspects are interconnected and the double materiality approach offers a holistic understanding of a company’s risks and opportunities, enabling a businesses to better anticipate future trends, such as shifts in consumer preferences toward sustainable products or the financial implications of climate change, and nature degradation, as a result of business impacts. 

In particular, GRI 3: Material Topics provides guidance on how businesses can identify, assess, and prioritise material topics for reporting. The approach is quite stakeholder-focused and involves the following steps: 

Step 1: Understand the organisation’s context  

GRI 3 encourages businesses to think broadly about potential topics, not just those that have an immediate or obvious financial impact, but those that reflect significant external societal or environmental concerns. Consider: 

  • Business activities 
  • Business relationships 
  • Sustainability context 
  • Stakeholders 

Thorough and ongoing stakeholder engagement is key to identifying material topics, alongside a review of the latest industry standards, regulatory developments and examining reports by other organisations. Contact as many of your stakeholders as you can and examine their concerns – employees, customers, local communities, NGOs and regulatory bodies.  

For this exercise to be effective, you must engage at-risk or vulnerable groups and consider impacts that result in collective harm (e.g. GHG emissions), which require consultation with experts in this field. Identify the full range of ESG topics that could be relevant to the business – these go beyond climate change and biodiversity to labour and human rights, community relations and governance.  

Step 2: Identify actual and potential impacts 

Financial materiality: Evaluate how the issues raised by stakeholders might impact the company’s financial performance. Risks related to climate change, such as increased operational costs due to carbon pricing, or physical damage to assets from extreme weather events, could have material financial consequences for a business.  

Impact materiality: how do your company’s operations and activities affect society and the environment? For example, a company’s operations may generate waste or pollution, harming local ecosystems and communities. These impacts may not affect the company’s bottom line in the short–term but are still relevant to stakeholders and fall under the company’s overall environmental and social responsibility. 

Where data is not immediately available or clear, conduct a scoping exercise to identify areas where negative impacts are likely to happen, considering impacts commonly associated with your sector. Identify also any positive impacts – those that contribute to nature restoration, conservation, protection or regeneration. 

Step 3: Assess the significance of the impacts 

The significance of the impact will be specific to each organisation and influenced by the sectors in which it operates. Consultation with experts is essential here. An actual negative impact’s significance is determined by its severity. Significance of a potential impact is determined by both the severity and likelihood of the impact, a.k.a. risk.  

Severity is determined by: 

  • Scale – how grave the impact is, including from a compliance perspective 
  • Scope – how widespread the impact is 
  • Irremediable character – how difficult it is to fix. 

For positive impacts, also look at scale and scope. How beneficial is the impact? How widespread is it or could it be?

Step 4: Prioritise Material Topics

After assessing both the financial and impact materiality, businesses must prioritise the topics that are most significant. This involves balancing the interests of shareholders (who may be primarily concerned with financial materiality) and stakeholders (who may be more concerned with societal and environmental impacts).

Step 5: Review and Disclose

The results of the double materiality assessment should be reviewed by the senior management before disclosure. Material topics should be shared in the company’s annual report. Under GRI standards, the company must explain how it conducted its materiality assessment and provide clear information on the financial and societal impacts of its operations as well as explaining why some standard topics are not considered material.

In each reporting period, review material topics from previous assessments and account for changes in the impacts, and changes due to organisational activities or business relationships. Document the approach taken for each assessment, including the methods of stakeholder engagement, evaluation, visualisation and reporting methods (and actions taken as a result). These elements should all be monitored, reviewed and updated regularly, as material issues can evolve over time. New regulations, shifting stakeholder expectations or emerging ESG risks will entail updating your materiality assessment considerations and methods in future. 

This idea is known as Dynamic Materiality​: “As companies more rapidly change their business models, what is material to such companies will be changing in stride. ​Just as the new material topics will emerge for companies as the company evolves, some sustainability issues that were previously material financially to companies will no longer be”. (​Kuh et al, 2020). 

By conducting a double materiality assessment now, on a voluntary basis, companies who do not yet fall under regulations can be ready for when regulation expands to encompass businesses of every scale and sector, and help secure a place in the supply and value chains of larger organisations who are currently mandated to report.

Transparent disclosure, as well as taking concrete action on biodiversity impacts and other ESG material topics, will enhance your business reputation with consumers and peers, while mitigating risks, boosting long-term resilience and contributing to a more sustainable future. 

The Business For Biodiversity Ireland platform offers guidance to all Irish businesses to build internal capacity to understand your material topics – sign up today.

Illustration: Figure 1(a), EFRAG IG1 Implementation Guidance on Double Materiality, May 2024. The European Sustainability Reporting Standards has published a materiality assessment document, P10 deals with double materiality, with a section on FAQs via the EFRAG site.

Visit the Global Reporting Initiative site for more information: https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-english-language/ 

 

 

Benchmark report reveals nature blindspot

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The World Benchmarking Alliance has released an updated Nature Benchmark, assessing how more than 800 major companies across varied sectors are impacting nature and protecting and restoring ecosystems.

Using company data and performance from 2022-2024, the research finds that, although some companies are helping to halt and reverse biodiversity loss, the majority do not yet fully understand how they impact and depend on nature. Only 5% of all companies have carried out an assessment of the impact of their operations on nature, and less than 1% have assessed their dependencies on nature.

The research, which explored the performance of companies such as Unilever, Kering and Nestlé, assessed companies across plastics, water stewardship, environmental rights, and board-level accountability, finding worrying gaps in key areas such as water use, ecosystem conversion and respecting local communities’ rights.

Two industries outperformed the rest in terms of ranking: Personal & Household Products, with an average score of 26 out of 100, and Pharmaceuticals & Biotechnology, with an average score of 20.

Nature blind spot: only 5% of companies assess their impact, and less than 1% understand dependencies

Only 5% of companies have carried out an assessment of the impact of their operations on nature. Less than 1% of companies have carried out an assessment of their dependencies on nature. This is worrying, as it means that companies cannot strategically manage and prioritise their actions on nature. Although some companies have started to assess their impacts and dependencies, they often only cover a fraction of their operations or don’t publish the results. They also tend to focus on land or freshwater, neglecting the marine realm. The landscape is rapidly changing – the EU Corporate Sustainability Reporting Directive, which has just come into effect, will require many large businesses to disclose their material sustainability impacts and dependencies from 2025 and will affect smaller companies down the line.

Regardless of their current regulatory requirements, all companies should begin applying a risk management and disclosure framework such as the Taskforce on Nature-Related Financial Disclosures.

You can view and filter companies involved by ranking and sector here: https://www.worldbenchmarkingalliance.org/publication/nature/rankings/

Companies overwhelmingly disregard Indigenous Peoples’ rights

Indigenous Peoples and local communities often live in critical ecosystems and coexist with threatened species. They manage about 40% of all terrestrial protected areas and their ecological knowledge enables a sustainable existence worldwide, yet less than 13% of companies assessed express a clear commitment to respect Indigenous Peoples’ rights.

As water insecurity rises, companies must accelerate their water stewardship

72% of the world’s population is water insecure. Findings show that 29% of companies are reporting water use reductions or disclosing water usage from water-stressed areas, suggesting a growing awareness of their role in ensuring water availability worldwide. However, water scarcity is also about the quality of available water for essential human needs like drinking and bathing. Only 15% of companies are reporting metrics on discharged pollutants, and just 4% have set targets to reduce them.

High risk of greenwashing on plastic, as companies struggle to back up efforts with data

Despite the comparatively high proportion of companies that provide qualitative evidence of working on plastic reduction (43%), their performance significantly drops regarding whether they are providing quantitative metrics (19%) to back these up, and even more so for whether they have a quantitative, time-bound targets (7%) to reduce plastic use and waste.

Increasing board accountability is vital: more leadership needed at the top

While 66% of companies assign sustainability oversight to their boards, only 2% of companies have boards that can demonstrate they have the relevant expertise on topics like biodiversity or climate. It is apparent that companies that demonstrate robust corporate governance score significantly better on other sustainability issues. To enable impact, companies should prioritise developing a sustainability strategy that covers nature, supported by concrete high-level responsibility and accountability for delivering the strategy.

Irish-based companies can start by joining Business For Biodiversity Ireland and getting started on our Roadmap to Nature Positive which will enable your organisation to build a strong biodiversity strategy.

You can visit a Nature Benchmark FAQ here to find out more.

Read the Nature Benchmark HERE.

Join the BFBI Nature Strategy Accelerator Programme HERE.

Business & Nature Summit 2023: BFBI’s key takeaways

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Business for Biodiversity Ireland (BFBI) was invited to attend the in-person and semi-virtual European Business and Nature Summit (EBNS) in Milan on the 11th and 12th of October 2023. BFBI’s Platform Development lead Lucy Gaffney and researcher Emer Ní Dhúill attended the summit – Europe’s foremost high-level political and technical forum, dedicated to mobilising the business community towards achieving the nature-positive goal – and returned with some key takeaways:

On Day 1, the BFBI team attended the Opening Address by EU Commissioner for the Environment Virginijus Sinkevicius, as well as the inspirational keynote by Climate Scientist and Explorer Gilles Denis, also the high level policy and business dialogues and a number of workshop parallel sessions. In addition, the team attended a side event facilitated by KPMG Italy and moderated by Orlaith Delargy of KPMG Ireland, which focused on CSRD and included a guest speaker from the sustainability team at Italian Coffee company Illy Caffe.

Workshop: GBF’s Target 15 as a catalyst for action

“Target 15. Businesses assess and disclose biodiversity dependencies, impacts and risks, and reduce negative impacts” (Kunming-Montreal Global Biodiversity Framework (GBF), Convention on Biological Diversity)

Target 15 of the Global Biodiversity Framework places nature conservation on equal footing with both profit and climate change by exhorting businesses to disclose their dependencies on and impacts to biodiversity. Yet achieving the promise of Target 15 will require new processes and tools. This session explored three such critical areas: how can companies use transition plans to accelerate progress on both nature and climate goals, how can financial institutions take responsibility and amplify this essential work, and how can Target 15 complement and improve the Paris Agreement’s stocktake of progress on climate goals?.

Key Takeaways:

This workshop included a panel discussion on business finance and government, including the need for alignment with financial flows. This session included speakers from the European Commission, the French Treasury, Orkla ASA, and Arcadis.

The need to redirect capital flows was mentioned, in particular that it should include public and private capital. It was highlighted that those who are the custodians of nature should be rewarded. The need to avoid and reduce negative impacts on nature was noted as a key part of Target 15 – ‘you can’t just restore nature, you must reduce and avoid impacts’.

Participants were divided into groups to discuss Target 15. Points raised included:

  • The link between biodiversity loss and climate change should be clearly stated, including an understanding that actions for biodiversity can mitigate the impacts from climate change.
  • Nature must be integrated with climate – this includes the synergies and trade-offs.
  • There is a need for transformative change to nature positive in order to achieve Target 15.
  • There is a need to disclose impacts and dependencies, but actions should also be disclosed.
  • Transition plans need to be well thought out, transparent, and identify action gaps.
  • The need to data standardisation was highlighted.
  • The timeline for Transition Plans was discussed, with it generally agreed that they should have long-term actions (at least to 2050), but in reality, the duration is short-term.
  • For nature, the location/landscape level is important for setting nature-positive goals. The sector level works well for climate action, but for biodiversity, the landscape level is more important. However, a good high-level starting point is the Sector Actions Towards a Nature-Positive Future developed by Business for Nature.
  • Although the location/landscape level for nature was considered important, it was highlighted that investors invest in sectors, not locations/landscapes. Consideration needs to be given to this and how to get investors to change that mindset – with a suggestion that investors go back to their clients and inform them of the need to assess impacts and dependencies at the location/landscape level along the value chain of a given portfolio.
  • The need to look at companies within sectors and what they doing was noted, with the aim of separating the leaders from the laggards.

Creating a credible roadmap to a nature-positive economy: how to avoid green-washing and ensure real outcomes for biodiversity

The session provided introductory information for businesses to action nature-positive ambition now. Providing real-world examples of actions being taken by leading corporations, with a focus on setting organisational biodiversity targets, measuring and accounting for impacts, and working to improve value-chain transparency. This session included speakers from Etifor, Fauna & Flora, BancaEtica, Salesforce, NextEnergy and NESTE and was moderated by Wesley Snell from Etifor.

Key Takeaways:

  • Businesses need to understand how they interact with commodity markets.
  • There is an understanding that we cannot eliminate harm completely, but that we need to operate within planetary boundaries
  • Biodiversity only applies to Scope 1 and 3
  • There is a general lack of biodiversity knowledge in the business community
  • There are key mindset challenges that exist in business
  • Getting internal buy-in can be a real stumbling block.

 

On Day 2, the BFBI team attended the opening address by Florika Fink-Hooijer, EC Director General for the Environment, the high-level policy and business dialogue 3 and a number of workshop sessions, as well as the closing plenary.

Sector transition pathways to nature positive

Following the adoption of the Global Biodiversity Framework, various business initiatives including Business for Nature (BfN), WBCSD and WEF have started identifying a set of sector-specific actions that business can take to contribute to a nature positive future. Drawing on the outcome of this work, this session identified common barriers and challenges currently preventing business action and impeding sector transition. As the momentum around business and biodiversity continues to increase globally, the session also identified policy levers to accelerate and scale up nature-positive sector transformation and opportunities to finance business innovations and models across the economy that protect and restore nature.

Moderated by Eva Zabey, CEO of Business for Nature, this was an audience-led session and after some brief panel questions, discussion was thrown out to the floor. The topic was “challenges facing businesses when it comes to taking or scaling action”. BFBI’s Lucy Gaffney intervened, stating that one of the main challenges involves dismantling the current ideals and thinking around corporate biodiversity actions, traditional activities like wildflower meadows and beehives, and rebuilding corporate perspectives around biodiversity strategies. The intervention was well received and prompted numerous conversations at the networking break.

Business for Nature announced a new campaign called “It’s Now for Nature” launching on November 9th, a rally cry to business to act on nature and contribute to nature positive world by 2030.

Biodiversity certificates and credits: an opportunity for forests, coastal habitats, and local communities?

Biodiversity credits and certificates offer a chance to accelerate the transition to a nature-positive society. All actors and market participants need to be involved in the design of emerging biodiversity schemes, understanding the challenges and conditions for developing a high integrity and scalable voluntary biodiversity credits framework that supports business in their journey towards nature positive. The session aimed to showcase emerging initiatives in this space, focusing on measuring, certifying, and trading of credits. By gathering different viewpoints from policy, science, and business, the session aimed to help demonstrate the multiple forms of expertise that are needed.

Key Takeaways

This session included speakers from ItaSIF – Forum per la Finanza Sostenibile, World Economic Forum, CDC Biodiversité, European Commission Joint Research Centre, NatureMetrics, Forest Stewardship Council International (FSC) and Etifor. Key takeaways from this session:

  • Biodiversity credits are not a silver bullet and not the solution to the biodiversity loss crisis – however they are an important and useful tool that can be employed.
  • Other mitigation measures need to be implemented before considering biodiversity credits.
  • Biodiversity credit claims need to be realistic and need to protect consumers from greenwashing – the Green Claims Directive was highlighted.
  • The TNFD and SBTN guidance were mentioned as important resources.
  • There is a need for standardised, verifiable data, including data on impact reductions and finance data.
  • There is a need for pressure data and on-the-ground data.
  • Data needs to be stored to be available long-term (aka a data hub).
  • Metrics for ecological equivalence similar to those of carbon equivalence are needed.
  • Criteria need to be measurable (carbon farming was mentioned).
  • Biodiversity is location specific, the metrics used in one location may not be appropriate for another location – this is a challenge.
  • Tools developed for nature metrics need to be aligned to the stakeholders needs/ability. However, there is a cost associated with developing such tools (i.e. NatureMetrics).
  • It was highlighted that there are numerous biodiversity credit standards but only a handful of projects.
  • Offsetting should be regulated, not voluntary.

Transforming the global food system: Establishing successful partnerships to engage all actors in the value chain

This session focused on tested tools and approaches for creating and maintaining successful inclusive value-chain collaboration to reach agrobiodiversity objectives in different contexts. Speakers included representatives from Nestle, Lidl, the Italian Farmers Association, the Cool Farm Alliance and Coldiretti Bio.

Key Takeaways

  • Food is an ecosystem service, biodiversity is the lubricant
  • The latest CAP is designed for productivity but some money is earmarked for climate and biodiversity
  • Businesses must focus on reducing negative externalities, reducing food loss and waste, educating consumers
  • Less nature = less food
  • Food is big business in Europe. The growing global population is putting huge pressures on food systems.
  • Farmers need to be part of the conversation – most farmers (in Italy) are small farmers with limited time and resources (this would hold true for Ireland too)
  • There is a need for common targets such as the EU Green Deal (EU Biodiversity Strategy and Farm to Fork) targets for reducing pesticide use
  • There is a legislative framework on food in progress at the EU Commission which focuses on soil health (soil underpins all sustainability in the food sector)
  • A big strength of food security is the ecosystem services provided
  • Tech drives investment, but eco-tech (including Nature-based Solutions) are also important
  • The EU are the standard setters and have influence on the global stage
  • Regarding the Nature Restoration Law, it was noted that some stakeholders feel threatened although the aim of the NRL is for the benefit all stakeholders.

BFBI platform lead Lucy asked a question around a 2020 UNEP report which states that the business models of primary producers will be more likely to shift towards nature positive if the value chain pays for the outcome. How likely are businesses within the value chain to finance their upstream primary producers to become more nature positive and how can we mobilise finance from within the value chain instead of consistently relying on the public purse?

Conclusion

The 2023 summit was about turning commitments into action and catalysing business activities that will support the Global Biodiversity Framework. There were certainly more businesses in attendance compared to 2022 and there were many examples of businesses taking action illustrated throughout the workshop sessions. The European Commission also had a larger delegation this year.

Several interventions were made by the BFBI team which highlighted our platform and our team. The opportunities for networking were vast and BFBI made some very important connections that will enhance our offering to business in the future by having access to experts and business examples that are well on their way to becoming nature positive.

Read more: European Business and Nature Summit Conference 2023

The EU Nature Restoration Law: The Danger of Dilution

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Read more

Ecology and Economy: Path to Nature Positive

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Image credit: Bending the curve of terrestrial biodiversity needs an integrated strategy | Nature

 

Our platform lead Lucy Gaffney has written a blog in conjunction with her upcoming presentation at the Chartered Institute of Ecology and Environmental Management’s upcoming Irish conference: Delivering a Nature Positive Ireland, first published on the CIEEM website.

We are on the brink of the next revolution, the “real” Green Revolution and its emergence signals the end of the ecocidal industrial revolution of the 1800s. For the first time in human history, we are waking up to the notion that healthy ecosystems are the foundation on which we have built our civilisations.

Nature is the great provider. People have become wealthier, we’re living longer and we have the best standard of living that has ever been. But while that curve is on the upswing, there is another curve that is plummeting at an alarming rate – the richness and health of the planet.

We are here because we have burned through the planet’s natural resources with reckless abandon, without assuring that these resources were replenished, without stewardship, without regard to other living beings and indigenous peoples.

But the tide is turning. The business world is waking up to the reality that without investment and stewardship of the natural world, their business is at risk, the economy is at risk and society, as we know it, is at risk.

First Steps
So how can businesses realistically start mobilising for nature? The truth is, that nature is the bigger picture. Our destruction of the natural world undermines the planet’s ability to process excess carbon and greenhouse gases, and our excessive greenhouse gas emissions which cause planetary warming and ocean acidification, perpetuates the loss of biodiversity and interrupts natural cycles.

The first step is really understanding that climate change and biodiversity are two sides of the same coin and absolutely need to be tackled together.

Climate or Biodiversity?
The Intergovernmental Science Policy Platform for Biodiversity and Ecosystem Services (IPBES) has identified five key industrial drivers of biodiversity loss.

– Pollution; solid, liquid and gaseous waste
– Invasive Species; non-native plant and animal species
– Ecosystem conversion; changing how we use our land and seas
– Climate Change; planetary warming, forest fires, ocean acidification
– Exploitation of natural resources


Many businesses are already planning or implementing sustainability projects and many of those projects are less to do with climate change and more to do with nature. Take single use plastics for example, yes they are made from petrochemicals, but the main reason we are ditching single-use plastics is to reduce pollution, a driver of biodiversity loss. There are of course cross-cutting benefits to eliminating single-use plastic, but pollution reduction is the most impactful.

Water stewardship is another corporate initiative that has a greater positive impact on biodiversity than climate change. Conserving water in areas that experience water stress has a high impact, not just on local flora and fauna but also on communities. As the summer temperatures rise, water stress is becoming a bigger issue, even in countries like Ireland. How many companies or services would grind to a halt if there was a prolonged drought?

Reframing our sustainability portfolio through the biodiversity lens might uncover that we are doing more for biodiversity than we first imagined.

Impacts and Dependencies
Every business depends on nature, whether directly or through its value chain. Understanding these dependencies on nature has the potential to expose hidden risks to your business and its future continuity.

Similarly, every organisation has an ecological impact. Whether it be through pollution, greenhouse gas emissions or buying palm oil for your products, some part of the natural world is being degraded. In order to develop a meaningful biodiversity strategy, businesses must understand these impacts and dependencies. There is no point in planting trees or wildflowers to tick the biodiversity action box, if a core activity in your business is responsible for deforestation somewhere else. That’s not nature positive.

There is a multitude of tools and frameworks available to help businesses, particularly corporates, understand their impacts but they can be quite technical and overwhelming for a lay person to navigate. In simple terms, a business could list core activities and explore how those activities might put pressure on those previously mentioned “drivers of biodiversity loss”. How can your business reduce that pressure? Through better recycling policies? By understanding where your raw materials come from? It doesn’t have to be complicated, any positive action is better than inaction, but it should be evidence-based.

The Role of the Consumer
It has long been my view that businesses need guidance and regulation to get to grips with these issues. But in parallel, there needs to be a shift in consumer sentiment and purchasing behaviour. We need to act quickly to avoid going over 1.5C in planetary warming and to halt nature loss, and the key to quick action is a change in consumer demand. It is happening, but there is still a lack of understanding of the issues in the mainstream. Do the public understand that buying products with palm oil, palm fat, palm kernels is causing deforestation in a tropical rainforest? Palm fat is in chocolate, peanut butter, stock cubes, most processed food, toothpaste, makeup.. the list goes on!

We need better labelling on products so that we, as consumers, can make more informed decisions and catalyse change from the ground up.

Into the future
In the next decade, “the competitive edge” will be redefined. The next great green revolution is coming and if business doesn’t evolve, then extinction is on the cards.

Lucy will be speaking at the upcoming CIEEM Irish Conference: Delivering a Nature Positive Ireland in Athlone, April 25. Book HERE.

Citizens’ Assembly Report on Biodiversity Loss launches

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In 2022, our platform lead Lucy Gaffney was asked to present to Ireland’s Citizens’ Assembly on Biodiversity Loss – the first such national citizens’ assembly anywhere in the world.

The Assembly’s final report to Government has now been launched with over 150 recommendations that have the potential to dramatically transform Ireland’s relationship with the natural environment.

 

The report was produced as a result of seven meetings of the assembly of 99 citizens, chaired by scientist and broadcaster Aoibhinn Ní Shúilleabháin, pictured above, who heard recommendations from experts in the field and visited areas of natural importance.

The report calls for sufficient funding and increased expenditure for enforcement and implementation of national legislation and EU biodiversity-related laws and directives. It recommends that nature be provided with protections within the constitution to allow it to continue to provide the necessities of life – food, clean water and air, providing a healthy environment for wellbeing into the future.

Other recommendations refer to actions in specific sectors such as agriculture; freshwater; marine and coastal environments; peatlands; forestry/woodlands/hedgerows; protected sites and species; invasive species; and urban and built environments. There is acknowledgement of the role of farmers as the custodians of the land and urges that the agriculture industry be supported in conserving and restoring biodiversity.

Read the report HERE.

Watch Lucy’s presentation on how businesses must transition to nature positive below.

Corporate Sustainability Reporting Directive for Biodiversity & Ecosystems

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In the Corporate Sustainability Reporting Directive (CSRD), the European Sustainability Reporting Standards (ESRS) E4 standard specifically addresses corporate sustainability relating to biodiversity and ecosystems.

The aim of ESRS E4 is to help businesses understand how they affect nature, positively and negatively, actually and potentially and how to interpret the results of corporate biodiversity action. Lucy Gaffney explains more…

Key questions for your business

  • How does the business contribute to achieving the objectives of the European Green Deal, the Sustainable Development Goals (SDGs) and the Global Biodiversity Framework (GBF)?
  • Can the business evolve its operations so that it no longer contributes to ecological damage?
  • Does the business understand the operational risks posed by deteriorating ecosystems and the potential opportunities that could be associated with the protection and conservation of nature?
  • How is the business managing those risks?

ESRS E4 specifies the information that must be disclosed about biodiversity and ecosystems across all sectors. Specific sectoral disclosure will be defined by ESRS SEC 1 Sector Classification and the CSRD requirements are expected to be in place for financial years beginning on or after 1 January 2024 by large publicly traded entities that have more than 500 employees at the same time (i.e. entities already subject to the Non-Financial Reporting Directive) and by 2025 for other large companies. Small and medium-sized enterprises (SMEs) will also be subject to a reporting obligation starting in 2027.

Disclosure Requirements

  1. ESRS E4 requires that a business disclose its strategic plan to ensure that their business model will become compatible with the transition to achieve no net loss of biodiversity by 2030, net gain from 2030 and full recovery by 2050. This disclosure will need to include plans to address nature loss within the value chain as well as confirmation that the strategy has been approved by the relevant management boards. 
  2. Each business will be required to disclose all policies relating to biodiversity and ecosystems. This is to ensure that businesses actually have policies to protect nature and how these policies are monitored and managed.
  3. Businesses will have to disclose plans and methodology that will support their biodiversity policies.
  4. A disclosure on the social consequences of nature loss will also be required. This includes, for example, information related to fair and equitable benefit sharing arising from the utilisation of genetic resources and traditional knowledge.
  5. Disclosures will have to include information on how business policies are connected and aligned with global goals and agreements, such as the SDGs, the GBF and the European Green Deal.
  6. Targets will form part of the disclosure mandate. Businesses will be required to disclose the biodiversity and ecosystem-related targets that it has adopted, including timelines, milestones, respect to ecological thresholds and planetary boundaries. In addition, these targets must be supported by the business management board and in alignment with and informed by guidelines set out by the Convention on Biological Diversity (CBD) and Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).
  7. Businesses must be transparent and disclose all biodiversity actions, action plans and allocation of resources that will enable the organisation to meet its policy objectives. 
  8. The standard requires the disclosure of pressure metrics. Does the business understand how its activities put additional pressure on the drivers of biodiversity loss? These include, but are not limited to pollution, invasive species, land use, climate change and exploitation of natural resources.
  9. Businesses must also disclose impact metrics related to geography or raw materials. This may include impacts on species and their extinction risk or impacts on ecosystems, reporting on extent, condition and function.
  10. Businesses will be required to disclose response metrics to understand how the business has tried to minimise, rehabilitate or restore nature in areas where it has had a significant negative impact.
  11. There is an optional disclosure on biodiversity-friendly consumption and production metrics which will provide insights into its consumption and production which may be considered biodiversity-friendly.
  12. The Taxonomy Regulation requires businesses to disclose information on the proportion of turnover, capital expenditure and operating expenditure that qualify as environmentally sustainable.
  13. Another voluntary disclosure is around biodiversity offsets, where the business may disclose actions, development and financing of biodiversity projects. 
  14. A disclosure on potential financial effects of nature-related risks and opportunities will be required.

This is an evolving space and many businesses will need to implement this as a first step. If a business cannot make these disclosures because strategies have not been developed or adopted, they will need to provide timeframes around when an appropriate strategy will be developed and adopted.

One of the chief aims of BFBI is to guide our businesses through upcoming policy changes around nature-related disclosures.

This article was also published in investESG Insight.

Business for Biodiversity Ireland @ COP15

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BFBI Platform Lead Lucy Gaffney writes: It was a great privilege to attend COP15 at the  Palais des Congrès in Montréal for the Convention on Biological Diversity’s 15th Conference of the Parties last December. This was the first COP I’ve ever been to so I wasn’t quite sure what to expect.

The trip was funded by the wonderful team at the National Parks and Wildlife Service and facilitated by our colleagues at the CoHab Initiative. I was representing Business for Biodiversity Ireland with the primary aims of learning, networking and building on our existing links within the Business and Biodiversity space.

I focused on attending sessions that were a part of the Business and Biodiversity Forum on the 12th and 13th of December. These sessions covered topics like ‘Greening Value Chains’ and ‘Valuing Nature in Decision-Making’. The Finance-centred day on the 14th saw Mark Carney of GFANZ take the stage to talk about making the most of the post 2020 Global Biodiversity Framework for financial decision-making.

I had the great pleasure of meeting Ryan Gellert, the CEO of Patagonia at an inspiring side event detailing the collaboration between the governments of Albania, Greece and Macedonia and their commitment to conserve the Vjosa-Aoos river system, Europe’s last wild river. I also got the chance to speak to Minister of State for Heritage Malcolm Noonan and discuss his continued support of the Business for Biodiversity Ireland platform.

5 key takeaways from COP15:


1. Harmful subsidies need to be identified and phased out (GBF, Target 18). Governments are still spending in excess of $500bn annually on subsidies for agriculture, forestry and fishing that incentivise environmentally harmful activities. The CBD called for governments to assess their potentially harmful subsidies and the OECD produced guidelines for this but governments were non responsive. We need to identify and reform these subsidies to incentivise nature protection and restoration, ensuring that key stakeholders are strongly engaged in this process.


2. Consumers must understand their role in the biodiversity crisis. We need to adopt a whole-of-society approach to addressing biodiversity loss and this translates to an immediate need to urgently and accurately inform the general public about the key issues (as we would in any other emergency) , how consumption behaviour compounds the crisis and how information and a shift in consumer demand will be a significant catalyst for change.


3. Data and finance are available to enable the nature restoration agenda. There is lots of nature data out there but it is scattered and fragmented. There is an abundance of finance out there but it is being channelled into the wrong places. The funding gap for biodiversity is estimated at around $700bn per year, less than the average global spend on soft drinks or the annual spend of the US military. There is work to do to create good financial flows but the capital is there.


4. We need to disrupt and transform the way we do business (GBF Target 15). Through mandatory assessment and disclosure of impacts and dependencies, meaningful biodiversity strategies and science-based targets. Voluntary action is not enough, action needs to mandated. Businesses need to roll up their sleeves and get stuck in, rather than waiting around for the perfect metric. There will be a certain amount of learning-by-doing and businesses need to be courageous and innovative in their approach. Sustainability will redefine what it means to have a competitive advantage in the next decade.


5. Our current food systems are fragile. The way we use our land and grow our food has resulted in 3bn people being undernourished, 1bn people being malnourished (from eating poor quality processed foods) and all the while 30% of our food is wasted. Our current systems are not capable of feeding the global population of 8bn. There will be 9bn people to feed in 2037 and if the food systems are not transformed, there will be a massive global food crisis in the next 15–20 years. Our food systems are subject to water and thermal stresses and we have no mitigation or transition plan in place to deal with the extreme problems that lie ahead.

Finally, delighted to have met Kevin O’Sullivan, Science Editor from the Irish Times where he included quotes from some of our discussions in Montreal. You can read the article HERE

Mobilising business for nature? This is where the magic happens…

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Day 2 of the Business and Biodiversity forum of COP15 in Montreal – and a long day of sessions and panel discussions about the role of government got me thinking. The #MakeitMandatory campaign focuses on Target 15 of the Global Biodiversity Framework and creating a driver from government level to mandate the assessment and disclosure of nature-related risks for all businesses.

How will businesses feel about this? Will these regulations be met with contempt?

It is my view, having run my own business for 15 years, that businesses won’t mobilise unless they have to. We need to discover the key that will unlock that motivation. I’m not sure that top-down government-mandated requirements alone will be enough.

The Irish government declared a biodiversity emergency in 2019. But it doesn’t really feel like we’re in a state of emergency. Most people are simply unaware of the deteriorating situation, or if they are, they feel powerless to address it.

The Irish government needs to treat this issue like the emergency that it is and invest money in enhancing awareness in the general public, much like they did for COVID-19 or how they create awareness about an upcoming referendum or census. 

 

We need a broad, mainstreamed advertising and awareness campaign, run on TV, radio, social media and print media to inform the public and mobilise their inherent power to catalyse change.

 

The people of Ireland need to understand their role in this crisis. We consume irresponsibly, but we don’t realise it. An awareness campaign would help create a bottom-up driver from consumer level. A demand for change. A demand for more responsible business, more nature-friendly products.

How would businesses feel about this? Will these consumer demands be met with respect? With urgency? Knowing that if products and services don’t align with evolving consumer sentiment, can the business expect to survive? Or go extinct?

The top-down regulation from government and the bottom-up change in consumer demand will create a space in between. And this is where the magic happens.

 

Lucy Gaffney – Business for Biodiversity Ireland

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