While most companies are acting on reducing greenhouse gas emissions, few have examined how the impact of their operations on nature and biodiversity are slowing net-zero progress, according to a report from the World Benchmarking Alliance (WBA).
The WBA’s first Nature Benchmark reviewed the policies and practices of businesses across eight sectors, including construction, construction materials, packaging, chemicals, pharmaceuticals, tires and rubber, and minerals and mining. It found that 5% of companies have done a science-based assessment to show what their impact on nature and biodiversity is, and fewer than 1% of businesses know how much of their businesses rely on nature.
The United Nations addressed how nature is being overlooked in work toward net zero at the recent COP27. It says efforts to reduce emissions could be undermined without a plan to reduce impacts, as well as using nature in beneficial ways, such as sequestering carbon. Additionally, investors need to broaden their definition of net zero to include the value of nature, according to the UN.
The WBA, which released the Nature Benchmark ahead of the UN’s COP15 biodiversity conference in Montreal, says achieving net zero is not possible without protecting forests, water sources, and biodiversity. It says taking such action is essential to every business and can provide economic value as well.
The Nature Benchmark studied 389 companies and 97% of them have not made a commitment to limit nature impacts through the end of the decade. The WBA says companies can improve biodiversity by tackling deforestation, curbing water and air pollution, and reducing solid waste production.
The UN says around a quarter of the world’s emissions come from natural areas and deforestation, and nature-based investments need to triple to close a $4.1 trillion financing gap in nature impacts by 2050 if net-zero targets are to be reached. The World Economic Forum says nature initiatives can also produce a third of the carbon mitigation needed to advance net-zero goals by 2030.
A biodiversity framework is expected at COP15, which could provide an outline to make improvements by 2030. The Taskforce on Nature-related Financial Disclosures is also working on standards for reporting nature-based investment impacts.
However, the focus on sustainability measures like natural capital falls well behind standards such as carbon pricing, according to a 2021 S&P Global Ratings report, and that can cost industries billions of dollars. This year’s release of the Global Sustainable Competitiveness Index found natural capital measures have fallen across 60% of the indicators it analyzes.
The WBA benchmark finds while 51% of the companies disclose their locations, only 14% say if they are near areas that could create biodiversity impacts. The report also says 13% of businesses have committed to adhering to Indigenous peoples’ rights. The UN says Indigenous Peoples and Local Communities account for about a third of natural areas but receive 1% of climate financing.
“We cannot achieve a net zero future without protecting the natural world and its communities,” says Vicky Sins, World Benchmarking Alliance’s nature transformation lead. “The urgent first step for companies is to carry out a deep assessment on nature. Without understanding their relationship to nature and how operations are either harming or helping biodiversity, how can businesses grasp what action to take? Companies must measure and report on how they interact with nature – including how their activities affect deforestation, pollution, and nature loss.”
The WBA plans to expand the benchmark to 22 industries in 2023, including agriculture, automobiles, food and beverage, oil and gas, and retail. Some of the largest companies in the world are being evaluated, including Adidas, Bridgestone, Chevron Phillips, and Dow in the first Nature Benchmark.
