On December 19, a few days after most of SA switched off the lights (literally) and headed out of the office for a much-needed break, delegates at the UN Biodiversity Conference of the Parties (COP15) in Montreal closed off their conference with a landmark agreement to guide global action on nature through to 2030.
While corporate SA has improved a great deal with respect to climate change action and reporting in recent years, the same cannot be said of developments in the biodiversity space. I have lamented this nearsightedness a great deal in the past, as the scientific community regards biodiversity and climate change as two sides of the same coin.
SA in particular is ranked alongside the polar regions and the east coast of Australia as having the highest global biodiversity impact probabilities resulting from climate change.
Given that the World Economic Forum believes that more than 50% of global GDP ($44-trillion) is moderately or highly dependent on nature and the goods and services it provides, it is high time that we started taking this concomitant issue seriously.
Further to our economic dependency on ecological goods and services, investing in sustainable, climate-resilient ecological systems presents the single largest opportunity to tackle the climate change crises, with the World Bank estimating that “nature-based solutions can provide 37% of the mitigation needed until 2030 to achieve the targets of the Paris Agreement”.
This historical lack of attention to biodiversity by the business community now appears to be at an end. For the first time the business and investment community descended on a biodiversity COP in their droves, with somewhere between 700 and 1,000 companies attending the event.
Not only this, but a group of 330 companies and investors in the Business for Nature network (with $24-trillion in assets under management) led the charge on biodiversity action by calling on governments to make “mandatory requirements for all large businesses and financial institutions to assess and disclose their impacts and dependencies on biodiversity by 2030” under target 15.
While the word “mandatory” was excluded from the final text, target 15 did establish a clear mandate for governments to require large and transnational companies and financial institutions to monitor, assess and transparently disclose their risks, dependencies and impacts on biodiversity through their operations, supply and value chains and portfolios.
If businesses think this will take the same leisurely rollout pace as that of climate change disclosure reporting, they should think again. Standard-setting and reporting bodies have already paid their school fees in the climate change arena and the International Sustainability Standards Board announced it will incorporate nature in its disclosure standards when they are released later in 2023.
In a similar vein, the Task Force on Climate-related Financial Disclosure’s little brother, the Taskforce on Nature-related Financial Disclosures, has already advised that it will provide specific sector agnostic recommendations in September.
Despite all the grumbling and pushback against environmental, social and governance (ESG) reporting in 2022, companies that fail to take climate and biodiversity action seriously are swimming against the tide. Ernst & Young’s 2022 Global Private Equity Survey reported that 39% of all private equity investors had invested in ESG-related products, up from 33% the year before.
It also found that 42% of the largest fund managers consider ESG factors either seriously or very seriously when making investment decisions, and more than 50% of total fundraising went to private equity firms with formal ESG policies in 2021.
In a similar survey by Natixis CIB last year, 65% of investors indicated an appetite for sustainability-linked debt products with pricing adjustment mechanisms, while 70% said they see ESG integration as a way to reduce investment risk and deliver increased returns in the long run in infrastructure and real estate private debt investments.
Like it or not, ESG action and reporting is about to step into a whole new gear.
• Maguire is carbon project manager at Climate Neutral Group SA. He writes in his personal capacity.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.