The standard provides food for thought for negotiators at the COP15 biodiversity summit as a blueprint for biodiversity impact reporting.
- Revised standards draft available for public comment with view to late 2023 publication
- Supply chain reporting included for the first time, but this will be challenging
- Spotlight on leading biodiversity loss drivers, such as climate change, alien species’ spread, and resource overexploitation
A revised version of the Global Reporting Initiative (GRI) biodiversity reporting standard, a draft of which has been made available for public comment, seeks to extend reporting to the supply chains of companies and organisations. Its broad scope underscores the huge challenges facing negotiators seeking to reach a framework agreement at the COP15 global biodiversity summit in Montreal.
COP15 – the UN Convention on Biodiversity – runs from 7-19 December. It is the latest attempt to provide a joined up international approach to stemming the loss of wildlife and plant species and habitats, which is accelerating due to the growing impact of human activities and global warming.
Mandatory impact reporting is seen as vital to the process, but for that to happen effectively, standards must be agreed covering what biodiversity impacts should be measured and how they should be measured.
GRI is a multi-stakeholder group comprising representatives from business, governments, civil society and other organisations, which seeks to provide a harmonised approach to measuring biodiversity impacts, in consultation with other biodiversity frameworks and initiatives.
The GRI standard is designed to be part of solution, enabling organisations to publicly disclose their most significant impacts on biodiversity, and how they manage them, in a transparent and accountable way.
To some extent, this process can draw on work already done with climate change, given organisations are already becoming accustomed to the need to building climate reporting into their operational models. But while climate impact reporting focuses mainly on one core measurement – the level of greenhouse gas emissions – biodiversity impacts take a multitude of forms from land degradation and dwindling fresh water supply to over-fishing and social harm resulting from biodiversity loss.
The difficulties of marshalling all these drivers into a coherent framework for impact reporting is recognised in proposed changes to the GRI Biodiversity Standard, which was originally drawn up in 2016.
One significant proposed change in the revised “exposure draft” of the standard is the extension of biodiversity reporting to an organisation’s supply chain, rather than just measuring its own biodiversity impact – regarded as necessary to tackle deforestation ore effectively, for example.
The revised standards also propose a simplification of some aspects of reporting by helping organisations prioritise the most significant impacts affecting their operations, and to focus on the leading direct drivers of biodiversity loss. These include the extent to which the activities of an organisation and its suppliers could lead to climate change, the introduction of invasive alien species, land and sea use change, overexploitation of resources, and pollution.
The standards also introduce requirements for biodiversity-related human rights impacts, such as those on indigenous peoples, local communities and workers.
The draft has been approved by the GRI’s Global Sustainability Standards Board (GSSB), which oversees the process, and released to coincide with COP15. It is open for public comment until 28 February 2023, with the final standard expected to be published in the second half of 2023.
Providing a framework for impact measurement is seen as crucial to boosting the adoption of biodiversity reporting. A KPMG Survey of Sustainability Reporting published in October 2022 found that only 40% of 5,800 leading companies around the world currently report on biodiversity.
“If the revised standards are implemented correctly, they will provide a much better picture of your relationship with biodiversity than the previous version, because it will be based on more indicators,” Wijnand Broer, program manager at the Partnership for Biodiversity Accounting Financials (PBAF) and a partner at Dutch-based consultancy CREM, told Impact Investor.
Broer, who advised on the GRI standards on behalf of PBAF, said the inclusion of company supply chains was crucial if measurement was to make a real difference in stemming biodiversity loss. However, he warned that, even if location-specific biodiversity measurement down the supply chain was more widely adopted, it would still be challenging to identify what impacts were directly attributable to one company rather than another operating in the same area.
Roel Nozeman, PBAF chair and senior advisor on biodiversity at ASN Bank, said persuading companies to part with commercially sensitive information is a further challenge for supply chain reporting.
“Some companies are not really eager to reveal their whole supply chain for competitive reasons, so I don’t think they will do this voluntarily. We need regulation if we are to start getting more insight into supply chains,” he said.
However, he believes it is possible to implement biodiversity reporting much more widely than at present, and that engagement by asset managers with investee companies can provide positive results if properly focused.
“Biodiversity measurement may be complex but it’s not impossible. As a financial institution or company, you need to know where your biodiversity impact hotspots are and then zoom in further to get as much local data as possible, using the different tools available to get answers,” he said.
Global framework essential
Katariina Vartiainen, senior manager, environment and sustainability, at Nefco, the Nordic Green Bank, said a workable framework agreement at COP15 in conjunction with improved reporting standards were vital to make progress in the fight to stem biodiversity loss.
“If there are measurable targets for biodiversity, it’s easier to align your own business strategy towards that target. At Nefco, we need targets that give clear guidance for businesses, so that when we are making financing decisions, we can reflect on them when we set targets for the level of biodiversity protection,” she said. Nefco recently launched a Biodiversity Pilot Programme to encourage its client companies to build positive impacts for nature into their projects.
The addition of new disclosures in the GRI standards to connect with the drivers of biodiversity loss, including climate change, pollution, and overexploitation of resources is seen as a step in the right direction.
“Reporting on the direct drivers of biodiversity loss – which could include land use change, overfishing, pollution and climate change – will help investors connect business activities and their interaction on biodiversity,” according to David Thomas, senior portfolio manager at Robeco, working on the company’s new biodiversity strategy.
While the GRI standards are seen as a vital cog on the mechanism for tackling biodiversity loss, the most important element will be the signing of a workable biodiversity agreement in Montreal.
“This COP is different from previous biodiversity COPs, because it’s setting targets for ten years ahead. It’s really crucial in that sense,” said Broer.